Relates to prompt payments to counties by the state; provides if prompt payment is not provided an interest payment shall be made to the contractor or county government.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1400
SPONSOR: Blankenbush TITLE OF BILL:
An act to amend the state finance law, in relation to prompt payment to
counties from the state
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends subdivision 1 of section 179-f of the state finance law
to add county governments to the states prompt payment law.
Section 2 provides the effective date.
JUSTIFICATION:
As counties across the State face increasing budget challenges in
already difficult economic times, it is imperative that the legislature
take action to ensure reimbursements for State mandated programs are
timely. At times, fiscal challenges at the State level lead to the delay
in payment or withholding of reimbursement funds from the counties as a
way to mitigate shortfalls for the State.
State law requires counties to pay for mandated services up front while
the State delays payment for monies owed to counties. Some counties have
turned to expensive borrowing to balance their books because of delays
in State funds. St. Lawrence County, which recently announced it was
borrowing up to $8.5 million-with interest charges that could run into
the thousands of dollars-to help cover its expenses for the rest of the
year. Franklin County is also considering short-term borrowing, even
though it is owed $3.8 million by the state. Clinton County is owed $6.1
million.
If counties are late with payments they owe to Albany, they have to pay
interest. It's only fair that the state should have to meet its obli-
gations, or face consequences, so that local taxpayers aren't the ones
left holding the bag.
Prompted by an outcry from private businesses and non-profit agencies
that do business with the state, Albany was forced to enact a Prompt
Payment Law in 1995 that required interest payments after a set dead-
line. Current law does not cover payments owed to counties and local
governments.
The state also pays interest on income tax refunds that are delayed more
than 45 days after the April 15 due date. Interest rates are set by the
Commissioner of Taxation and Finance, and currently range from 2 percent
to 12 percent.
PRIOR LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
None to the state.
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become law.
