N.Y. FEA Law § 8 — New York Code / Act FEA / Section 8
Development of the financial plan
Status: in_force

* § 8. Development of the financial plan. 1. Pursuant to the\nprocedures contained in subdivision three of this section, each year the\ncity shall develop, and may from time to time modify, with the approval\nof the board during a control period, a four year financial plan\ncovering the city and the covered organizations.\n  Each such financial plan and financial plan modification shall comply\nwith the requirements of subdivision four of this section and shall,\nexcept as otherwise provided pursuant to subdivision two-a of this\nsection, conform to the following standards:\n  a. For its fiscal years ending June thirtieth, nineteen hundred\nseventy-nine through June thirtieth, nineteen hundred eighty-one, the\ncity's budget covering all expenditures other than capital items shall\nbe prepared and balanced so that the results thereof would not show a\ndeficit when reported in accordance with the accounting principles set\nforth in the state comptroller's uniform system of accounts for\nmunicipalities, as the same may be modified by the comptroller, in\nconsultation with the city comptroller, for application to the city;\nsubject to the provision of subdivision four of section three thousand\nthirty-eight of the public authorities law with respect to contributions\nby the city or other public employer to any retirement system or pension\nfund and subject to the provision of paragraph (c) of subdivision five\nof section three thousand thirty-eight of the public authorities law\nwith respect to expense items included in the capital budget of the\ncity. For the fiscal year ending June thirtieth, nineteen hundred\neighty-two, and for each fiscal year thereafter, the city's budget\ncovering all expenditures other than capital items shall be prepared and\nbalanced so that the results thereof would not show a deficit when\nreported in accordance with generally accepted accounting principles and\nwould permit comparison of the budget with the report of actual\nfinancial results prepared in accordance with generally accepted\naccounting principles. With respect to financial plans that include the\nfiscal years ending June thirtieth, nineteen hundred seventy-nine\nthrough June thirtieth, nineteen hundred eighty-one, the city's budget\ncovering all expenditures other than capital items shall be prepared in\naccordance with generally accepted accounting principles and there shall\nbe substantial progress in each such fiscal year towards achieving a\ncity budget covering all expenditures other than capital items the\nresults of which would not show a deficit when reported in accordance\nwith generally accepted accounting principles. The city shall eliminate\nexpense items from its capital budget not later than the commencement of\nthe fiscal year ending June thirtieth, nineteen hundred eighty-two. For\nthe fiscal year ending June thirtieth, nineteen hundred eighty-nine, and\nfor each fiscal year thereafter, the budgets covering all expenditures\nother than capital items of each of the covered organizations shall be\nprepared and balanced so that the results thereof would not show a\ndeficit when reported in accordance with generally accepted accounting\nprinciples; and for each fiscal year prior thereto, there shall be\nsubstantial progress towards such goal. Notwithstanding the foregoing\nand the provisions of any general or special state law or local law to\nthe contrary, including but not limited to the New York city charter:\n(i) all costs that would be capital costs in accordance with generally\naccepted accounting principles, but for the application of governmental\naccounting standards board statement number forty-nine, shall be deemed\nto be capital costs for purposes of this act and any other provision of\nstate or local law, including but not limited to the New York city\ncharter, relevant to the treatment of such costs; and (ii) the\ndetermination as to the existence of a deficit pursuant to this act and\nany other provision of state or local law, including but not limited to\nthe New York city charter, shall be made without regard to changes in\nrestricted fund balances, as defined by the governmental accounting\nstandards board, where restrictions in relation to such fund balances\nare imposed by state or federal law or regulation, or otherwise by\nprivate or governmental parties other than the city of New York, and\nwithout regard to funds held in the health stabilization fund, the\nschool crossing guards health insurance fund, any revenue stabilization\nfund established pursuant to section fifteen hundred twenty-eight of the\nNew York city charter and the management benefits fund established by\nthe city of New York. Deposits into any such revenue stabilization fund\nshall be deemed to be expenses of such city in the fiscal year in which\nsuch deposits are made, and withdrawals from such fund shall be deemed\nto be revenues of such city in the year in which such withdrawals are\nmade; provided however, that surpluses of such city, whether accumulated\nfrom fiscal years ending prior to the effective date of the chapter of\nthe laws of two thousand twenty that amended this paragraph or existing\nat the close of any fiscal year ending after such effective date, shall\nbe deposited into such revenue stabilization fund as soon as\npracticable, and such deposits shall not be deemed expenses of the city\nin the fiscal year in which such deposits are made.\n  b. The limitations on its outstanding short-term obligations required\nby subdivision nine of section three thousand thirty-eight of the public\nauthorities law and by section nine-b of this act shall be observed at\nall times, as each is amended from time to time.\n  c. Provision shall be made for the payment in full of the debt service\non all bonds and notes of the city and the covered organizations (other\nthan notes held by the municipal assistance corporation for the city of\nNew York to the extent that such corporation has evidenced its intention\nnot to present such notes for payment during the fiscal year in which\nthe determination is made provided that such notes were held by such\ncorporation on June thirtieth, nineteen hundred seventy-eight or were\nissued in exchange for or in refunding or renewal of notes held by such\ncorporation on such date), for the adequate funding of programs of the\ncity and the covered organizations which are mandated by state or\nfederal law and for which obligations are going to be incurred during\nthe fiscal year and for payment of a guarantee fee or any other amounts\nrequired by the United States of America or any agency or\ninstrumentality thereof in connection with the guarantee of the payment\nof the principal of or interest on bonds or notes issued by the city.\n  d. All projections of revenues and expenditures contained in a\nfinancial plan shall be based on reasonable and appropriate assumptions\nand methods of estimation. All cash flow projections shall be based upon\nreasonable and appropriate assumptions as to sources and uses of cash\n(including but not limited to the timing thereof), and shall provide for\noperations of the city and covered organizations to be conducted within\nthe cash resources so projected.\n  e. The city shall provide a general reserve for each fiscal year to\ncover potential reductions in its projected revenues or increases in its\nprojected expenditures during each such fiscal year. The amount provided\nfor such general reserve shall be estimated by the city in accordance\nwith paragraph d of this subdivision, but in no event shall it be less\nthan one hundred million dollars at the beginning of any fiscal year.\n  f. For financial plans beginning with the fiscal year ending June\nthirtieth, nineteen hundred eighty-three or any succeeding fiscal year,\nthe first fiscal year included in any financial plan shall make\nprovision for the repayment of any deficit incurred by the city during\nthe preceding fiscal year.\n  2. In developing the financial plan the city shall seek to achieve a\nstabilized work force for the city and, to the extent a reduction in the\nwork force is required, primary recourse shall be had to the attrition\nprocess to accomplish such reduction.\n  2-a. The city and the board shall confer concerning the projected\neffect on the budgets of the city and the covered organizations of any\nchange in generally accepted accounting principles, or change in the\napplication of generally accepted accounting principles to the city and\nthe covered organizations, made after the effective date of this act. If\nthe board determines that immediate compliance with such change will\nhave a material effect on such budgets over a time period insufficient\nto accommodate the effect without a substantial adverse impact on the\ndelivery of essential services, the board may authorize and approve a\nmethod of phasing the requirements of such change into such budgets over\nsuch reasonably expeditious time period as the board deems appropriate.\n  3. The financial plan shall be developed and, during a control period,\nshall be approved, and may from time to time be modified, in accordance\nwith the following procedures:\n  a. The city shall, by June first, nineteen hundred seventy-eight,\nprepare and submit a financial plan to the board covering the four year\nperiod which begins with the fiscal year ending June thirtieth, nineteen\nhundred seventy-nine. Thereafter, at least fifty days prior to the\nbeginning of each fiscal year or on such other date as the board may\napprove upon the request of the city, the city shall prepare and submit\na financial plan to the board covering the four year period beginning\nwith such fiscal year. On such dates the mayor shall also submit to the\nboard the city's executive expense, revenue and capital budgets for the\nensuing fiscal year and a certificate of the mayor stating that such\nbudgets are consistent with the financial plan submitted therewith, that\nprojections contained in the budgets and financial plan are based upon\nreasonable and appropriate assumptions and methods of estimation, and\nthat operation within the budgets is feasible.\n  b. (i) During a control period the board shall promptly review each\nfinancial plan and financial plan modification submitted by the city.\nNot more than forty-five days after submission of a financial plan or\nmore than thirty days after submission of a financial plan modification\nthe board shall determine whether the financial plan or financial plan\nmodification is complete and complies with the standards set forth in\nsubdivision one of this section and shall approve or disapprove the\nfinancial plan or financial plan modification in accordance with the\nprovisions of this section. If the board determines that the financial\nplan or financial plan modification is complete and complies with the\nstandards set forth in subdivision one of this section, the board shall\napprove the financial plan or financial plan modification. Upon making\nsuch determination the board shall make a certification to the city\nsetting forth revenue estimates approved by the board in accordance with\nsuch determination.\n  (ii) At all times other than during a control period the board shall\npromptly review each financial plan and financial plan modification\nsubmitted by the city. If the board determines after such review that\nthe financial plan or financial plan modification submitted by the city\nis not in accordance with the standards set forth in subdivision one of\nthis section, the board shall promptly so notify the city and may take\nsuch other action under this act as it deems appropriate.\n  c. The board shall disapprove a financial plan or financial plan\nmodification if during a control period it determines that the financial\nplan or financial plan modification is incomplete or fails to comply\nwith the provisions of subdivision one of this section. In disapproving\na financial plan or a financial plan modification the board may order\nthat one or more of the following actions be taken:\n  (i) expenditures or reserves to assure availability of amounts\nrequired for debt service requirements on all bonds and notes of the\ncity and the covered organizations or expenditures required for adequate\nfunding of programs of the city and the covered organizations mandated\nby state or federal law and for which obligations are going to be\nincurred during the fiscal year, be increased to the levels required to\nprovide for their payment in full;\n  (ii) the revenue projections (or any item thereof) during any period\nbe adjusted to comply with the standards set forth in subdivision one of\nthis section; and\n  (iii) the aggregate expenditures projected for any period be reduced\nto conform to revenue estimates certified by the board in order to\ncomply with the standards set forth in subdivision one of this section.\n  d. During a control period in the event that the city shall, for any\nreason, fail to submit a financial plan prior to the beginning of a\nfiscal year, as required by paragraph a of this subdivision, or in the\nevent that the board has not, for any reason permitted under this act,\napproved a financial plan submitted by the city prior to the beginning\nof a fiscal year, the board shall formulate and adopt a financial plan\nto be effective until the board approves a financial plan submitted by\nthe city. Any financial plan so formulated by the board shall comply\nwith the standards set forth in subdivision one of this section. The\nbudgets and operations of the city and the covered organizations at all\ntimes shall be in conformance and compliance with the financial plan\nthen in effect.\n  e. After the initial adoption by the city, or the approval by the\nboard during a control period, of a financial plan, projections of\nrevenues and expenditures and other estimates contained in the financial\nplan shall be reexamined by the board at least quarterly in consultation\nwith the city and the covered organizations, and during a control period\nthe city shall prepare and submit to the board financial plan\nmodifications at such times, in such detail and within such time periods\nas the board may require in order to modify the financial plan to\nconform to the standards set forth in subdivision one of this section.\nDuring a control period in the event the board determines that (i)\nrevenue estimates (or any item thereof) must be adjusted to ensure\ncompliance with the standards set forth in subdivision one of this\nsection, or (ii) that the city or a covered organization is expending\nfunds at a rate that would cause expenditures to exceed the aggregate\nexpenditure limitation for the city or covered organization provided for\nin the financial plan then in effect, prior to the expiration of the\nfiscal year, the city shall submit a financial plan modification to\neffect such adjustments in revenue estimates and reductions in total\nexpenditures as may be necessary to conform to such standards or\naggregate expenditure limitations. If during a control period the city\nfails to submit such modification after such determination as to\nadjustments in revenue estimates or such determination as to rates of\nexpenditures, or to submit a financial plan modification in the detail\nor within the time period specified by the board, or if such\nmodification is disapproved by the board as not conforming to the\nstandards set forth in subdivision one of this section, the board may\nformulate and adopt such financial plan modification as it deems\nappropriate to ensure that the financial plan continues to meet such\nstandards. Such modification shall become effective on its adoption.\nNotwithstanding the provisions of this section, in the event the city\nshall determine that, due to unforeseen events during a fiscal year,\ncompliance with the standards set forth in paragraph a of subdivision\none of this section would result in a material adverse impact upon the\ndelivery of essential services, the city shall notify the board of such\ndetermination, together with such information, projections or analyses\nrelating thereto as the board may require, and shall submit a\nmodification to the financial plan reflecting such determination. During\na control period the board shall disapprove any such modification unless\nit finds that (i) the city's determination is supported by information,\nprojections and analyses which the board deems substantially accurate in\nall material respects and (ii) such events, in its judgment, warrant\nsuch modification to the financial plan to avoid such adverse impact on\nthe delivery of essential services.\n  f. The city may, from time to time, submit financial plan\nmodifications for review by the board. During a control period the board\nshall approve such modifications unless it determines that such\nmodifications would constitute grounds for disapproval of the financial\nplan pursuant to paragraph c of this subdivision, or if applicable,\npursuant to paragraph e of this subdivision.\n  g. Anything contained in this act to the contrary notwithstanding,\nduring a control period the board may at any time disapprove or after\nconsultation with the city revise the revenue estimates (or any item\nthereof) prepared by the city in connection with the preparation of a\nfinancial plan or any modification thereto and determined by the board\nnot to be based on assumptions and methods of estimation which are\nreasonable and appropriate under the circumstances and in view of the\nobjectives and purposes of the act. The board may after consultation\nwith the city determine the estimated revenues of the city and the\ncovered organizations provided, however, that any revenues estimated by\nthe board shall be based on reasonable and appropriate assumptions and\nmethods of estimation.\n  4. Each financial plan shall be in such form and shall contain such\ninformation for each year during which the financial plan is in effect\nas the board may specify, and shall, in such detail as the board may\nfrom time to time prescribe, include projections of all revenues,\nexpenditures and cash flows (including but not limited to projected\ncapital expenditures and debt issuances) and a schedule of projected\ncapital commitments of the city and except in such instances as the\nboard may deem appropriate each of the covered organizations. In\naddition, each financial plan and financial plan modification shall\ninclude a statement of the significant assumptions and methods of\nestimation used in arriving at the projections contained therein, set\nforth in such form and in such detail as the board may from time to time\nprescribe.\n  5. The city and the covered organizations shall promptly furnish the\nboard with any information which the board may request to satisfy itself\nthat (i) projected employment levels, collective bargaining agreements\nand other action relating to employee costs, capital construction and\nsuch other matters as the board may specify, are consistent with the\nprovisions made for such costs in the financial plan, (ii) the city and\nthe covered organizations are taking whatever action is necessary with\nrespect to programs mandated by state and federal law to ensure that\nexpenditures for such programs are limited to and covered by the\nexpenditures stated in the financial plan, and (iii) adequate reserves\nare provided to maintain programs mandated by state and federal law and\nfor which obligations are going to be incurred in the fiscal year and\nother essential programs in the event revenues have been overestimated\nor expenditures underestimated for any period.\n  6. For each financial plan and financial plan modification to be\nprepared and submitted by the city to the board pursuant to the\nprovisions of this section, the covered organizations shall submit to\nthe city such information with respect to their projected expenditures,\nrevenues, cash flows and a schedule of projected capital commitments for\neach year covered by such financial plan or modification as the city\nshall determine. Notwithstanding any other provision of law limiting the\nauthority of the city with respect to any covered organization, the\ncity, in the preparation and submission of the financial plan and\nmodifications thereof, shall (except for debt service or for other\nexpenditures to the extent that such expenditures are required by law)\nhave the power to determine the aggregate expenditures to be allocated\nto any covered organization in the financial plan and any modifications\nthereto.\n  * Terminates July 1, 2035 or ... see § 13\n