S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         3589
                              2015-2016 Regular Sessions
                                 I N  A S S E M B L Y
                                   January 27, 2015
                                      ___________
       Introduced  by M. of A. MAGEE -- read once and referred to the Committee
         on Governmental Operations
       AN ACT to amend the state finance law, in relation to prompt payments to
         local governments of certain state aid associated with disaster relief
         THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section 1. Section 179-d of the state finance law, as added by chapter
    2  153 of the laws of 1984, is amended to read as follows:
    3    S  179-d. Legislative intent. Firms and organizations that do business
    4  with the state of New York expect and deserve to be paid in a prompt and
    5  timely manner.   Unjustified  delays  in  paying  vendors,  construction
    6  contractors,  and  providers  of  service  may discourage such firms and
    7  organizations from doing business with the state of  New  York  and  may
    8  ultimately  increase  the  costs  to  the state government of purchasing
    9  materials, equipment, and supplies; undertaking construction and  recon-
   10  struction  projects;  and  obtaining  a wide variety of professional and
   11  other specialized services including those that are provided to  persons
   12  in  need.  Consequently, this legislation sets standards for the payment
   13  of bills incurred by state agencies within specified periods of time and
   14  requires interest payments in situations where contract payments do  not
   15  conform  to these standards. Consistent with accepted business practices
   16  and with sound principles of fiscal management, it is the intent of this
   17  legislation to encourage state agencies in all three branches  of  state
   18  government  to make payments at least as expeditiously as they currently
   19  do and further to reduce  existing  payment  processing  times  whenever
   20  feasible,  while  at  the  same  time  permitting  the state agencies to
   21  perform proper and reasonable financial oversight activities designed to
   22  ensure that the state government  receives  the  quality  of  goods  and
   23  services  to  which  it  is entitled and to ensure that public funds are
   24  spent in a prudent and responsible manner.    ADDITIONALLY,  THE  PROMPT
   25  PAYMENT  OF  AMOUNTS DUE TO LOCAL GOVERNMENT UNITS ASSOCIATED WITH STORM
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD07538-01-5
       A. 3589                             2
    1  RELIEF AND RECOVERY IS VITAL TO THE CONTINUED ECONOMIC VIABILITY OF  THE
    2  STATE AS A WHOLE. STORM-RAVAGED COMMUNITIES MUST BE PROVIDED RELIEF IN A
    3  MANNER  THAT  ALLOWS FOR EXPEDITED REPAIR OF MUNICIPAL INFRASTRUCTURE SO
    4  THAT RESIDENTS OF SUCH COMMUNITIES CAN CONTINUE THEIR DAY-TO-DAY LIVES.
    5    S 2. Section 179-e of the state finance law is amended by adding a new
    6  subdivision 11 to read as follows:
    7    11. "UNIT OF LOCAL GOVERNMENT" MEANS COUNTIES, CITIES, TOWNS, VILLAGES
    8  AND SCHOOL DISTRICTS.
    9    S  3.  Subdivisions 1 and 2 of section 179-f of the state finance law,
   10  subdivision 1 as amended by chapter 332 of the laws of 1989 and subdivi-
   11  sion 2 as amended by chapter 153 of the laws of  1984,  are  amended  to
   12  read as follows:
   13    1.  Each  state  agency which is required to make a payment from state
   14  funds pursuant to a contract OR PURSUANT TO A STATE OR FEDERAL STATUTORY
   15  OR REGULATORY OBLIGATION TO MAKE A PAYMENT TO A UNIT OF LOCAL GOVERNMENT
   16  WHERE SUCH PAYMENT IS MEANT TO ASSIST SUCH UNIT  WITH  RECOVERY  FROM  A
   17  NATURAL  DISASTER and which does not make such [contract] payment by the
   18  required payment date shall make an interest payment to  the  contractor
   19  OR  UNIT  OF  LOCAL  GOVERNMENT  in  accordance with this article on the
   20  amount of the [contract] payment which is due, unless  failure  to  make
   21  such  [contract]  payment  is the result of a lien, attachment, or other
   22  legal process against the money due said contractor  OR  UNIT  OF  LOCAL
   23  GOVERNMENT,  or unless the amount of the interest payment as computed in
   24  accordance with the provisions of section one hundred seventy-nine-g  of
   25  this article is less than ten dollars. A pro rata share of such interest
   26  shall be paid by the contractor or subcontractor, as the case may be, to
   27  subcontractors  and  materialmen in a proportion equal to the percentage
   28  of their pro rata share of the contract payment. Such pro rata share  of
   29  interest  shall  be  due to such subcontractors and materialmen only for
   30  those payments which are not paid to such subcontractors and materialmen
   31  prior to the date upon which interest begins to accrue between the state
   32  agency and the contractor. Such pro rata  share  of  interest  shall  be
   33  computed  daily  until  such payments are made to the subcontractors and
   34  materialmen.
   35    2. The required payment date shall be thirty calendar days,  excluding
   36  legal holidays, or in the case of final payments on highway construction
   37  contracts  seventy-five  calendar  days, excluding legal holidays, after
   38  receipt of an invoice for the amount of the contract payment due; except
   39  when:
   40    (a) the state comptroller in the course of his audit  determines  that
   41  there  is  reasonable  cause to believe that payment may not properly be
   42  due, in whole or in part;
   43    (b) in accordance with specific statutory or  contractual  provisions,
   44  payment  must  be  preceded  by  an  inspection period or by an audit to
   45  determine the resources applied or used by a  contractor  in  fulfilling
   46  the terms of the contract;
   47    (c) the necessary state government appropriation required to authorize
   48  payment has yet to be enacted;
   49    (d) the cash balance of the fund or sub-fund from which the payment is
   50  to be made is insufficient to finance the payment;
   51    (e)  a proper invoice must be examined by the federal government prior
   52  to payment;
   53    (f) the goods or property have not been delivered or the services have
   54  not been rendered by the contractor in  compliance  with  the  terms  or
   55  conditions of the contract;
       A. 3589                             3
    1    (g)  the required payment date is modified in accordance with subdivi-
    2  sion three of this section; or
    3    (h)  in  the  case of final payments on highway construction contracts
    4  the commissioner of transportation determines that  the  contractor  has
    5  failed  to properly submit the necessary documents and other submissions
    6  prescribed by the  contract  specifications  and  requirements,  by  the
    7  provisions  of  subdivision eight of section thirty-eight of the highway
    8  law, and by all other applicable state and  federal  laws  in  order  to
    9  enable  the  department  of  transportation to process the final payment
   10  properly and expeditiously.
   11    Any time taken to satisfy or rectify any of the  types  of  conditions
   12  described in paragraphs (a) through (f) or (h) of this subdivision shall
   13  extend  the  required  payment  date  by  an equal period of time.   FOR
   14  PURPOSES OF A PAYMENT TO A UNIT OF LOCAL GOVERNMENT WHERE  SUCH  PAYMENT
   15  IS  MEANT TO ASSIST SUCH UNIT WITH RECOVERY FROM A NATURAL DISASTER, THE
   16  REQUIRED PAYMENT DATE SHALL BE NO LATER THAN REQUIRED BY LAW.
   17    S 4. Section 179-g of the state finance law, as amended by chapter  61
   18  of the laws of 1989, is amended to read as follows:
   19    S 179-g. Computation of interest payment. Interest payments on amounts
   20  due  to a contractor, OR UNIT OF LOCAL GOVERNMENT pursuant to this arti-
   21  cle shall be paid to the contractor, OR UNIT OF LOCAL GOVERNMENT for the
   22  period beginning on the day after the required payment date  and  ending
   23  on  the payment date for those payments required according to this arti-
   24  cle and shall be paid at the rate of interest in effect on the date when
   25  the interest payment is made. Notwithstanding any other provision of law
   26  to the contrary, interest shall be computed at the  rate  equal  to  the
   27  overpayment  rate set by the commissioner of taxation and finance pursu-
   28  ant to subsection (e) of section one thousand ninety-six of the tax law.
   29    S 5. Section 179-h of the state finance law, as amended by chapter 153
   30  of the laws of 1984, is amended to read as follows:
   31    S  179-h.  Determination  of  appropriations  against  which  interest
   32  payments are to be charged. Except in situations when federal law or the
   33  provisions of section one hundred seventy-nine-o of this article require
   34  otherwise,  an  interest  payment required by this article shall be paid
   35  from the same appropriation  as  that  from  which  the  related  proper
   36  invoice, OR NATURAL DISASTER RELIEF ASSISTANCE is paid; provided, howev-
   37  er,  (1)  that the interest payment shall not reduce the amount of money
   38  that otherwise will be payable to  the  contractor,  OR  UNIT  OF  LOCAL
   39  GOVERNMENT under the terms of the relevant contract, OR NATURAL DISASTER
   40  RELIEF  ASSISTANCE RESPECTIVELY and, FOR PURPOSES OF AN INTEREST PAYMENT
   41  OWED TO A CONTRACTOR (2) that if the  obligation  to  make  an  interest
   42  payment  is incurred in whole or in part because it takes the department
   43  of audit and control more than  eight  calendar  days,  excluding  legal
   44  holidays,  from  the date it receives an approvable voucher from another
   45  state agency to process a contract payment,  then  the  portion  of  the
   46  total  interest payment that is attributable to delays by the department
   47  of audit and control shall be paid from  funds  made  available  to  the
   48  department  of audit and control. Notwithstanding any other provision of
   49  law to the contrary, if the amount of  money  available  from  any  such
   50  appropriation  to  the state agency which received the proper invoice is
   51  insufficient to pay the interest and if for any reason it is not  feasi-
   52  ble  for  the  director of the budget to exercise the transfer or inter-
   53  change authority established by section  fifty-one  or  ninety-three  of
   54  this  chapter,  the  director  of  the budget may issue a certificate or
   55  certificates transferring or interchanging within a fund such amount  as
   56  is  needed  to  pay  the interest to said appropriation within such fund
       A. 3589                             4
    1  from the unspent balance of any appropriation that is available  to  the
    2  same  state  agency.  In  exercising  the latter transfer or interchange
    3  authority, the director of the  budget  shall  transfer  or  interchange
    4  amounts  that  are  not  needed to accomplish the purposes for which the
    5  appropriation was made, except, however, the director of the budget may,
    6  to the extent he deems it practicable, transfer or  interchange  amounts
    7  from  appropriations  that otherwise would be available for the adminis-
    8  tration and operations of the state agency which incurred  the  interest
    9  payment.  Any such certificate or certificates issued by the director of
   10  the budget shall be sent to the state comptroller and  copies  shall  be
   11  filed with the chairman of the senate finance committee and the chairman
   12  of the assembly ways and means committee.
   13    S  6.  Section 179-k of the state finance law, as added by chapter 153
   14  of the laws of 1984, is amended to read as follows:
   15    S 179-k. Acceptance of payment. The acceptance of payment, in whole or
   16  in part, by a contractor, OR UNIT  OF  LOCAL  GOVERNMENT  shall  not  be
   17  deemed  to  constitute  a  waiver  of  interest  otherwise due under the
   18  provisions of this article nor to supersede the  provisions  of  section
   19  one hundred forty-five of this chapter.
   20    S 7. Subdivision 1 of section 179-m of the state finance law, as added
   21  by  chapter  153  of the laws of 1984, paragraph d as amended by chapter
   22  618 of the laws of 1994, is amended to read as follows:
   23    1. The state comptroller shall:
   24    a. Promulgate such rules and regulations as may be necessary to  carry
   25  out the comptroller's responsibilities under this article.
   26    b.  Develop  and  implement  a procedure for calculating the amount of
   27  interest, if any, due to any contractor, OR  UNIT  OF  LOCAL  GOVERNMENT
   28  pursuant  to  the  provisions of this article. [Such] FOR PURPOSES OF AN
   29  INTEREST PAYMENT OWED TO A  CONTRACTOR,  SUCH  procedure  shall  include
   30  provisions  for  calculating  (i)  the amount of time, in calendar days,
   31  between the date of receipt of a proper invoice by the state agency  and
   32  the date on which an approvable voucher was delivered to the state comp-
   33  troller; (ii) the amount of time between the date on which an approvable
   34  voucher  was  delivered  to  the state comptroller and the payment date;
   35  (iii) the amount of interest, if any, chargeable  to  the  state  agency
   36  involved  pursuant  to this article; and (iv) the amount of interest, if
   37  any, chargeable to the department of audit and control pursuant to  this
   38  article.
   39    c. [Develop] FOR PURPOSES OF AN INTEREST PAYMENT OWED TO A CONTRACTOR,
   40  DEVELOP  and  implement a procedure for paying such interest in not more
   41  than seven days from the payment date on those proper invoices for which
   42  interest is due and for which the director of the budget does not  issue
   43  a certificate or certificates increasing, transferring, or interchanging
   44  funds so that an interest payment can be made [pusuant] PURSUANT to this
   45  article.    The comptroller shall also develop and implement a procedure
   46  for paying such interest in not more than fourteen days from the payment
   47  date on those proper invoices for which interest is due  and  for  which
   48  the  director  of  the  budget  does issue a certificate or certificates
   49  increasing, transferring, or interchanging funds  so  that  an  interest
   50  payment can be made pursuant to this article.
   51    d. [Develop] FOR PURPOSES OF AN INTEREST PAYMENT OWED TO A CONTRACTOR,
   52  DEVELOP and implement a procedure by which every state agency will noti-
   53  fy  contractors  promptly  and  directly  whenever the state comptroller
   54  rejects a voucher and returns it to the state agency due to an error  or
   55  omission in the voucher by the contractor.
       A. 3589                             5
    1    S  8.  Section 179-p of the state finance law, as added by chapter 153
    2  of the laws of 1984, is amended to read as follows:
    3    S  179-p.  Inapplicability  of  the provisions. The provisions of this
    4  article shall not apply to payments due and owing by the state:
    5    1. under the eminent domain procedure law;
    6    2. as interest allowed on judgments rendered by a  court  pursuant  to
    7  any provision of law other than those provisions contained in this arti-
    8  cle;
    9    3.  to  the  federal  government;  to  any state agency or its related
   10  instrumentalities; to any duly  constituted  unit  of  local  government
   11  including, but not limited to, counties, cities, towns, villages, school
   12  districts,  special districts, or any of their related instrumentalities
   13  EXCEPT IN THE CASE IN WHICH STATE PAYMENTS ARE MADE FOR EXPENSES RELATED
   14  TO DAMAGE RESULTING FROM A NATURAL DISASTER; to any public authority  or
   15  public  benefit  corporation;  or  to  employees  of state agencies when
   16  acting in, or incidental to, their public employment capacity;
   17    4. to contractors of third party payment agreements including, but not
   18  limited to, the fiscal agent or fiscal intermediary designated  pursuant
   19  to section three hundred sixty-seven-b of the social services law;
   20    5.  to  entities  which  receive  state funds through any intermediary
   21  organization other than a state agency; or
   22    6. in situations where the comptroller exercises a legally  authorized
   23  set-off against all or part of the payment due the contractor.
   24    S 9. This act shall take effect immediately.