Opinion ID: 2234380
Heading Depth: 1
Heading Rank: 6

Heading: Legislative Appropriations

Text: New York State Constitution, article VII, § 11, provides, in relevant part, [N]o debt shall be hereafter contracted by or in behalf of the state, unless such debt shall be authorized by law, for some single work or purpose. . . . No such law shall take effect until it shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for and against it at such election. As this Court has recognized, a statute providing for multiyear payments pursuant to annual legislative appropriations does not create a debt within the meaning of article VII, § 11, and is not subject to the public referendum requirement ( see Schulz, 84 NY2d at 249, 251). Thus, the 30 annual payments that LGAC is required to make pursuant to the MAC Refinancing Act, passed without a public referendum, must be subject to annual legislative appropriations in order to satisfy this provision of the State Constitution. LGAC contends that the amendment to Public Authorities Law § 3240 (5) added a sentence at the end of that subdivision that renders the Act unconstitutional. Public Authorities Law § 3240 (5) reads as follows: The agreement of the state contained in this section shall be deemed executory only to the extent of appropriations available for payments under this section and no liability on account of any such payment shall be incurred by the state beyond such appropriations. The state, acting through the director of the budget, and the corporation may enter into, amend, modify, or rescind one or more agreements providing for the specific manner, timing, and amount of payments to be made under this section, but only in conformity with this section. Provided however, this subdivision shall not apply for payments made pursuant to section [3238-a] of this title (emphasis added). LGAC argues that the final sentence of the subdivision exempts the payments to the City from the executory clause contained in the first sentence, and therefore obligates the State to provide the funds for LGAC's payments even without an appropriation. We disagree. Statutes must be construed to effectuate the intent of the Legislature. Reading the Act as a whole, we conclude that the amended sentence was intended to apply only to the previous sentence, not to the entire subdivision, and the failure to make that intent plain in the statutethe result of legislative haste cannot serve to void the Act. The previous sentence permitted LGAC and the State to amend, modify, or rescind one or more agreements providing for the specific manner, timing, and amount of payments to be made by LGAC. In enacting the amended sentence, the Legislature sought to prevent the State from changing the specific timing of the payments mandated under the Act. The City's fiscal year begins July 1, whereas the State's fiscal year begins April 1. It was therefore important from a budgeting perspective that the $170 million be available to the City no later than July 1. Accordingly, the Legislature intended to remove the discretion of the State Budget Director and LGAC with respect to the timing of the annual payments, so as to ensure that LGAC's payment to the City or its assignee would occur during each city fiscal year. LGAC's contrary contentionthat the Legislature's intent in amending Public Authorities Law § 3240 (5) was to exempt the payments to the City from the requirement of appropriationis belied by the reality that the MAC Refinancing Act otherwise continues to explicitly require that the payments be subject to annual legislative appropriation. Public Authorities Law § 3238-a states, in pertinent part: Notwithstanding any inconsistent provision of law, [LGAC] shall transfer to the city of New York [$170 million] from the resources of the corporation pursuant to section [3239] of this title. Such payment shall be made during each city fiscal year. Such payments from the corporation shall be made from the fund established by [State Finance Law § 92-r] and in accordance with the provisions thereof. As noted above, the fund established by State Finance Law § 92-r (1) is the Tax Fund. LGAC receives its revenue from the Tax Fund only by legislative appropriation. Section 92-r (5) (a) of the State Finance Law states that once the Comptroller receives the certification of LGAC's payment requirements, submitted pursuant to Public Authorities Law § 3240, the Comptroller must pay the amount certified pursuant to an appropriation. The Act amended Public Authorities Law § 3240 (1) to require LGAC to include in its annual certification the $170 million payments it is required to make to the City. Moreover, section 3240 (3) states that the Comptroller must pay the amount certified by LGAC provided that any such amounts shall have been first appropriated by the state. Thus, upon construing the Act as a whole and reading its parts together to determine the intent of the Legislature, as we must, we conclude that the intent of the Legislature is clear: to enact a constitutionally sound statute pursuant to which the State would assist the City in meeting its debt obligations to MAC by providing for annual payments to the City through legislative appropriations channeled through LGAC. Moreover, both STARC and the City acknowledge that LGAC's annual payments to the City must be appropriated. Of course, if no appropriation is made from the Tax Fund, LGAC cannot access the funds from which it must make its payments to the City, and the City would not receive the payment. Notably, section 3238-a requires that LGAC's payments be made from the Tax Fund, and even if revenue were available to LGAC from other sources, it could not be used to make the payments to the City. Thus, the Act ensures that any payments to the City are subject to an annual legislative appropriation notwithstanding the amendment to Public Authorities Law § 3240 (5). Indeed, the entire purpose of channeling the annual payments through LGAC is to make use of LGAC's trapping mechanism, which gives the Legislature an incentive, but not an obligation, to appropriate; in fact appropriation remains, as it must, ultimately discretionary. If, as plaintiffs contend, the Legislature had wanted to create an absolute and unconditional requirement of payments to the City, not subject to appropriation, it would simply have provided that in each of the next 30 years the State shall pay $170 million annually to the City. If the payments were meant to be mandated without the need for appropriation, there would have been no need to channel the payments through LGAC, using the incentive of the trapping mechanism of State Finance Law § 92-r. Therefore, we conclude that the MAC Refinancing Act does not violate article VII, § 11, of the New York State Constitution. [7]