NEW YORK STATE FINANCIAL EMERGENCY ACT FOR THE CITY OF NEW YORK * Section 1. Short title. 2. Definitions. 2-a. Legislative declaration of financial emergency. 3. General rights and prohibitions. 4. Power of city or covered organization to determine the expenditure of available funds. 5. New York state financial control board; created. 6. Administration of the board. 7. Functions of the board. 7-a. Reports of the city. 8. Development of the financial plan. 9. Establishment and application of the board fund. 9-a. Establishment and application of a general debt service fund. 9-b. Limitations on short-term borrowing. 10. Wage freeze. 10-a. Covenants, authorizations to agree and remedies. 11. Prohibitions; penalties. 12. Indemnification. 13. Termination. 14. Separability. 15. Court preference. * Terminates July 1, 2008 or ... see § 13 * Section 1. Short title. This act shall be known and may be cited as the "New York State Financial Emergency Act for The City of New York". * Terminates July 1, 2008 or ... see § 13 * § 2. Definitions. As used in this act, the following words and terms shall have the following meanings unless the context shall indicate another or different meaning or intent. 1. "Comptroller" means the comptroller of the state of New York. 2. "City" means the city of New York. 3. "Mayor" means the mayor of the city of New York. 4. "City comptroller" means the comptroller of the city. 5. "Covered organization" means any governmental agency, public authority or public benefit corporation which receives or may receive monies directly, indirectly or contingently, (other than monies received for the sale of goods or the rendering of services or the loan of monies to the city) from the city, and in any event includes, without limitation, the board of education of the city of New York, the board of higher education of the city of New York, the New York city transitional finance authority, the health and hospitals corporation, the New York city transit authority, the New York city housing authority, the New York city housing development corporation, city university construction fund, Battery park city authority, New York city convention and exhibition center corporation, Manhattan and Bronx surface transit operating authority, Staten Island rapid transit operating authority, the New York city sports authority and the Brooklyn sports center authority but shall not include (i) any governmental agency, public authority or public benefit corporation specifically exempted from the provisions of this act by order of the board upon application of such agency, authority, or corporation to the board or at the board's own motion upon a finding by the board that such exemption does not materially affect the ability of the city to adopt and maintain
a budget pursuant to the provisions of this act and provided that at the time of such exemption there shall have been and during the period of such exemption there shall be an annual audit by a nationally recognized independent certified public accounting firm or consortium of firms, one of which shall be a nationally recognized firm, of the covered organization's financial statements performed in accordance with generally accepted auditing standards and report by such auditor thereon which includes an opinion that the financial statements so audited have been prepared in accordance with generally accepted accounting principles (subject to the provisions of subdivision two-a of section eight of this act) and such other information as such auditors deem appropriate, (ii) any state public authority as defined in section two hundred one of the civil service law, unless specifically named above, or (iii) any governmental agency, authority, commission or instrumentality created by compact or agreement between the state of New York and another state or states; provided, however, that the board may terminate any exemption granted by order of the board pursuant to this subdivision upon a determination that the circumstances upon which such exemption was granted are no longer applicable. 6. "Board" means the governmental agency created by section five of this act. 7. "Deputy comptroller" means the deputy comptroller for the city of New York created by section forty-one-a of the executive law. 8. "Municipal assistance corporation for the city of New York" means the corporate governmental agency created by section three thousand thirty-three of the public authorities law. 9. "Short-term obligations" means tax anticipation notes, bond anticipation notes, revenue anticipation notes, budget notes and urban renewal notes of the city. 10. "Revenues" mean all taxes, federal and state aid, rents, fees, charges, payments, all proceeds from borrowings and other income and receipts paid or payable to or for the account of the city or any of the covered organizations. 11. "Financial plan" means the financial plan of the city and the covered organizations to be developed pursuant to section eight of this act, as from time to time modified. 12. "Control period" means the period of time from the effective date of this act until the date when (a) there shall no longer be effective or outstanding any guarantee by the United States of America as to payment of principal of or interest on any note or bond issued by the city or a state financing agency, (b) the board shall determine, based on annual audit reports furnished in accordance with section seven-a, that for each of the three immediately preceding fiscal years, the city has adopted and adhered to budgets covering all expenditures other than capital items, the results of which did not show a deficit when reported in accordance with generally accepted accounting principles subject to the provisions of subdivision two-a of section eight of this act and (c) the comptroller of the state and the comptroller of the city jointly shall certify that securities sold by or for the benefit of the city during the fiscal year immediately preceding such date and the then current fiscal year in the general public market satisfied the capital and seasonal financing requirements of the
city during such period and that there is a substantial likelihood that such securities can be sold in the general public market from such date through the end of the next succeeding fiscal year in amounts which will satisfy substantially all of the capital and seasonal financing requirements of the city during such period in accordance with the financial plan then in effect, provided that for these purposes sales to any fund whose governing body includes any designated representative of the state or city or to any financial institution which participates in a private placement for the purchase of securities for the benefit of the city during its nineteen hundred seventy-nine fiscal year shall not be deemed sales in the general public market, unless in the case of sales to such a financial institution such comptrollers jointly certify at the time of each such sale that a sale could have been made in such amount and on reasonably comparable terms in the general public market. After termination of the control period in accordance with the foregoing provisions and until there shall no longer be outstanding any notes or bonds issued by the city or a state financing agency which are entitled to the benefits of the pledge and agreement authorized by section ten-a hereof, the board shall reimpose a control period upon a determination at any time that any of the following events has occurred or that there is a substantial likelihood and imminence of such occurrence: (i) the city shall have failed to pay the principal of or interest on any of its bonds or notes when due or payable (other than notes held by the municipal assistance corporation for the city of New York to the extent that such corporation has evidenced its intention not to present such notes for payment during the fiscal year in which the determination is made provided that such notes were held by such corporation on June thirtieth, nineteen hundred seventy-eight or were issued in exchange for or in refunding or renewal of notes held by such corporation on such date), (ii) the city shall have incurred a deficit of more than one hundred million dollars during its fiscal year in the results of operations covered by a budget covering all expenditures other than capital items as reported in accordance with generally accepted accounting principles, subject to the provisions of subdivision two-a of section eight of this act, (iii) the city shall have issued notes in violation of section nine-b of this act as amended from time to time, (iv) the city shall have otherwise violated any provision of this act and such violation substantially impairs the ability of the city to pay principal of or interest on its bonds or notes when due and payable or its ability to adopt or adhere to a budget covering all expenditures other than capital items balanced in accordance with this act or (v) the comptrollers' joint certification at any time, at the request of the board or on the comptrollers' joint initiative, which joint certification shall be made from time to time as promptly as circumstances warrant and reported to the board, that on the basis of facts existing at such time they could not make the joint certification described by clause (c) of the preceding sentence. The board shall terminate any such reimposed control period when it determines that none of the conditions which would permit the board to reimpose a control period exist. After termination of a control period the board shall annually consider items (i) through (v) above and determine whether, in
its judgment, any of the events described in such items have occurred and the board shall publish each such determination. Each such joint certification made by the comptrollers hereunder shall be based on their separate written determinations which shall take into account a report and opinion of a nationally recognized independent expert in the marketing of municipal securities selected by the board as well as any other information which may be available to each comptroller and each such separate written determination by the comptrollers shall have annexed thereto the report and opinion of such expert and any other information taken into account and shall be made public when delivered to the board. Notwithstanding any part of the foregoing to the contrary, in no event shall any control period continue beyond the earlier of (a) July first, two thousand eight or (b) the date (i) when all bonds and notes containing the pledge and agreement authorized by section ten-a of this act are refunded, redeemed, discharged or otherwise defeased or (ii) when there shall no longer be outstanding any guarantee by the United States of America or any agency or instrumentality thereof as to payment of principal of or interest on any note or bond issued by the city or a state financing agency, whichever of (i) or (ii) shall occur later. 13. "Debt service repayment account" means the special account established pursuant to subdivision four of section nine of this act. 14. "Fund" means the general debt service fund established pursuant to section nine-a of this act. 15. "Board fund" means the board fund established pursuant to section nine of this act. 16. "TAN debt service account" means the tax anticipation note debt service account established within the fund pursuant to section nine-a of this act. 17. "RAN debt service account" means the revenue anticipation note debt service account established within the fund pursuant to section nine-a of this act. 18. "Available funds" means at any date of computation the monies held by the city or a covered organization which (i) are not required (a) to be applied to the fund, the TAN debt service account, the RAN debt service account or otherwise to meet the debt service requirements of the city and the covered organizations on their bonds and notes (other than bonds and notes of covered organizations payable from revenues not included in the fund) as they become due, or (b) to pay other liabilities of the city and the covered organizations having statutory or contractual priority over remaining liabilities of the city and the covered organizations, and (ii) therefore, may be applied to the payment of other obligations on an allocated basis as specified by the city for expenditures in accordance with a financial plan. 19. "Available tax levy" with respect to an issue of tax anticipation notes means at any date of computation the total amount of city real estate taxes or assessments projected, consistent with the financial plan then in effect, to be received in cash on or before the fifth day preceding the maturity date of such tax anticipation note issue, less amounts required during the period between the date of computation and the fifth day preceding such maturity date to be paid into the general debt service fund or otherwise required to pay interest
payable on other outstanding city bonds and notes, principal (including payments into sinking funds) coming due on outstanding city bonds and principal to be paid from sources other than the proceeds of bonds or renewal notes on other outstanding city notes (exclusive of revenue anticipation notes or renewals thereof issued less than two years prior to the date of computation) but not including payments from sinking funds required by the terms of certain city bonds. For the purposes of this subdivision such amounts required shall not include principal of or interest on any notes of the city held by the municipal assistance corporation for the city of New York to the extent that such corporation has evidenced its intention not to present such notes for payment of principal or interest during the fiscal year in which the computation is made provided that such notes were held by such corporation on June thirtieth, nineteen hundred seventy-eight or were issued in exchange for or in refunding or renewal of notes held by such corporation on such date. 20. "State financing agency" means the municipal assistance corporation for the city of New York or its successor. * Terminates July 1, 2008 or ... see § 13 * § 2-a. Legislative declaration of financial emergency. The legislature hereby finds and declares that a state of financial emergency continues to exist within the city. The legislature further finds and declares that the maintenance by the city of a balanced budget in accordance with generally accepted accounting principles and the city's borrowing practices are and will continue to be a matter of overriding state concern, and that it is also appropriate and desirable for the legislature to exercise its duty under section twelve of article eight of the state constitution to restrict the powers of the city to prevent abuses in taxation and assessments and in contracting of indebtedness by the city. * Terminates July 1, 2008 or ... see § 13 * § 3. General rights and prohibitions. 1. Neither the city nor any covered organization shall borrow or expend any monies, or in any way, directly or indirectly, expressly or implicitly, engage its credit during any control period except in compliance with the provisions of this act. 2. Nothing contained in this act shall limit the right of the city or any covered organization to comply with the provisions of any existing contract with or for the benefit of the holders of any bonds or notes of the city or such covered organization or any public authority or public benefit corporation. 3. Nothing contained in this act shall be construed to impair the right of employees to organize or to bargain collectively. * Terminates July 1, 2008 or ... see § 13 * § 4. Power of city or covered organization to determine the expenditure of available funds. Nothing contained in this act shall be construed to limit the power of the city or a covered organization to determine, from time to time, within available funds for the city or for such covered organization, the purposes for which expenditures are to be made by the city or such covered organization and the amounts of such expenditures, consistent with the aggregate expenditures then permitted under the financial plan for the city or such covered organization. * Terminates July 1, 2008 or ... see § 13
* § 5. New York state financial control board; created. There is hereby created the New York state financial control board. The board shall be a governmental agency and instrumentality of the state and it shall have such powers and functions as are set forth in this act. * Terminates July 1, 2008 or ... see § 13 * § 6. Administration of the board. 1. The membership of the board shall be the governor, the state comptroller (pursuant to his authority to supervise the accounts of any political subdivision of the state), the mayor, the city comptroller and three members appointed by the governor with the advice and consent of the senate. At least two of the appointed members shall be residents of the city or have their principal place of business in the city. Such appointed members shall serve at the pleasure of the governor. The governor shall be the chairman of the board and the governor or his representative shall preside over all meetings of the board. The board shall act by majority vote of the entire board. The board shall maintain a record of its proceedings in such form as it may determine, but such record shall indicate attendance and all votes cast by each member. Every member of the board, who is otherwise an elected official of the state or city, shall be entitled to designate a representative to attend, in his place, meetings of the board and to vote or otherwise act in his behalf. Written notice of such designation shall be furnished to the board by the designating member prior to any meeting attended by his representative. Any such representative shall serve at the pleasure of the designating member. No such representative shall be authorized to delegate any of his duties or functions to any other person. The lieutenant governor, temporary president of the senate, the minority leader of the senate, speaker and minority leader of the assembly, the president of the council of the city of New York, the city board of estimate acting by majority vote, and the vice-chairman and the minority leader of the council of the city of New York, shall each be entitled to appoint a representative to the board. Each such representative shall be entitled to receive notice of and to attend all meetings of the board but shall not be entitled to vote. No representative shall be an employee or officer of the federal, state or city governments. Each representative shall serve at the pleasure of the appointing official or body, shall be eligible for reappointment, and shall hold office until his successor has been appointed. 2. Notwithstanding any inconsistent provisions of law, general, special or local, no officer or employee of the state, or political subdivision of the state, any governmental entity operating any public school or college or other public agency or instrumentality or unit of government which exercises governmental powers under the laws of the state, shall forfeit his office or employment by reason of his acceptance or appointment as a member, representative, officer, employee or agent of the board nor shall service as such member, representative, officer, employee or agent of the board be deemed incompatible or in conflict with such office or employment. 3. The members of the board appointed by the governor and all representatives designated by members of the board shall serve without salary or per diem allowance but shall be entitled to
reimbursement for actual and necessary expenses incurred in the performance of official duties under this act, provided however that such members and representatives are not, at the time such expenses are incurred, public employees otherwise entitled to such reimbursement. 4. The governor and the mayor, jointly, shall appoint an executive director of the board who shall serve at the pleasure of the board and may be removed by the board. The board may delegate to the executive director or to one or more of its other officers, employees or agents, such powers and duties as the board may deem proper, except any duties inconsistent with the duties and functions prescribed by any other office or position any such person may hold. * Terminates July 1, 2008 or ... see § 13 * § 7. Functions of the board. 1. In carrying out the purposes of this act, the board shall perform the following functions: a. In accordance with the provisions of section eight of this act, the board shall (i) consult with the city and the covered organizations in the preparation of the financial plan, and certify to the city the revenue estimates approved therein, (ii) prescribe the form of the financial plan and the supporting information required in connection therewith, and (iii) exercise the rights of approval, disapproval and modification with respect to the financial plan, including but not limited to the revenue estimates contained therein. b. The board, to the extent it deems it necessary or appropriate in order to accomplish the purposes of this act, shall establish and adopt procedures with respect to the (i) proper maintenance of the board fund, (ii) the deposit and investment of revenues in such fund and (iii) disbursement of monies from such fund. c. The board shall, from time to time and to the extent it deems necessary or appropriate in order to accomplish the purposes of this act, (i) review the operations, management, efficiency and productivity of such city operations and of such covered organizations or portions thereof as the board may determine, and make reports thereon; (ii) audit compliance with the financial plan in such areas as the board may determine; (iii) recommend to the city and the covered organizations such measures relating to their operations, management, efficiency and productivity as it deems appropriate to reduce costs and improve services so as to advance the purposes of this act; and (iv) obtain information of the financial condition and needs of the city and the covered organizations. Nothing herein shall diminish the powers of the comptroller otherwise provided by law and the board may request the assistance of the comptroller in performing the above functions. d. The board (i) shall receive from the city and review the reports to be prepared by or on behalf of the city pursuant to section seven-a; (ii) shall receive from the city and the covered organizations and from the deputy comptroller, and shall review such financial statements and projections, budgetary data and information, and management reports and materials as the board deems necessary or desirable to accomplish the purposes of this act; and (iii) shall inspect, copy and audit such books and records of the city and the covered organizations as the board deems necessary or desirable to accomplish the purposes of this act.
e. All contracts entered into by the city or any covered organization must be consistent with the provisions of this act and must comply with the requirements of the financial plan as approved by the board. With respect to all contracts or other obligations to be entered into by the city or any covered organization after October fifteenth, nineteen hundred seventy-five, requiring the payment of funds or the incurring of costs by the city or any covered organization: (i) Within twenty days from the effective date of this act the mayor shall present to the board proposed regulations respecting the categories and types of contracts and other obligations required to be reviewed by the board pursuant to this subdivision e. Within thirty days from the effective date of this act, the board shall approve or modify and approve such proposed regulations or promulgate its own in the event that such proposed regulations are not submitted to it within the twenty days as provided for herein. Such regulations may thereafter be modified by the board from time to time on not less than thirty days notice to the mayor and the mayor may from time to time propose modifications to the board. Unless expressly disapproved or modified by the board within thirty days from the date of submission by the mayor, any such proposed regulations or modifications shall be deemed approved by the board; (ii) Prior to entering into any contract or other obligations subject to review of the board under its regulations, the city or any covered organization shall submit a copy of such contract or other obligation to the board accompanied by an analysis of the projected costs of such contract or other obligation and a certification that performance thereof will be in accordance with the financial plan, all in such form and with such additional information as the board may prescribe. The board shall promptly review the terms of such contract or other obligation and the supporting information in order to determine compliance with the financial plan; (iii) During a control period the board shall, by order, disapprove any contract or other obligation reviewed by it only upon a determination that, in its judgment, the performance of such contract or other obligation would be inconsistent with the financial plan and the city or covered organization shall not enter into such contract or other obligation; (iv) During a control period if the board approves the terms of a reviewed contract or other obligation, the city or covered organization may enter into such contract or other obligation upon the terms submitted to the board. Failure of the board to notify the city or covered organization within thirty days (or such additional time not exceeding thirty days as the board shall have notified the city or covered organization, that it requires to complete its review and analysis) after submission to it of a contract or other obligation that such contract or other obligation has been disapproved shall be deemed to constitute board approval thereof. f. Upon submission thereof by the city, the board shall review the terms of each proposed long-term and short-term borrowing by the city and any covered organization to be affected during a control period but after October fifteenth, nineteen hundred seventy-five, and no such borrowing shall be made unless approved by the board. Each such proposed borrowing by a covered
organization shall be submitted to the city by the covered organization before it may be considered by the board. Not more than thirty days after any such submission by a covered organization the city shall transmit any such proposed terms of borrowing to the board together with the certification of the city as to whether such proposed terms of borrowing are in accordance with the financial plan and are consistent with the objectives and purposes of this act. Any such submission to the city shall be accompanied by a certification of the covered organization that the terms thereof are in accordance with the financial plan and are consistent with the objectives or purposes of this act. The transmittal by the city to the board shall include a recommendation by the city for the approval or disapproval of such proposed terms of borrowing pursuant to the terms of this paragraph. In the event the city does not make such transmittal within such thirty day period, such covered organization may submit such proposed borrowing directly to the board. The board shall disapprove any borrowing if it determines that such borrowing is inconsistent with the financial plan or the objectives or purposes of this act. The board shall consult and coordinate with the municipal assistance corporation for the city of New York with respect to borrowings of the city and any covered organization and shall receive reports from the muncipal assistance corporation for the city of New York on its review of borrowings by the city. No covered organizations shall be prohibited from issuing bonds or notes to pay outstanding bonds or notes. g. The board and the comptroller shall receive quarterly reports from the city comptroller setting forth the debt service requirements on all bonds and notes of the city and the covered organizations for the following quarter, which reports shall be in such form and contain such information as the board shall determine. Such reports shall be issued no later than sixty days prior to the start of the quarter to which they pertain and shall be updated immediately upon each issuance of bonds or notes after the date of such report to reflect any change in debt service requirements as a result of such issuance. The board also shall receive from the city monthly and quarterly financial reports, which reports shall be in such form and contain such information as the board shall determine and shall be made available by the city to the public. In order to avoid duplicative reports and reporting requirements, to the extent that the city is required to submit monthly or quarterly financial reports to the department of the treasury pursuant to any agreement or arrangement made in connection with federal guarantees of notes or bonds issued by the city or a state financing agency, copies of such reports shall be submitted to the board in satisfaction of the monthly and quarterly reporting requirements set forth above, together with such additional information as the board may require. Each monthly and quarterly report herein required to be submitted to the board must indicate any variance between actual and budgeted revenues, expenses or cash for the period covered by such report. h. The board shall issue, to the appropriate officials of the city and the covered organizations, such orders as it deems necessary to accomplish the purposes of this act, including but not limited to timely and satisfactory implementation of an approved financial plan. Any order so issued shall be binding
upon the official to whom it was issued and failure to comply with such order shall subject the official to the penalties described in section eleven of this act. i. The board shall coordinate with the municipal assistance corporation for the city of New York and the deputy comptroller with respect to the performance of its review and monitoring of the revenues and expenditures of the city and the covered organizations. 2. In the event of any default by the city on its outstanding bonds or notes, and so long as such default has not been cured, the board may, any provisions of this act notwithstanding, take any action that it is authorized to take pursuant to title six-A of article two of the local finance law, and may direct the city to take any action that the city is authorized to take under such law. * 3. (a) Notwithstanding any provision of the New York City Collective Bargaining Law, codified as chapter fifty-four of the New York city administrative code, or any general or special law to the contrary, any report or recommendation of an impasse panel constituted pursuant to such chapter which provides for an increase in wages or fringe benefits of any employee of the city or covered organization, in addition to considering any standard or factor required to be considered by applicable law, including the standards enumerated in section 1173-7.0(c)(3)(b) of such chapter, shall also take into consideration and accord substantial weight to the financial ability of the city and or covered organization to pay the cost of such increase in wages or fringe benefits. (b) The board of collective bargaining constituted pursuant to such chapter, when reviewing such report or recommendation before proceeding to other issues, shall make a threshold determination as to whether such report or recommendation for an increase in wages or fringe benefits is within the city's and or covered organization's financial ability to pay. If the threshold determination is in the negative, the matter shall be remitted to the impasse panel for further consideration. If the threshold determination is in the affirmative, the further review of the report or recommendation with respect to other issues, if any, shall proceed as provided by law. Unless the parties stipulate otherwise, the threshold determination shall be made within thirty days after submission of the report or recommendation to the board of collective bargaining. (c) Any determination pursuant to article eight of the labor law or any agreement or stipulation entered into in lieu thereof which provides for an increase in wages or fringe benefits of any employee of the city or covered organization shall, in addition to considering any standard or factor required to be considered by applicable law, also take into consideration and accord substantial weight to the financial ability of the city and or covered organization to pay the cost of such increase. (d) Any report or recommendation of a fact finding or similar type panel or any interest arbitration award which provides for an increase in wages or fringe benefits of any employee of the city or covered organization not subject to the provisions of the New York City Collective Bargaining Law, codified as chapter fifty-four of the New York city administrative code, shall, in addition to considering any standard or factor required to be considered by applicable law, also take into consideration and
accord substantial weight to the financial ability of the city and or covered organization to pay the cost of such increase. (e) Any party to a proceeding before the board of collective bargaining as described in paragraph (b) or other body as described in paragraphs (c) or (d) hereof may commence a special proceeding in the appellate division, first department, supreme court, state of New York, to review the threshold determination as to the city and or covered organization's financial ability to pay. Such proceeding shall be commenced not later than thirty days after the final determination has been made by the board of collective bargaining in the case of paragraph (b) or other body in the case of paragraphs (c) or (d). Such proceeding shall have preference over all other causes in such appellate division, other than causes relating to the election law. (f) The court shall make a de novo review of the record solely for the purpose of determining whether an award of an increase in wages or fringe benefits was within the city's and or covered organization's financial ability to pay. The court's findings as to such issue shall be based upon a preponderance of all the evidence set forth in the record. Unless the parties stipulate otherwise, arguments or submission shall be had within fifteen days after commencement of the special proceeding and the court shall render its decision within fifteen days thereafter. All questions, other than the question relating to the threshold determination, shall be reviewed by the appellate division in the same proceeding in the manner provided by articles seventy-five or seventy-eight of the civil practice law and rules as may be appropriate, notwithstanding that the issue would otherwise have been cognizable in the first instance before a special or trial term of the supreme court. If an appeal shall otherwise lie from such determination of the appellate division to the court of appeals, notice of such appeal shall be filed within thirty days after the entry of the final order or judgment of the appellate division if such appeal is of right or within ten days after entry of an order granting leave to appeal and such appeal shall have preference over all other appeals other than appeals relating to the election law. (g) At any stage of any proceeding under paragraphs (a), (b), (c), (d) and (e) hereof or any appeal from an order or judgment therefrom, the board may intervene as a party on the issue of the financial ability of the city and or covered organization to pay the cost of an increase in wages or fringe benefits. (h) For the purposes of this subdivision, financial ability to pay shall mean the financial ability of the city and or covered organization to pay the cost of any increase in wages or fringe benefits without requiring an increase in the level of city taxes existing at the time of the commencement of a proceeding under paragraph (a), (c) or (d) hereof. (i) The provisions of this subdivision shall terminate on June thirtieth, nineteen hundred eighty-six. * NB Expires June 30, 1986 4. During a control period, except upon approval by the board in accordance with the provisions of paragraph e or f of subdivision one of this section, as the board shall determine, neither the city nor a covered organization shall enter any agreement or other arrangement, whether or not it creates a debt of the city or a covered organization, pursuant to which the revenues or credit of the city may be directly or indirectly
pledged, encumbered, committed or promised, contingently or otherwise, for the payment of obligations of a public benefit corporation. Nothing in this subdivision shall limit the right of the city to comply with the provisions of any existing agreement or other arrangement in respect of the obligations of a public benefit corporation. 5. The board may employ such consultants as it may deem necessary to assist it in performing its functions required under this act. 6. The board shall have the authority to make and execute agreements and all other instruments which the board deems necessary for the exercise of its powers and functions including, in connection with any agreement by the federal government or any agency or instrumentality thereof to guarantee the payment of the principal of or interest on bonds or notes issued by the city or by a state financing agency, to enter into one or more agreements containing terms and conditions required by the secretary of the treasury pursuant to the New York City Loan Guarantee Act of l978, Public Law 95-339 with the federal government or any agency or instrumentality thereof with respect to such guarantee or any matters related thereto and to comply with such terms and conditions. 7. The board may appoint qualified individuals to participate as members of such audit, productivity or similar committees or councils as the city may from time to time establish in consultation with the board. Such individuals, however, shall not be deemed to be officers, employees or agents of the board. The board shall review and report on, not less than annually, the development and implementation of methods for enhancing the productivity of the city's labor force proposed by any such committee or council. * Terminates July 1, 2008 or ... see § 13 * § 7-a. Reports of the city. 1. The city shall take such action as may be necessary to enable a nationally recognized independent certified public accounting firm or consortium of firms, one of which at least is a nationally recognized independent certified public accounting firm, to perform an annual audit in accordance with generally accepted auditing standards and to furnish to the board the report on such audit prepared by such firm or consortium of firms, which report shall include an opinion as to whether the city's financial statements have been prepared in accordance with generally accepted accounting principles subject to the provisions of subdivision two-a of section eight of this act and shall state whether the audit of such financial statements was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as were considered necessary under the circumstances. Such report shall note the nature and extent of variations, if any, from generally accepted accounting principles reflected in the city's financial statements. The city shall make available for inspection and copying all books, records, work papers and other data and material as required by such auditors, and the city shall make its officers and employees available to, and shall cooperate with such auditors so as to permit such annual audit to be completed and the report issued to the city and to the board within four months after the close of the city's fiscal year.
2. Not later than January fifteenth, nineteen hundred eighty-one, the city shall issue a report to the board on its program designed to enable the city (i) during its fiscal years ending June thirtieth, nineteen hundred eighty-three and June thirtieth, nineteen hundred eighty-four, to minimize its dependence upon the state financing agency to the extent that it shall be prudent to satisfy the city's financing needs by the sale of obligations of the city or its agencies in the public markets, and (ii) thereafter to satisfy its financing needs entirely by the sale of such obligations. The report shall describe such actions that the city proposes to take, in addition to those actions required by law, to implement the program and shall contain such further information as the board may reasonably specify. After the issuance of such initial report, the city shall report to the board at least semi-annually through June thirtieth, nineteen hundred eighty-two and thereafter at least quarterly on the actions it has taken to implement the program and on the results thereof. The city may revise the program from time to time but shall promptly describe any revisions and the reasons therefor to the board. The city may comply with the requirements of this subdivision by submitting the necessary information as supplementary material to a financial plan or financial plan modification in accordance with the standards and procedures of section eight of this act. The provisions of this subdivision shall terminate on June thirtieth, nineteen hundred eighty-five. * Terminates July 1, 2008 or ... see § 13 * § 8. Development of the financial plan. 1. Pursuant to the procedures contained in subdivision three of this section, each year the city shall develop, and may from time to time modify, with the approval of the board during a control period, a four year financial plan covering the city and the covered organizations. Each such financial plan and financial plan modification shall comply with the requirements of subdivision four of this section and shall, except as otherwise provided pursuant to subdivision two-a of this section, conform to the following standards: a. For its fiscal years ending June thirtieth, nineteen hundred seventy-nine through June thirtieth, nineteen hundred eighty-one, the city's budget covering all expenditures other than capital items shall be prepared and balanced so that the results thereof would not show a deficit when reported in accordance with the accounting principles set forth in the state comptroller's uniform system of accounts for municipalities, as the same may be modified by the comptroller, in consultation with the city comptroller, for application to the city; subject to the provision of subdivision four of section three thousand thirty-eight of the public authorities law with respect to contributions by the city or other public employer to any retirement system or pension fund and subject to the provision of paragraph (c) of subdivision five of section three thousand thirty-eight of the public authorities law with respect to expense items included in the capital budget of the city. For the fiscal year ending June thirtieth, nineteen hundred eighty-two, and for each fiscal year thereafter, the city's budget covering all expenditures other than capital items shall be prepared and balanced so that the results thereof would not show a deficit when reported in accordance with generally
accepted accounting principles and would permit comparison of the budget with the report of actual financial results prepared in accordance with generally accepted accounting principles. With respect to financial plans that include the fiscal years ending June thirtieth, nineteen hundred seventy-nine through June thirtieth, nineteen hundred eighty-one, the city's budget covering all expenditures other than capital items shall be prepared in accordance with generally accepted accounting principles and there shall be substantial progress in each such fiscal year towards achieving a city budget covering all expenditures other than capital items the results of which would not show a deficit when reported in accordance with generally accepted accounting principles. The city shall eliminate expense items from its capital budget not later than the commencement of the fiscal year ending June thirtieth, nineteen hundred eighty-two. For the fiscal year ending June thirtieth, nineteen hundred eighty-nine, and for each fiscal year thereafter, the budgets covering all expenditures other than capital items of each of the covered organizations shall be prepared and balanced so that the results thereof would not show a deficit when reported in accordance with generally accepted accounting principles; and for each fiscal year prior thereto, there shall be substantial progress towards such goal. Notwithstanding the foregoing and the provisions of any general or special state law or local law to the contrary, including but not limited to the New York city charter, all costs that would be capital costs in accordance with generally accepted accounting principles, but for the application of governmental accounting standards board statement number forty-nine, shall be deemed to be capital costs for purposes of this chapter and any other provision of state or local law, including but not limited to the New York city charter, relevant to the treatment of such costs. b. The limitations on its outstanding short-term obligations required by subdivision nine of section three thousand thirty-eight of the public authorities law and by section nine-b of this act shall be observed at all times, as each is amended from time to time. c. Provision shall be made for the payment in full of the debt service on all bonds and notes of the city and the covered organizations (other than notes held by the municipal assistance corporation for the city of New York to the extent that such corporation has evidenced its intention not to present such notes for payment during the fiscal year in which the determination is made provided that such notes were held by such corporation on June thirtieth, nineteen hundred seventy-eight or were issued in exchange for or in refunding or renewal of notes held by such corporation on such date), for the adequate funding of programs of the city and the covered organizations which are mandated by state or federal law and for which obligations are going to be incurred during the fiscal year and for payment of a guarantee fee or any other amounts required by the United States of America or any agency or instrumentality thereof in connection with the guarantee of the payment of the principal of or interest on bonds or notes issued by the city. d. All projections of revenues and expenditures contained in a financial plan shall be based on reasonable and appropriate assumptions and methods of estimation. All cash flow projections shall be based upon reasonable and appropriate assumptions as to
sources and uses of cash (including but not limited to the timing thereof), and shall provide for operations of the city and covered organizations to be conducted within the cash resources so projected. e. The city shall provide a general reserve for each fiscal year to cover potential reductions in its projected revenues or increases in its projected expenditures during each such fiscal year. The amount provided for such general reserve shall be estimated by the city in accordance with paragraph d of this subdivision, but in no event shall it be less than one hundred million dollars at the beginning of any fiscal year. f. For financial plans beginning with the fiscal year ending June thirtieth, nineteen hundred eighty-three or any succeeding fiscal year, the first fiscal year included in any financial plan shall make provision for the repayment of any deficit incurred by the city during the preceding fiscal year. 2. In developing the financial plan the city shall seek to achieve a stabilized work force for the city and, to the extent a reduction in the work force is required, primary recourse shall be had to the attrition process to accomplish such reduction. 2-a. The city and the board shall confer concerning the projected effect on the budgets of the city and the covered organizations of any change in generally accepted accounting principles, or change in the application of generally accepted accounting principles to the city and the covered organizations, made after the effective date of this act. If the board determines that immediate compliance with such change will have a material effect on such budgets over a time period insufficient to accommodate the effect without a substantial adverse impact on the delivery of essential services, the board may authorize and approve a method of phasing the requirements of such change into such budgets over such reasonably expeditious time period as the board deems appropriate. 3. The financial plan shall be developed and, during a control period, shall be approved, and may from time to time be modified, in accordance with the following procedures: a. The city shall, by June first, nineteen hundred seventy-eight, prepare and submit a financial plan to the board covering the four year period which begins with the fiscal year ending June thirtieth, nineteen hundred seventy-nine. Thereafter, at least fifty days prior to the beginning of each fiscal year or on such other date as the board may approve upon the request of the city, the city shall prepare and submit a financial plan to the board covering the four year period beginning with such fiscal year. On such dates the mayor shall also submit to the board the city's executive expense, revenue and capital budgets for the ensuing fiscal year and a certificate of the mayor stating that such budgets are consistent with the financial plan submitted therewith, that projections contained in the budgets and financial plan are based upon reasonable and appropriate assumptions and methods of estimation, and that operation within the budgets is feasible. b. (i) During a control period the board shall promptly review each financial plan and financial plan modification submitted by the city. Not more than forty-five days after submission of a financial plan or more than thirty days after submission of a financial plan modification the board shall determine whether
the financial plan or financial plan modification is complete and complies with the standards set forth in subdivision one of this section and shall approve or disapprove the financial plan or financial plan modification in accordance with the provisions of this section. If the board determines that the financial plan or financial plan modification is complete and complies with the standards set forth in subdivision one of this section, the board shall approve the financial plan or financial plan modification. Upon making such determination the board shall make a certification to the city setting forth revenue estimates approved by the board in accordance with such determination. (ii) At all times other than during a control period the board shall promptly review each financial plan and financial plan modification submitted by the city. If the board determines after such review that the financial plan or financial plan modification submitted by the city is not in accordance with the standards set forth in subdivision one of this section, the board shall promptly so notify the city and may take such other action under this act as it deems appropriate. c. The board shall disapprove a financial plan or financial plan modification if during a control period it determines that the financial plan or financial plan modification is incomplete or fails to comply with the provisions of subdivision one of this section. In disapproving a financial plan or a financial plan modification the board may order that one or more of the following actions be taken: (i) expenditures or reserves to assure availability of amounts required for debt service requirements on all bonds and notes of the city and the covered organizations or expenditures required for adequate funding of programs of the city and the covered organizations mandated by state or federal law and for which obligations are going to be incurred during the fiscal year, be increased to the levels required to provide for their payment in full; (ii) the revenue projections (or any item thereof) during any period be adjusted to comply with the standards set forth in subdivision one of this section; and (iii) the aggregate expenditures projected for any period be reduced to conform to revenue estimates certified by the board in order to comply with the standards set forth in subdivision one of this section. d. During a control period in the event that the city shall, for any reason, fail to submit a financial plan prior to the beginning of a fiscal year, as required by paragraph a of this subdivision, or in the event that the board has not, for any reason permitted under this act, approved a financial plan submitted by the city prior to the beginning of a fiscal year, the board shall formulate and adopt a financial plan to be effective until the board approves a financial plan submitted by the city. Any financial p