NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A2258
SPONSOR: Ra TITLE OF BILL:
An act to amend the state finance law, in relation to the tax stabiliza-
tion reserve fund
PURPOSE OR GENERAL IDEA OF BILL:
To increase the maximum amount permissible for annual deposit of State
surplus monies to the Tax Stabilization Reserve Fund from two percent to
four percent, in order to increase the size of the fund.
SUMMARY OF PROVISIONS:
Subdivisions 3 and 4 of Section 92 of the State Finance Law, as sepa-
rately amended by Chapters 405 and 957 of the laws of 1981, are amended
to increase the size of the Tax Stabilization Reserve fund up to four
percent.
JUSTIFICATION:
The last time this cap was adjusted was in 1981. At that time, the Divi-
sion of the Budget stated that the two percent cap "represent(ed) a more
manageable and realistic target in the present decade." However, this
cap is simply too low today.
A general rule of thumb utilized by rating agencies and good government
groups concerning the preferred size of reserve funds is five percent of
the General Fund, except for those large states like New York and Cali-
fornia that have such large budgets, where a somewhat lower reserve
allocation is acceptable.
The balance in the Tax Stabilization Reserve Fund is currently well
below two percent, and this legislation will permit the State to build
up these reserves to more appropriate levels.
PRIOR LEGISLATIVE HISTORY:
A.3214 (2023-2024) - referred to Ways & Means
A.4700 (2021-2022) - held for consideration in Ways & Means
A.5907 (2019-2020) (Barclay) - held for consideration in Ways & Means
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
EFFECTIVE DATE:
This act shall take effect three years after it becomes law.
STATE OF NEW YORK
________________________________________________________________________
2258
2025-2026 Regular Sessions
IN ASSEMBLY
January 16, 2025
___________
Introduced by M. of A. RA, BARCLAY, BLANKENBUSH, HAWLEY, MANKTELOW,
MORINELLO, TAGUE -- read once and referred to the Committee on Ways
and Means
AN ACT to amend the state finance law, in relation to the tax stabiliza-
tion reserve fund
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivisions 3 and 4 of section 92 of the state finance
2 law, as separately amended by chapters 405 and 957 of the laws of 1981,
3 are amended to read as follows:
4 3. At the close of each fiscal year any cash surplus remaining in the
5 general fund over and above the norm for such fiscal year shall be
6 transferred from or retained in such fund as hereinafter in this subdi-
7 vision provided. There shall be transferred to the tax stabilization
8 reserve fund all of such surplus moneys, up to and including an amount
9 equivalent to [two-tenths] four-tenths of one per centum of such norm,
10 unless such transfer would increase such reserve fund to an amount in
11 excess of [two] four per centum of the amount of the norm for such
12 fiscal year, in which event such transfer shall be limited to such
13 amount as will increase such reserve fund to such [two] four per centum
14 limitation. Any balance of such surplus moneys, thereafter remaining in
15 the general fund, shall be retained in such fund and be available for
16 the reduction of state taxes.
17 4. In the event that at the close of any fiscal year the receipts
18 derived from the taxes, fees and other sources, required to be paid
19 during such fiscal year into the general fund of the state shall fall
20 below the norm for such fiscal year, there shall be transferred from the
21 tax stabilization reserve fund to the general fund to the extent that
22 there are sufficient moneys in the tax stabilization reserve fund, an
23 amount equal to the difference between the norm and the amount of such
24 receipts. If such transfer reduces the tax stabilization reserve fund to
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD05690-01-5
A. 2258 2
1 an amount less than [two] four per centum of the norm for such fiscal
2 year, the amount so transferred shall be repaid in cash prior to the
3 computation and payment of any transfer to the fund pursuant to subdivi-
4 sion three of this section in not less than three equal annual install-
5 ments within the period of six years or less next succeeding the date of
6 such transfer; provided, however, that if any such annual installment
7 shall increase such reserve fund to an amount in excess of [two] four
8 per centum of the amount of the norm for the then current fiscal year,
9 such installment shall be limited to such amount as will increase such
10 reserve fund to such [two] four per centum limitation and no further
11 repayment of the whole or any part of such transfer shall be required in
12 any subsequent fiscal year. Repayments to the tax stabilization reserve
13 fund shall be stipulated in annual budget bills.
14 § 2. This act shall take effect 3 years after it shall have become a
15 law.
