-  This bill is not active in this session.
 
     
  •  Summary 
  •  
  •  Actions 
  •  
  •  Committee Votes 
  •  
  •  Floor Votes 
  •  
  •  Memo 
  •  
  •  Text 
  •  
  •  LFIN 
  •  
  •  Chamber Video/Transcript 

A07476 Summary:

BILL NOA07476
 
SAME ASSAME AS S05445
 
SPONSORMagnarelli
 
COSPNSRThiele, Bronson, Buchwald, McDonald, Galef, Rozic, Jacobson, Otis, D'Urso, Abinanti, Wallace, Colton
 
MLTSPNSR
 
Amd 34, Gen Muni L
 
Relates to audits by the state comptroller of certain organizations directly or indirectly controlled by municipal corporations and certain other government entities.
Go to top    

A07476 Actions:

BILL NOA07476
 
05/06/2019referred to local governments
05/14/2019reported referred to codes
05/21/2019reported referred to ways and means
06/05/2019reported referred to rules
06/14/2019reported
06/14/2019rules report cal.283
06/14/2019ordered to third reading rules cal.283
06/18/2019substituted by s5445
 S05445 AMEND= SKOUFIS
 05/01/2019REFERRED TO LOCAL GOVERNMENT
 05/20/20191ST REPORT CAL.801
 05/21/20192ND REPORT CAL.
 05/22/2019ADVANCED TO THIRD READING
 05/30/2019PASSED SENATE
 05/30/2019DELIVERED TO ASSEMBLY
 05/30/2019referred to ways and means
 06/18/2019substituted for a7476
 06/18/2019ordered to third reading rules cal.283
 06/18/2019passed assembly
 06/18/2019returned to senate
 12/17/2019DELIVERED TO GOVERNOR
 12/20/2019SIGNED CHAP.710
Go to top

A07476 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7476
 
SPONSOR: Magnarelli
  TITLE OF BILL: An act to amend the general municipal law, in relation to audits of governmentally controlled entities   PURPOSE: To authorize the State Comptroller to audit private organizations controlled by local government entities.   SUMMARY OF PROVISIONS: Section 1 of this bill amends section 34 of the General Municipal Law to authorize the State Comptroller to examine the financial affairs of any organization (other than a statewide association of local governments or local government officials) that is under the control of one or more local government entities, including municipal corporations, school districts, fire districts and industrial development agencies. An organ- ization would be deemed "under the control" of a local government entity when one or more individuals who serve as officers or employees of the local government entity (a) select either a majority of the organiza- tion's highest policy-making body or the organization's chief executive officer; (b) constitute a majority of the voting strength that selects either a majority of the organization's highest policy-making body or the organization's chief executive officer; or (c) serve as (i) a major- ity of the organization's highest policy-making body; (ii) the organiza- tion's chief executive officer in his or her official capacity; or (iii) a partner in the organization in his or her official capacity. The phrase "a majority of the organization's highest policy-making body" would mean a majority of the whole number of positions comprising such body, unless such body is allowed to act by a majority of a quorum, in which case the term would mean a majority of the quorum. Subsidiaries and other entities controlled by the organization would also be covered. Section 2 of this bill provides that this act would take effect imme- diately.   PRIOR LEGISLATIVE HISTORY: S. 4827 and A. 3047 (Passed Assembly) of 2017-2018 S. 5690-A and A. 7056-A (Passed Assembly) of 2016 S. 5690 and A. 7056 (Passed Assembly) of 2015 S. 4497 and A. 3633 (Passed Assembly) of 2013-2014 S. 7540 and A. 9689 (Passed Assembly) of 2011-2012 S. 7907 (Passed Senate) and A. 11088 of 2009-2010   JUSTIFICATION: Local development corporations, as well as certain other types of private organizations (e.g., limited liability companies), have been utilized by counties; cities, towns, villages, and other local govern- ments, such as fire districts, as a means to indirectly finance local government operations and projects. Audits performed by the State Comp- troller's Office have found these private entities have been used to avoid constitutional or statutory provisions that apply to projects undertaken directly by a local government entity (e.g. the prohibition on gifts and loans to or in aid of private entities in Article VIII, § 1 of the State Constitution; referendum requirements such as those in the Local Finance Law applicable to certain municipal bond resolutions; the competitive bidding requirements of Article 5-A of the General Municipal Law; and limitations on the issuance of debt such as those contained in Article VIII, § 4 of the State Constitution). Currently, the State Comptroller does not have the authority to audit directly local development corporations and other similar types of private organizations, even when they are controlled by a local govern- ment entity. Instead, the Comptroller may only examine the relationship between the local government entity and the private organization as part of an audit of the local government entity. And even in the context of such an audit, the Comptroller generally may not look beyond the finan- cial or business relationship to examine the overall finances and oper- ations of the private organization itself. Thus, for example, the Comp- troller may be unable to examine a private organization's internal controls to assess whether moneys provided to the organization by a local government entity are properly safeguarded. While local development corporations and other similar types of private organizations are established to be legally separate from the local government entity, as a practical matter, they often function as if they are instrumentalities of local government entities. The bill would recognize this reality and expand the Comptroller's audit authority commensurately to include direct audits of private organizations which are under the control of one or more local government entities. Such audits would provide greater assurance that these organizations are operating in the public interest. The bill's definition of "under the control" is necessary to ensure that the Comptroller's audit authority is based on the substance, rather than the form, of the relationship between the local government entity and the private organization. To avoid creating incentives or disincentives to the use of any particular type of private organization, this bill would apply to every type of organization under the control of a munici- pal corporation or other local government entity that is not already subject to audit by the Comptroller, except a statewide association of local governments or local government officials.   BUDGET IMPLICATIONS: This bill has no significant fiscal impact. The fiscal impact of the bill is limited to organizations actually audited by the Comptroller and confined to the staff time and other resources required to cooperate with the auditors. Any such impact would be offset by potential savings based upon the audit findings.   EFFECTIVE DATE: This bill would take effect immediately.
Go to top

A07476 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          7476
 
                               2019-2020 Regular Sessions
 
                   IN ASSEMBLY
 
                                       May 6, 2019
                                       ___________
 
        Introduced  by M. of A. MAGNARELLI, THIELE, BRONSON, BUCHWALD, McDONALD,
          GALEF, ROZIC -- (at request of the State Comptroller) -- read once and
          referred to the Committee on Local Governments
 
        AN ACT to amend the general municipal law,  in  relation  to  audits  of
          governmentally controlled entities

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Section 34 of the general  municipal  law,  as  amended  by
     2  chapter 233 of the laws of 2006, is amended to read as follows:
     3    §  34.  Powers  and  duties  of examiners. 1. The comptroller and each
     4  examiner of municipal affairs shall  have  power  to  examine  into  the
     5  financial affairs of every such municipal corporation, industrial devel-
     6  opment agency, district, [fire company as defined in section two hundred
     7  four-a  of this chapter,] agency [and], activity [and], any fire company
     8  as defined in section two hundred four-a of this chapter, and any  other
     9  organization,  except  a  statewide  association of local governments or
    10  local government officials, that is controlled by one  or  more  of  any
    11  such  municipal corporations, industrial development agencies, districts
    12  or agencies.  An organization shall be deemed under the control  of  one
    13  or   more   municipal  corporations,  industrial  development  agencies,
    14  districts or agencies when one or more individuals who serve as officers
    15  or employees of any such municipal corporation,  industrial  development
    16  agency,  district  or agency: (a) select either a majority of the organ-
    17  ization's highest policy-making body or the organization's chief  execu-
    18  tive  officer;  (b)  constitute  a  majority of the voting strength that
    19  selects either a majority of the  organization's  highest  policy-making
    20  body  or  the  organization's  chief executive officer; or (c) serve as:
    21  (i) a majority of the organization's highest policy-making body; (ii) in
    22  his or her official capacity, the organization's chief  executive  offi-
    23  cer;  or  (iii) in his or her official capacity, a partner in the organ-
    24  ization. An organization under the control  of  one  or  more  municipal
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD08963-01-9

        A. 7476                             2
 
     1  corporations,  industrial  development  agencies,  districts or agencies
     2  shall also include any other organization that  is  controlled  by  such
     3  organization.
     4    2. In connection with any examination authorized by subdivision one of
     5  this  section,  the  comptroller  and each examiner of municipal affairs
     6  shall have power to administer an oath to any person whose testimony may
     7  be required, and to compel the appearance and attendance of such  person
     8  for  the  purpose  of  any  such  examination and investigation, and the
     9  production of books and papers. In the case of a municipal  corporation,
    10  industrial  development agency, or school district, no such person shall
    11  be compelled to appear or be examined elsewhere than within such munici-
    12  pal corporation, industrial development agency, or school  district.  In
    13  the  case  of  any district other than a school district, no such person
    14  may be compelled to appear or be examined elsewhere than within the town
    15  or one of the towns  in  which  such  district  or  portion  thereof  is
    16  located. In the case of an urban renewal agency, no such person shall be
    17  compelled  to  appear  or  be examined outside the municipal corporation
    18  wherein such agency is established. In the case of a  fire  company,  no
    19  such person shall be compelled to appear or be examined outside the area
    20  served  by the company. In the case of an activity, no such person shall
    21  be compelled to appear outside the area served by the activity.  In  the
    22  case  of  an  organization  under  the  control of one or more municipal
    23  corporations, industrial development agencies, districts or agencies, no
    24  such person shall be compelled to appear or to be examined  outside  the
    25  county in which the organization has its principal headquarters. Willful
    26  false swearing in such examination shall be perjury and shall be punish-
    27  able as such.
    28    3. For purposes of this section, the term "a majority of the organiza-
    29  tion's  highest  policy-making  body" shall mean a majority of the whole
    30  number of positions comprising such body, provided, however, that if the
    31  documents establishing the organization's internal governance allow such
    32  body to act by a majority of a quorum,  then  such  term  shall  mean  a
    33  majority of the quorum.
    34    § 2. This act shall take effect immediately.
Go to top