Amd S54, St Fin L; add S160.05, Loc Fin L; amd S209, Civ Serv L
Establishes the financial restructuring board for local governments; relates to public arbitration panels for deciding whether public employers are fiscally eligible.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8086
SPONSOR: Farrell TITLE OF BILL: An act to amend the state finance law, the local
finance law and the civil service law, in relation to the financial
restructuring board for local governments; and to amend the civil
service law, in relation to public arbitration panels determinations of
whether public employers are fiscally eligible
PURPOSE:
This bill would establish a permanent Financial Restructuring Board for
Local Governments that would provide a meaningful, substantive avenue
for fiscally eligible municipalities to reform and restructure and
provide public services in a cost-effective manner. It would also extend
current provisions of the binding interest arbitration law and reform
that arbitration process by setting forth new parameters for arbitration
awards.
SUMMARY OF PROVISIONS:
Section 1 of the bill would amend the State Finance Law to empower the
newly created Financial Restructuring Board for Local Governments ("the
Board") to award currently authorized Local Government Performance and
Efficiency grants, in its discretion, for financial restructuring and
related purposes.
Section 2 of the bill would amend the Local Finance Law to create a
permanent Financial Restructuring Board for Local Governments composed
of ten members: the Director of the Budget (who would serve as chair),
the State Comptroller, the Attorney General and the Secretary of State
(each of whom could designate an individual to serve on their behalf)
and six members appointed by the Governor, one of whom upon recommenda-
tion of the Speaker of the Assembly, one of whom upon the recommendation
of the Temporary President of the Senate, one with experience in munici-
pal financial and restructuring matters and three other members.
The Board, at the request of a "fiscally eligible municipality" (eligi-
bility to be determined by the Board and not including New York City),
would be empowered to seek information and make necessary queries in
order to comprehensively review government operations, finances, manage-
ment practices, a municipality's economic base and any other factors it
deemed relevant to make findings and recommendations on reforming and
restructuring the operations of such municipality. It would have the
discretion to, among other things, award grants, and prescribe loans (as
provided in section one of the bill), the terms of which it would formu-
late, as well as make other recommendations. The Board's recommendations
would not bind a municipality, but if the municipality agrees to the
Board's proposals, it would be contractually bound to fulfill those
terms. The Board would be mandated to complete its work and issue
recommendations within six months of receiving a request to convene.
Section 3 of the bill would amend Civil Service L. § 209 to provide an
alternative "for fiscally eligible municipalities" to the current bind-
ing arbitration law. The municipality, with the consent of an impacted
union (subject to Civil Service L. § 209, subd. 4), would have the
opportunity to present an impasse in collective bargaining for a final
determination to the Board. In such case, the Board would operate in the
same manner as an arbitration panel under subdivisions 4 and 6 of Civil
Service L. § 209 and issue a binding ruling which would have to be
rendered within six months of convening.
Section 4 of the bill would extend the current statute for binding
interest arbitration in Civil Service L. § 209 from July 1, 2013 to July
1, 2016.
Section 5 of the bill would establish criteria by which a local govern-
ment (a county, city, town, or village) subject to the "Property Tax
Cap" in General Municipal L. § 3-c could be deemed a fiscally eligible
municipality for which its "ability to pay" would be the lead factor in
an arbitrator's award under Civil Service L. § 209. For any such local
government entering binding interest arbitration, the arbitration panel
must first and foremost, give 70% of its weight and consideration to the
local government's "ability to pay". All other factors and consideration
would receive the remaining 30% weight. In addition, for these local
governments, arbitrators would have to factor in the constraints and
limitations imposed by the "Property Tax Cap".
For purposes of this bill, a local government would be deemed a fiscally
eligible municipality for arbitration purposes if one of the following
two fiscal tests are met: (1) if the local government's average full
value property tax rate is above the 75th percentile for all munici-
palities statewide, as averaged over the most recent five fiscal years,
or, (2) if the local government's five year average general fund balance
equals less than five percent of its budget, and the government has
received certification from the State comptroller verifying total fund
balance availability. If a local government failed to report any of the
data necessary to compute these two tests, it would not be considered
fiscally eligible and could not avail itself of the associated
provisions.
Section 5 of the bill is a severability clause.
Section 6 of the bill provides the effective date.
EXISTING LAW:
There is no permanent body empowered by law to inquire into and make
recommendations called for in this legislation with respect to munici-
palities. In addition, Civil Service Law § 209, subd. 4 provides the
only avenue for resolving impasses between municipalities and certain
uniformed employee organizations.
JUSTIFICATION:
Municipalities, when faced with a fiscal crisis, often have nowhere to
turn except for the extraordinary remedies of bankruptcy or the appoint-
ment of a financial control board - or do nothing. There is no standing
body under State or federal law to which they can turn for help. This
proposal fills that void. Provided that such municipalities are prepared
to make the often hard choices required to maintain solvency and fiscal
viability while still providing the services to which their residents
are entitled, the newly constituted Financial Restructuring Board for
Local Governments would provide those municipalities with a resource so
that their restructuring efforts can be coordinated and effective. The
Board would be available all year and not tied to a legislative session.
Moreover, it would have to make recommendations within six months of
being asked, a significantly shorter time than proceeding in court. As a
public body, it would be subject to New York's Open Meetings Law and
Freedom of Information Law.
One incentive already available for participating municipalities is the
Local Government Performance Efficiency Program which would be amended
to allow financial assistance as approved by the Board. Under this
program, up to $80 million would be available this year. The primary
purpose for such assistance would be to help fund the restructuring
initiatives and recommendations provided by the Board. The Board would
have discretion to determine what other form of assistance to provide
(grant, loan, or combination). Specific loan terms and conditions would
be determined by the Board - including allowable uses for loan proceeds.
In instances when public employers and their represented police and fire
employees are at an impasse in their contractual negotiations, current
law provides the terms by which an interest arbitration panel can make
awards and settle the dispute. While current law requires an arbitrator
to consider a local government's "ability to pay", this concept is
neither defined nor emphasized. These amendments to New York State's
Taylor Law would remedy that shortcoming by letting eligible munici-
palities have their ability to pay given a specific, leading weight in
determining an arbitration award.
Finally, a fiscally eligible municipality and its labor unions subject
to the Taylor Law's provisions authorizing interest arbitration can
jointly ask the Board to act as the arbitration panel to decide contract
disputes at any point that the parties agree that they are at impasse.
The Board, when so acting as an arbitration panel, must render its deci-
sion within six months of being so requested, a substantially shorter
time period than the length of most interest arbitrations.
LEGISLATIVE HISTORY:
This is a new bill. Civil Service L. § 209, subd. 4 was last extended in
2009.
BUDGET IMPLICATIONS:
There will be minimal fiscal impacts associated with this bill. Costs
associated with the operation of the Financial Restructuring Board for
Local Governments would be borne by existing appropriations, and funding
for any new financial assistance to localities would come from appropri-
ations contained in the enacted 2013-14 State Budget.
EFFECTIVE DATE:
The bill would take effect immediately, but sections one, two and three
would take effect on the ninetieth day after the bill would become a law
and sections four and five would be deemed to have been in full force
and effect on and after April 1, 2013; and sections three, four and five
would apply to all agreements and interest arbitration determinations
that expire before, on or after April 1, 2013 except those (a) where the
public employment relations board received a petition to refer the
dispute to a public arbitration panel pursuant to subdivision 4 of Civil
Service L. § 209 before June 14, 2013 or (b) where the public employment
relations board received a declaration of impasse pursuant to subdivi-
sion 4 of Civil Service L. § 209 on or after April 1, 2013 but on or
before June 14, 2013.
