S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         2608
                              2015-2016 Regular Sessions
                                   I N  S E N A T E
                                   January 26, 2015
                                      ___________
       Introduced  by  Sens. SEWARD, DeFRANCISCO, FUNKE, LITTLE, ORTT, RITCHIE,
         VENDITTO -- read twice and ordered printed, and  when  printed  to  be
         committed to the Committee on Finance
       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
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD07538-01-5
       S. 2608                             2
    1  PAYMENT OF AMOUNTS DUE TO LOCAL GOVERNMENT UNITS ASSOCIATED  WITH  STORM
    2  RELIEF  AND RECOVERY IS VITAL TO THE CONTINUED ECONOMIC VIABILITY OF THE
    3  STATE AS A WHOLE. STORM-RAVAGED COMMUNITIES MUST BE PROVIDED RELIEF IN A
    4  MANNER  THAT  ALLOWS FOR EXPEDITED REPAIR OF MUNICIPAL INFRASTRUCTURE SO
    5  THAT RESIDENTS OF SUCH COMMUNITIES CAN CONTINUE THEIR DAY-TO-DAY LIVES.
    6    S 2. Section 179-e of the state finance law is amended by adding a new
    7  subdivision 11 to read as follows:
    8    11. "UNIT OF LOCAL GOVERNMENT" MEANS COUNTIES, CITIES, TOWNS, VILLAGES
    9  AND SCHOOL DISTRICTS.
   10    S 3. Subdivisions 1 and 2 of section 179-f of the state  finance  law,
   11  subdivision 1 as amended by chapter 332 of the laws of 1989 and subdivi-
   12  sion  2  as  amended  by chapter 153 of the laws of 1984, are amended to
   13  read as follows:
   14    1. Each state agency which is required to make a  payment  from  state
   15  funds pursuant to a contract OR PURSUANT TO A STATE OR FEDERAL STATUTORY
   16  OR REGULATORY OBLIGATION TO MAKE A PAYMENT TO A UNIT OF LOCAL GOVERNMENT
   17  WHERE  SUCH  PAYMENT  IS  MEANT TO ASSIST SUCH UNIT WITH RECOVERY FROM A
   18  NATURAL DISASTER and which does not make such [contract] payment by  the
   19  required  payment  date shall make an interest payment to the contractor
   20  OR UNIT OF LOCAL GOVERNMENT in  accordance  with  this  article  on  the
   21  amount  of  the  [contract] payment which is due, unless failure to make
   22  such [contract] payment is the result of a lien,  attachment,  or  other
   23  legal  process  against  the  money due said contractor OR UNIT OF LOCAL
   24  GOVERNMENT, or unless the amount of the interest payment as computed  in
   25  accordance  with the provisions of section one hundred seventy-nine-g of
   26  this article is less than ten dollars. A pro rata share of such interest
   27  shall be paid by the contractor or subcontractor, as the case may be, to
   28  subcontractors and materialmen in a proportion equal to  the  percentage
   29  of  their pro rata share of the contract payment. Such pro rata share of
   30  interest shall be due to such subcontractors and  materialmen  only  for
   31  those payments which are not paid to such subcontractors and materialmen
   32  prior to the date upon which interest begins to accrue between the state
   33  agency  and  the  contractor.  Such  pro rata share of interest shall be
   34  computed daily until such payments are made to  the  subcontractors  and
   35  materialmen.
   36    2.  The required payment date shall be thirty calendar days, excluding
   37  legal holidays, or in the case of final payments on highway construction
   38  contracts seventy-five calendar days, excluding  legal  holidays,  after
   39  receipt of an invoice for the amount of the contract payment due; except
   40  when:
   41    (a)  the  state comptroller in the course of his audit determines that
   42  there is reasonable cause to believe that payment may  not  properly  be
   43  due, in whole or in part;
   44    (b)  in  accordance with specific statutory or contractual provisions,
   45  payment must be preceded by an inspection  period  or  by  an  audit  to
   46  determine  the  resources  applied or used by a contractor in fulfilling
   47  the terms of the contract;
   48    (c) the necessary state government appropriation required to authorize
   49  payment has yet to be enacted;
   50    (d) the cash balance of the fund or sub-fund from which the payment is
   51  to be made is insufficient to finance the payment;
   52    (e) a proper invoice must be examined by the federal government  prior
   53  to payment;
   54    (f) the goods or property have not been delivered or the services have
   55  not  been  rendered  by  the  contractor in compliance with the terms or
   56  conditions of the contract;
       S. 2608                             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
       S. 2608                             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.
       S. 2608                             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.