2012 -- H 7353

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LC01085

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO TOWNS AND CITIES - FISCAL OVERSEERS, BUDGET COMMISSIONS

AND RECEIVERS

     Introduced By: Representatives Silva, and McLaughlin

     Date Introduced: February 02, 2012

     Referred To: House Municipal Government

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 45-9-3 of the General Laws in Chapter 45-9 entitled "Budget

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Commissions" is hereby amended to read as follows:

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     45-9-3. Appointment and duties of fiscal overseer. -- (a) Upon joint request by a city's

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or town's elected chief executive officer and city or town council, which request is approved by

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the division of municipal finance and the auditor general, or in absence of such a request, in the

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event that the director of revenue, in consultation with the auditor general, makes any two (2) or

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more of the findings set forth in subsection (b), the director of revenue may appoint a fiscal

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overseer for the city or town to assess the ability of the city or town government to manage the

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city's or town's fiscal challenges.

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      (b) The director of revenue may appoint a fiscal overseer if the director finds in his or

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her sole discretion that any two (2) of the following events have occurred which are of such a

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magnitude that they threaten the fiscal well-being of the city or town, diminishing the city or

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town's ability to provide for the public safety or welfare of the citizens of the city or town:

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      (1) The city or town projects a deficit in the municipal budget in the current fiscal year

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and again in the upcoming fiscal year;

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      (2) The city or town has not filed its audits with the auditor general by the deadlines

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required by law for two (2) successive fiscal years (not including extensions authorized by the

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auditor general);

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      (3) The city or town has been downgraded by one of the nationally recognized statistical

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rating organizations;

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      (4) The city or town is otherwise unable to obtain access to credit markets on reasonable

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terms in the sole judgment of the director of revenue.

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      (5) The city or town does not promptly respond to requests made by the director of

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revenue, or the auditor general, or the chairpersons of the house and/or senate finance committees

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for financial information and operating data necessary to assess the fiscal condition of the city or

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town in the sole judgment of the director of revenue.

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      (c) The director of revenue may also appoint a fiscal overseer if a city or town fails to

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comply with the requirements of sections 45-12-22.1 -- 45-12-22.5 of the general laws.

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      (d) The fiscal overseer shall without limitation:

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      (1) Recommend to the elected chief executive officer, city or town council and school

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committee sound fiscal policies for implementation;

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      (2) Supervise all financial services and activities;

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      (3) Advise the assessors, director of finance, city or town treasurer, purchasing agent and

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employees performing similar duties but with different titles;

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      (4) Provide assistance in all matters related to municipal financial affairs;

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      (5) Assist in development and preparation of the municipal budget, all department

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budgets and spending plans;

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      (6) Review all proposed contracts and obligations;

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      (7) Monitor the expenditures of all funds;

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      (8) Approve the annual or supplemental municipal budgets of the city or town and all of

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its departments; and

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      (9) Report monthly to the director of revenue, the auditor general, the governor and the

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chairpersons of the house finance and senate finance committees on the progress made towards

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reducing the municipality's deficit and otherwise attaining fiscal stability.

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      (e) All department budgets and requests for municipal budget transfers shall be

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submitted to the fiscal overseer for review and approval.

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      (f) The city or town shall annually appropriate amounts sufficient for the proper

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administration of the fiscal overseer and staff, as determined in writing by the division of

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municipal finance. If the city or town fails to appropriate such amounts, the division of municipal

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finance shall direct the general treasurer to deduct the necessary funds from the city's or town's

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distribution of state aid and shall expend those funds directly for the benefit of the fiscal overseer

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and staff.

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      (g) Within one hundred twenty (120) days of being appointed by the director of revenue,

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the fiscal overseer shall develop a three (3)-year operating and capital financial plan to achieve

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fiscal stability in the city or town. The plan shall include a preliminary analysis of the city's or

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town's financial situation and the fiscal overseer's initial recommendations to immediately begin

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to address the city's or town's operating and structural deficits. The fiscal overseer shall have the

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power to compel operational, performance or forensic audits, or any other similar assessments.

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The fiscal overseer shall have the power, at the expense of the city or town, to employ, retain,

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supervise such managerial, professional and clerical staff as are necessary to carry out the

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responsibility of fiscal overseer, subject to the approval of the division of municipal finance;

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provided, however, that the fiscal overseer shall not be subject to chapter 37-2 or chapter 45-55 of

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the general laws in employing such staff.

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     (h) The fiscal overseer, budget commission or receiver of the city or town shall be limited

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to dealing with financial matters, and shall not have authority to enact any ordinance, resolution

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or charter revision, and shall not be empowered to abolish any board or committee or reduce any

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elected body to an advisory capacity.

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     (i) The elected bodies of any city or town, while being overseen by a fiscal overseer,

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budget commission or receiver, shall continue to perform their elected duties as provided by state

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law or local charter except that such elected bodies shall not enact any ordinances regarding their

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budgets or any other fiscal-related matter that contradicts any order of the fiscal overseer, budget

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commission or receiver.

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     (j) A fiscal overseer, budget commission or receiver shall not have the authority to enact

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any local ordinance but shall have the authority to issue any order(s) provided that such order(s)

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pertain to the fiscal integrity of the city or town. The order(s) shall be properly noticed as

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provided by the open meetings law (chapter 42-46) and shall remain in effect for as long as the

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city or town remains under the supervision of the fiscal overseer, budget commission or receiver.

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     (k) No order issued by a fiscal overseer, budget commission or receiver shall be deemed

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an ordinance or made part of any city or town code or charter. Any such orders shall be kept

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separate and apart from the city’s or town’s code and charter, but shall be made accessible for

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public review.

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     SECTION 2. This act shall take effect upon passage.

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LC01085

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TOWNS AND CITIES - FISCAL OVERSEERS, BUDGET COMMISSIONS

AND RECEIVERS

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     This act would limit the duties and powers of a fiscal overseer, budget commission and

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receiver of a city or town to financial matters only.

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     This act would take effect upon passage.

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LC01085

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