N.Y. NYS Financial Emergency Act for the city of NY 868/75 § 8: Development of the financial plan

* § 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:

(i) 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 act 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; and (ii) the

determination as to the existence of a deficit pursuant to this act and

any other provision of state or local law, including but not limited to

the New York city charter, shall be made without regard to changes in

restricted fund balances, as defined by the governmental accounting

standards board, where restrictions in relation to such fund balances

are imposed by state or federal law or regulation, or otherwise by

private or governmental parties other than the city of New York, and

without regard to funds held in the health stabilization fund, the

school crossing guards health insurance fund, any revenue stabilization

fund established pursuant to section fifteen hundred twenty-eight of the

New York city charter and the management benefits fund established by

the city of New York. Deposits into any such revenue stabilization fund

shall be deemed to be expenses of such city in the fiscal year in which

such deposits are made, and withdrawals from such fund shall be deemed

to be revenues of such city in the year in which such withdrawals are

made; provided however, that surpluses of such city, whether accumulated

from fiscal years ending prior to the effective date of the chapter of

the laws of two thousand twenty that amended this paragraph or existing

at the close of any fiscal year ending after such effective date, shall

be deposited into such revenue stabilization fund as soon as

practicable, and such deposits shall not be deemed expenses of the city

in the fiscal year in which such deposits are made.

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 plan so formulated by the board shall comply

with the standards set forth in subdivision one of this section. The

budgets and operations of the city and the covered organizations at all

times shall be in conformance and compliance with the financial plan

then in effect.

e. After the initial adoption by the city, or the approval by the

board during a control period, of a financial plan, projections of

revenues and expenditures and other estimates contained in the financial

plan shall be reexamined by the board at least quarterly in consultation

with the city and the covered organizations, and during a control period

the city shall prepare and submit to the board financial plan

modifications at such times, in such detail and within such time periods

as the board may require in order to modify the financial plan to

conform to the standards set forth in subdivision one of this section.

During a control period in the event the board determines that (i)

revenue estimates (or any item thereof) must be adjusted to ensure

compliance with the standards set forth in subdivision one of this

section, or (ii) that the city or a covered organization is expending

funds at a rate that would cause expenditures to exceed the aggregate

expenditure limitation for the city or covered organization provided for

in the financial plan then in effect, prior to the expiration of the

fiscal year, the city shall submit a financial plan modification to

effect such adjustments in revenue estimates and reductions in total

expenditures as may be necessary to conform to such standards or

aggregate expenditure limitations. If during a control period the city

fails to submit such modification after such determination as to

adjustments in revenue estimates or such determination as to rates of

expenditures, or to submit a financial plan modification in the detail

or within the time period specified by the board, or if such

modification is disapproved by the board as not conforming to the

standards set forth in subdivision one of this section, the board may

formulate and adopt such financial plan modification as it deems

appropriate to ensure that the financial plan continues to meet such

standards. Such modification shall become effective on its adoption.

Notwithstanding the provisions of this section, in the event the city

shall determine that, due to unforeseen events during a fiscal year,

compliance with the standards set forth in paragraph a of subdivision

one of this section would result in a material adverse impact upon the

delivery of essential services, the city shall notify the board of such

determination, together with such information, projections or analyses

relating thereto as the board may require, and shall submit a

modification to the financial plan reflecting such determination. During

a control period the board shall disapprove any such modification unless

it finds that (i) the city's determination is supported by information,

projections and analyses which the board deems substantially accurate in

all material respects and (ii) such events, in its judgment, warrant

such modification to the financial plan to avoid such adverse impact on

the delivery of essential services.

f. The city may, from time to time, submit financial plan

modifications for review by the board. During a control period the board

shall approve such modifications unless it determines that such

modifications would constitute grounds for disapproval of the financial

plan pursuant to paragraph c of this subdivision, or if applicable,

pursuant to paragraph e of this subdivision.

g. Anything contained in this act to the contrary notwithstanding,

during a control period the board may at any time disapprove or after

consultation with the city revise the revenue estimates (or any item

thereof) prepared by the city in connection with the preparation of a

financial plan or any modification thereto and determined by the board

not to be based on assumptions and methods of estimation which are

reasonable and appropriate under the circumstances and in view of the

objectives and purposes of the act. The board may after consultation

with the city determine the estimated revenues of the city and the

covered organizations provided, however, that any revenues estimated by

the board shall be based on reasonable and appropriate assumptions and

methods of estimation.

4. Each financial plan shall be in such form and shall contain such

information for each year during which the financial plan is in effect

as the board may specify, and shall, in such detail as the board may

from time to time prescribe, include projections of all revenues,

expenditures and cash flows (including but not limited to projected

capital expenditures and debt issuances) and a schedule of projected

capital commitments of the city and except in such instances as the

board may deem appropriate each of the covered organizations. In

addition, each financial plan and financial plan modification shall

include a statement of the significant assumptions and methods of

estimation used in arriving at the projections contained therein, set

forth in such form and in such detail as the board may from time to time

prescribe.

5. The city and the covered organizations shall promptly furnish the

board with any information which the board may request to satisfy itself

that (i) projected employment levels, collective bargaining agreements

and other action relating to employee costs, capital construction and

such other matters as the board may specify, are consistent with the

provisions made for such costs in the financial plan, (ii) the city and

the covered organizations are taking whatever action is necessary with

respect to programs mandated by state and federal law to ensure that

expenditures for such programs are limited to and covered by the

expenditures stated in the financial plan, and (iii) adequate reserves

are provided to maintain programs mandated by state and federal law and

for which obligations are going to be incurred in the fiscal year and

other essential programs in the event revenues have been overestimated

or expenditures underestimated for any period.

6. For each financial plan and financial plan modification to be

prepared and submitted by the city to the board pursuant to the

provisions of this section, the covered organizations shall submit to

the city such information with respect to their projected expenditures,

revenues, cash flows and a schedule of projected capital commitments for

each year covered by such financial plan or modification as the city

shall determine. Notwithstanding any other provision of law limiting the

authority of the city with respect to any covered organization, the

city, in the preparation and submission of the financial plan and

modifications thereof, shall (except for debt service or for other

expenditures to the extent that such expenditures are required by law)

have the power to determine the aggregate expenditures to be allocated

to any covered organization in the financial plan and any modifications

thereto.

* Terminates July 1, 2035 or ... see § 13