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art.008/3/008/2/015/2/015/1

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     ARTICLE 8 AS AMENDED

RELATING TO MUNICIPALITIES

     SECTION 1. Section 45-12-22.2 of the General laws in Chapter 45-12 entitled

"Indebtedness of Towns and Cities" is hereby amended to read as follows:

     45-12-22.2. Monitoring of financial operations – Corrective action. -- Subsections (a)

through (e)(h) below shall apply to cities and towns.

     (a) The chief financial officer of each municipality and each school district within the

state shall continuously monitor financial operations by tracking actual versus budgeted revenue

and expense.

     (b) The chief financial officer of the municipality shall submit a report on a monthly basis

to the municipality's chief executive officer, each member of the city or town council, and school

district committee certifying the status of the municipal budget from all fund sources, including

the school department budget from all fund sources, or regional school district budget from all

fund sources. The chief financial officer of the municipality shall also submit a quarterly report

on or before the 25th day of the month succeeding the end of each fiscal quarter budget-to-actual

financial information on or before the 25th day succeeding the last day of the sixth, ninth, and

twelfth month of each fiscal year to the division of municipal finance, the commissioner of

education, and the auditor general pursuant to the provisions outlined in section (d) certifying the

status of the municipal budget, including the school budget that has been certified by the school

department. Each quarterly report submitted must be signed by the chief executive officer, chief

financial officer, the superintendent of the school district, and chief financial officer for the

school district. The report has to be submitted to the city own council president and the school

committee chair. It is encouraged, but not required, to have the council president/school

committee chair sign the report. The chief financial officer of the school department or school

district shall certify the status of the school district's budget and shall assist in the preparation of

these reports. The monthly report and quarterly reports budget-to-actual financial information as

required in this section shall be in a format prescribed by the division of municipal finance, the

commissioner of education, and the state auditor general. The budget-to-actual financial

information and the monthly reports shall contain a statement as to whether any actual or

projected shortfalls in budget line items are expected to result in a year-end deficit; the projected

impact on year-end financial results, including all accruals and encumbrances; and how the

municipality and school district plans to address any such shortfalls. In the event that the school

reporting is not provided, then state education aid may be withheld pursuant to the provisions of §

16-2-9.4(d).

     (c) In order to facilitate electronic upload to the "Transparency Portal" as defined herein,

the chief financial officer of the municipality shall also submit, as part of the annual audited

financial statements of the municipality, a municipal data report for the municipality’s general

fund containing content and in a format designated by the division of municipal finance and the

office of the auditor general. Such municipal data report shall be included in the scope of the

annual audit and shall be included in the municipality’s financial statements as supplementary

information.

     (d) All budget-to-actual financial information as required in (b), municipal data report as

required in (c), and reports required pursuant to the provisions of § 44-35-10 shall be submitted to

the division of municipal finance through the use of the division’s Transparency Portal, in the

format required by the division of municipal finance, which will be located on the division’s

website. The division of municipal finance will create a finalized report from all information

submitted through the Transparency Portal ("Transparency Report"). The division of municipal

finance will submit the Transparency Report to the municipality to be signed by the chief

executive officer, chief financial officer, superintendent of the school district, and chief financial

officer for the school district. All signed Transparency Reports shall be posted to the

municipality’s website within ten (10) business days of receipt of such report. The municipalities

shall provide a copy of the signed Transparency Report to the commissioner of education, the

office of the auditor general, the municipality’s council president, and the school committee chair.

In addition, a copy of the signed Transparency Report which has been designated by the division

of municipal finance for the inclusion in the municipalities audited financial statements shall be

provided by the municipality to its auditor.

     (c)(e)If any of the quarterly reports budget-to-actual financial information required under

subsection (b) project a year-end deficit, the chief financial officer of the municipality shall

submit to the state division of municipal finance, the commissioner of education, and the auditor

general a corrective action plan signed by the chief executive officer and chief financial officer on

or before the last day of the month succeeding the close of the fiscal quarter in which budget-to-

actual financial information is required, which provides for the avoidance of a year-end deficit or

structural deficit that could impact future years, and the school superintendent shall also comply

with the provisions of § 16-2-11(c) to assist in this effort. The plan may include recommendations

as to whether an increase in property taxes and/or spending cuts should be adopted to eliminate

the deficit. The plan shall include a legal opinion by municipal counsel that the proposed actions

under the plan are permissible under federal, state, and local law. The state division of municipal

affairs may rely on the written representations made by the municipality in the plan and will not

be required to perform an audit.

     (d)(f) If the division of municipal finance concludes the plan required hereunder is

insufficient and/or fails to adequately address the financial condition of the municipality, the

division of municipal finance can elect to pursue the remedies identified in § 45-12-22.7.

     (e)(g) The monthly reports and budget-to-actual financial information required shall

include the financial operations of any departments or funds of municipal government, including

the school department or the regional school district, notwithstanding the status of the entity as a

separate legal body. This provision does not eliminate the additional requirements placed on local

and regional school districts by §§ 16-2-9(f) and 16-3-11(e)(3).

     (h) The "Transparency Portal" shall be an electronic interface which will be implemented,

maintained, and monitored by the state division of municipal finance with the assistance of the

state department of administration. In addition, the division of municipal finance shall post to its

website a list of participating and non-participating entities for each reporting cycle identified

under subsections (b), (c), and required reports pursuant to § 44-35-10.

       Subsections (f)(i) through (j)(m) below shall apply to fire districts.

     (f)(i) The treasurer/chief financial officer or other fiduciary, as applicable, of the fire

district within the state shall continuously monitor the fire district's financial operations by

tracking actual versus budgeted revenue and expense.

     (g)(j) The treasurer/chief financial officer or other fiduciary, as applicable, of the fire

district shall submit a quarterly report on or before the 25th day of the month succeeding the end

of each fiscal quarter to the division of municipal finance and the state auditor general certifying

the status of the fire district's budget. Each quarterly report submitted must be signed by the chair

of the governing body and the treasurer/chief financial officer. The report shall be submitted to

the members of the governing body and the members of the town council. The quarterly reports

shall be in a format prescribed by the division of municipal finance and the state auditor general.

The reports shall contain a statement as to whether any actual or projected shortfalls in budget

line items are expected to result in a year-end deficit; the projected impact on year-end financial

results including all accruals and encumbrances; and how the fire district plans to address any

such shortfalls.

     (h)(k) If any of the quarterly reports required under subsection (g) above project a year-

end deficit, the treasurer/chief financial officer or other fiduciary, as applicable, of the fire district

shall submit to the division of municipal finance and the state auditor general a corrective action

plan signed by the chair of the governing body and treasurer/chief financial officer, or other

fiduciary as applicable, of the fire district on or before the last day of the month succeeding the

close of the fiscal quarter, which provides for the avoidance of a year-end deficit or structural

deficit that could impact future years. The plan may include recommendations as to whether an

increase in property taxes and/or spending cuts should be adopted to eliminate the deficit. The

plan shall include a legal opinion by legal counsel that the proposed actions under the plan are

permissible under federal, state, and local law. Said plan shall be sent to the members of the fire

district's governing body and the members of the town council. The division of municipal finance

may rely on the written representations made by the governing body of the fire district in the plan

and is not be required to perform an audit.

     (i)(l) If the division of municipal finance concludes the plan required hereunder is

insufficient and/or fails to adequately address the financial condition of the fire district, the

division of municipal finance can elect to pursue the remedies identified in § 45-12-22.7.

     (j)(m) The reports and plans required above shall also include, but not be limited to, a

comprehensive overview of the financial operations of the fire district, including a list of the

value of the fire district's assets (tangibles and intangibles) and liabilities. 

     SECTION 2. Section 44-35-10 of the General laws in Chapter 44-35 entitled "Property

Tax and Fiscal Disclosure – Municipal Budgets" is hereby amended to read as follows:

     44-35-10. Balanced municipal budgets – Additional reporting requirements –

Electronic reporting/municipal uniform chart of accounts. -- (a) The operating budgets for all

cities and towns shall provide for total appropriations which do not exceed total estimated

receipts, taking into account any general fund surplus or deficit estimated to be carried over from

the current fiscal year. The funding of accumulated deficits shall be consistent with the provisions

of § 45-12-22.

     (b) The chief elected official in each city and town shall provide to the division of

municipal finance within thirty (30) days of final action, in the form and format required by the

division, the adopted budget survey.

     (c) Within thirty (30) days of final action as referenced in subsection (b) above each city

or town shall provide to the division a five (5) year forecast, in the form and format required by

the division, for major funds as defined by generally accepted accounting principles as

established by the governmental accounting standards board (GASB). The forecast shall include,

but not be limited to, a scenario reflecting pensions and post employment Benefits other than

pensions (OPEB) obligations at one hundred percent (100%) of the annual required contribution

(ARC), both for the general and unrestricted school funds. The forecast shall also reflect any and

all underlying assumptions.

     (d) The reports required under (b) and (c) above shall be submitted in accordance with

the requirements outlined under § 45-12-22.2 (d).

     (d)(e) Within sixty (60) days of executing changes in healthcare benefits, pension

benefits and OPEB a municipality shall provide a fiscal impact statement to the division of

municipal finance, reflecting the impact on any unfunded liability and ARC, as well as the impact

on the five (5) year forecast. The fiscal impact statements shall show underlying actuarial

assumptions and provide support for underlying assumptions.

     (e)(f) A municipality shall join electronic reporting/implement municipal uniform chart

of accounts (UCOA), within six (6) months of implementation. 

     SECTION 3. Section 42-142-4 of the General laws in Chapter 42-142 entitled

"Department of Revenue" is hereby amended to read as follows:

     42-142-4. Division of property valuation and municipal finance. -- (a) There is hereby

established within the department of revenue a division of property valuation and municipal

finance. The head of the office shall be the chief of property valuation and municipal finance.

     (b) The division of property valuation and municipal finance shall have the following

duties:

     (i) Provide assistance and guidance to municipalities in complying with state law;

     (ii) To eEncourage cooperation between municipalities and the state in calculating,

evaluating and distributing state aid;

     (iii) To maintain a data center of information of use to municipalities; Encourage the

exchange of information between the division and other governmental entities in an effort to

increase shared services by making available, through the use of web based applications or other

mediums municipal vendor contracts and/or any other data the division deems appropriate.

     (iv) To mMaintain and compute financial and equalized property value information for

the benefit of municipalities and public policy decision makers;

     (v) To eEncourage and assure compliance with state laws and policies relating to

municipalities especially in the areas of public disclosure, tax levies, financial reporting, and

property tax issues;

     (vi) To eEncourage cooperation between municipalities and the state by distributing

information and by providing technical assistance to municipalities;

     (vii) To gGive guidance to public decision makers on the equitable distribution of state

aid to municipalities; and

     (viii) To pProvide technical assistance for property tax administration. 

     SECTION 4. Section 45-13-12 of the General Laws in Chapter 45-13 entitled "State Aid"

is hereby amended to read as follows:

     45-13-12. Distressed communities relief fund. -- (a) There is established a fund to

provide state assistance to those Rhode Island cities and towns which have the highest property

tax burdens relative to the wealth of taxpayers.

     (b) Establishment of indices. Four (4) indices of distress shall be established to determine

eligibility for the program. Each community shall be ranked by each distress index and any

community which falls into the lowest twenty percent (20%) of at least three (3) of the four (4)

indices shall be eligible to receive assistance. The four (4) indices are established as follows:

     (1) Percent of tax levy to full value of property. This shall be computed by dividing the

tax levy of each municipality by the full value of property for each municipality. For the 1990-91

fiscal year, tax levy and full value shall be as of the assessment date December 31, 1986.

     (2) Per capita income. This shall be the most recent estimate reported by the U.S.

Department of Commerce, Bureau of the Census.

     (3) Percent of personal income to full value of property. This shall be computed by

multiplying the per capita income above by the most recent population estimate as reported by the

U.S. Department of Commerce, Bureau of the Census, and dividing the result by the full value of

property.

     (4) Per capita full value of property. This shall be the full value of property divided by

the most recent estimate of population by the U.S. Department of Commerce, Bureau of the

Census.

     (c) Distribution of funds. Funds shall be distributed to each eligible community on the

basis of the community's tax levy relative to the total tax levy of all eligible communities. For the

fiscal year 1990-91, the reference year for the tax levy shall be the assessment date of December

31, 1988. For each fiscal year thereafter, except for fiscal year 2007-2008, the reference year and

the fiscal year shall bear the same relationship. For the fiscal year 2007-2008 the reference year

shall be the same as for the distributions made in fiscal year 2006-2007.

     Any newly qualifying community shall be paid fifty percent (50%) of current law

requirements the first year it qualifies. The remaining fifty percent (50%) shall be distributed to

the other distressed communities proportionately. When any community falls out of the distressed

community program, it shall receive a one-time payment of fifty percent (50%) of the prior year

requirement exclusive of any reduction for first year qualification; however, in the event that the

total appropriation is increased from the prior year's appropriation, each eligible community shall

receive: (1) A distribution based on the community's tax levy relative to the total tax levy of all

eligible communities; and (2) A percentage of the amount of said increased appropriation which

percentage shall be calculated based on a community's distribution relative to the total increase in

the appropriation. The community shall be considered a distressed community in the fall-out

year.

     (d) Appropriation of funds. The state of Rhode Island shall appropriate funds in the

annual appropriations act to support this program. For each of the fiscal years ending June 30,

2011, June 30, 2012, and June 30, 2013 seven hundred eighty-four thousand four hundred fifty-

eight dollars ($784,458) of the total appropriation shall be distributed equally to each qualifying

distressed community.

     (e) Payments. Payments shall be made to eligible communities each August.

     (f) Mandatory Participation for Collection of Debts. Any community determined to be a

distressed community under this chapter shall, within three (3) months of said determination,

contract with the tax administrator, in accordance with § 42-142-7, to allow the tax administrator

to collect outstanding liabilities owed to the distressed community. The division of municipal

finance shall determine which of said liabilities shall be subject to the collection by the tax

administrator.

     SECTION 5. This article shall take effect upon passage.