2017 -- H 5357

========

LC000310

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

____________

A N   A C T

RELATING TO TOWNS AND CITIES -- BUDGET COMMISSIONS

     Introduced By: Representatives Roberts, Morgan, Nardolillo, Chippendale, and Nunes

     Date Introduced: February 02, 2017

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 45-9-1, 45-9-2, 45-9-3, 45-9-4, 45-9-5, 45-9-6, 45-9-7, 45-9-8, 45-

9-9, 45-9-10, 45-9-10.1, 45-9-11, 45-9-12, 45-9-13, 45-9-14, 45-9-15, 45-9-18, 45-9-19 and 45-9-

20 of the General Laws in Chapter 45-9 entitled "Budget Commissions" are hereby amended to

read as follows:

     45-9-1. Declaration of policy and legal standard.

     It shall be the policy of the state to provide a mechanism for the state to work with cities,

and towns, and fire districts undergoing financial distress that threatens the fiscal well-being,

public safety, and welfare of such cities, or towns, and fire districts or other cities, towns, fire

districts or the state, with the state providing varying levels of support and control depending on

the circumstances. The powers delegated by the general assembly in this chapter shall be carried

out having due regard for the needs of the citizens of the state and of the city, or town, or fire

district and in such a manner as will best preserve the safety and welfare of citizens of the state

and their property and the access of the state, its municipalities, and fire districts to capital

markets, all to the public benefit and good.

     45-9-2. Definitions.

     As used in this chapter, the following words shall, unless the context clearly requires

otherwise, have the following meanings:

      (1) "Budget commission" means the budget and review commission established under §§

45-9-5 and 45-9-6.

      (2) "Charter" means the home rule charter or the legislative charter of any city, or town,

or fire district.

      (3) "Division of municipal finance" means the division of municipal finance in the

department of revenue or any successor department or agency.

      (4) "Director of revenue" means the director of the department of revenue.

      (5) "Elected chief executive officer" means, in cities and towns having a popularly

elected chief executive officer, the popularly elected chief executive officer, and in cities and

towns where there is no popularly elected chief executive officer, the president of the city or town

council.

      (6) "Fire district budget" means the fiscal-year operating budget of the fire district.

      (7) "Fiscal overseer" means the financial overseer appointed under § 45-9-3.

      (8) "General Treasurer" means the general treasurer of the state.

      (9) "Municipal budget" means the fiscal-year operating budget of the city, or town, or

fire district, inclusive of the school department budget and all other departments.

      (10) "Officer" means the chief administrative and financial officer appointed under § 45-

9-10 after abolition of a fiscal overseer or a budget commission or a receiver in a city, or town, or

fire district.

      (11) "Receiver" means the receiver appointed pursuant to §§ 45-9-7 or 45-9-8.

      (12) "School committee", means the school committee of the city or town, but shall not

mean, or include, a regional school district committee.

      (13) "State Aid" means the funds made available to cities and towns:

      (i) As state aid pursuant to chapter 13 of title 45, but specifically excluding

reimbursements to cities and towns for the cost of state mandates pursuant to § 45-13-9;

      (ii) As school operations aid provided for in §§ 16-7-5 -- 16-7-34.3 and as school

housing aid pursuant to §§ 16-7-35 -- 16-7-47, but subject to any pledge to bonds issued to

finance school projects by the Rhode Island health and educational building corporation;

      (iii) In replacement of motor vehicle and trailer excise taxes pursuant to chapter 34.1 of

title 44;

      (iv) From the public service corporation tax pursuant to chapter 13 of title 44;

      (v) From the local meal and beverage tax pursuant to § 44-18-18.1 and the hotel tax

pursuant to § 44-18-36.1; and

      (vi) Pursuant to all acts supplementing such chapters listed in subdivisions (i) through (v)

above, or pursuant to any other law hereafter enacted providing for funds to municipalities in lieu

of, or in substitution for, or in addition to, the funds provided pursuant to acts supplementing such

LC000310 - Page 2 of 21

chapters listed in subdivisions (i) through (v).

     45-9-3. Appointment and duties of fiscal overseer.

     (a) Upon joint request by a city's or town's elected chief executive officer and city or

town council, or for a fire district, the request of the governing body as established by charter,

which request is approved by the division of municipal finance and the auditor general, or in

absence of such a request, in the event that the director of revenue, in consultation with the

auditor general, makes any two (2) or more of the findings set forth in subsection (b), the director

of revenue may appoint a fiscal overseer for the city, or town, or fire district to assess the ability

of the city or town government or fire district to manage fiscal challenges.

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

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

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

the city's, or town's, or fire district's ability to provide for the public safety or welfare of the

citizens of the city, or town, or fire district:

      (1) The city, or town, or fire district projects a deficit in the municipal budget or fire

district budget in the current fiscal year and again in the upcoming fiscal year;

      (2) The city, or town, or fire district has not filed its required audits with the auditor

general by the deadlines required by law for two (2) successive fiscal years (not including

extensions authorized by the auditor general);

      (3) The city, or town, or fire district has been downgraded by one of the nationally

recognized statistical rating organizations;

      (4) The city, or town, or fire district is otherwise unable to obtain access to credit

markets or obtain financing when necessary on reasonable terms in the sole judgment of the

director of revenue.

      (5) The city, or town, or fire district does not promptly respond to requests made by the

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

committees, for financial information and operating data necessary to assess the fiscal condition

of the city, or town, or fire district in the sole judgment of the director of revenue.

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

district fails to comply with the requirements of §§ 45-12-22.1 -- 45-12-22.5.

      (d) The fiscal overseer shall without limitation:

      (1) Recommend to the elected chief executive officer, fire district board of directors, city

or town council, and school committee sound fiscal policies for implementation;

      (2) Supervise all financial services and activities;

LC000310 - Page 3 of 21

      (3) Advise the assessors, director of finance, city or town treasurer, fire district board of

directors, purchasing agent, and employees performing similar duties but with different titles;

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

      (5) Assist in development and preparation of the municipal or fire district budget, all

department budgets, and spending plans;

      (6) Review all proposed contracts and obligations;

      (7) Monitor the expenditures of all funds;

      (8) Approve the annual or supplemental fire districts budgets or municipal budgets of the

city or town and all of its departments; and

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

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

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

      (e) All department budgets and requests for municipal or fire district budget transfers

shall be submitted to the fiscal overseer for review and approval.

      (f) The city, or town, or fire district shall annually appropriate amounts sufficient for the

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

municipal finance. If the city, or town, or fire district fails to appropriate such amounts, the

division of municipal finance shall direct the general treasurer to deduct the necessary funds from

the city's, or town's, or fire district's distribution of state aid and shall expend those funds directly

for the benefit of the fiscal overseer and staff.

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

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

fiscal stability in the city, or town, or fire district. The plan shall include a preliminary analysis of

the city's, or town's, or fire district's financial situation and the fiscal overseer's initial

recommendations to immediately begin to address the operating and structural deficits. The fiscal

overseer shall have the power to compel operational, performance, or forensic audits, or any other

similar assessments. The fiscal overseer shall have the power, at the expense of the city, or town,

or fire district, to employ, retain, and supervise such managerial, professional and clerical staff as

are necessary to carry out the responsibility of fiscal overseer, subject to the approval of the

division of municipal finance; provided, however, that the fiscal overseer shall not be subject to

chapter 2 of title 37 or chapter 55 of title 45 in employing such staff.

     45-9-4. Approval of tax levy.

     A city, or town, or fire district that is subject to the jurisdiction of a fiscal overseer or a

budget commission, may not levy property taxes or motor vehicle excise taxes without prior

LC000310 - Page 4 of 21

approval of the division of municipal finance. Before the city, or town, or fire district that is

subject to the jurisdiction of a fiscal overseer or a budget commission, shall send out tax bills, the

city, or town, or fire district shall submit to the division of municipal finance a copy of its adopted

municipal or fire district budget and such supporting revenue and expenditure information as the

division of municipal finance shall prescribe for the succeeding fiscal year. The adopted

municipal or fire district budget, and such supporting revenue and expenditure information as the

division of municipal finance may prescribe, shall be submitted to the division of municipal

finance no later than ten (10) days after the adoption of the budget. The division of municipal

finance shall ascertain whether the budget for that fiscal year contains reasonable revenues from

taxation and other sources to meet the appropriations and other amounts required by law to be

raised, and the division of municipal finance shall report its conclusion to the director of revenue.

If the director of revenue determines that the municipal or fire district budget as presented does

not contain reasonable revenues from taxation and other sources to meet appropriations and other

amounts required by law to be raised, the director of revenue shall certify this determination in

writing and provide notice of the determination with a copy of the certificate to the auditor

general, the governor, and the chairpersons of the house and senate finance committees; and

notify the city, or town, or fire district that its tax levy has not been approved and that the city, or

town, or fire district is not authorized to mail or otherwise transmit tax bills to city or town

taxpayers. If the director of revenue has made the foregoing determination, the city, or town, or

fire district shall prepare a revised budget for review and approval by the director of revenue.

     The city, or town, or fire district shall submit the reports required by § 45-12-22.2 to the

director of revenue, the division of municipal finance, the auditor general, the governor, and the

chairpersons of the house and senate finance committees.

      The director of revenue may waive any reporting or filing requirements contained in this

section.

     45-9-5. Reports of fiscal overseer and appointment of budget and review

commission.

     (a) The fiscal overseer shall report in writing to the division of municipal finance if the

fiscal overseer concludes that the city, or town, or fire district: (1) Is unable to present a balanced

municipal or fire district budget; (2) Faces a fiscal crisis that poses an imminent danger to the

safety of the citizens of the city, or town, or fire district, or their property; (3) Will not achieve

fiscal stability without the assistance of a budget commission; or (4) That the tax levy of the fiscal

year should not be approved.

      (b) If the fiscal overseer believes, at any time, that a budget commission should be

LC000310 - Page 5 of 21

appointed, the fiscal overseer may report that belief to the division of municipal finance.

      (c) If the fiscal overseer reports to the division of municipal finance under subsections

(a) or (b), the director of revenue may immediately abolish the fiscal overseer and appoint a

budget commission.

      (d) A budget commission shall have all of the powers and duties set forth in §§ 45-9-3

and 45-9-6.

      (e) If a budget commission has not been appointed, and if the division of municipal

finance determines that the city, or town, or fire district has taken steps necessary to achieve long-

term fiscal sustainability and no longer requires active state oversight, the director of revenue

may abolish the fiscal overseer.

      (f) If the division of municipal finance notifies the director of revenue in writing that the

city, or town, or fire district is unable to achieve a balanced municipal budget, then the director of

revenue shall establish a budget commission.

      (g) Upon joint request by a city's or town's elected chief executive officer and city or

town council, or, for a fire district, the request of the governing body as established by charter,

which request is approved by the division of municipal finance, the director of revenue, in

consultation with the auditor general, may establish a budget commission for such city, or town,

or fire district.

     45-9-6. Composition of budget commission.

     (a) If a budget commission is established under §§ 45-9-5 or 45-12-22.7, it shall consist

of five (5) members: three (3) of whom shall be designees of the director of revenue; one of

whom shall be the elected chief executive officer of the city; and one of whom shall be a council

member of the town or city elected to serve on the budget commission as chosen by a majority

vote of said town or city council. In cities or towns in which the elected chief executive officer

for purposes of this chapter is the president of the city or town council, one member shall be the

appointed city or town manager or town administrator (or, if none, the city or town chief financial

officer) as the fifth member. For a fire district, it shall consist of five (5) members: three (3) of the

members of the budget commission shall be designees of the director of revenue; one shall be the

chairperson of the district's governing body; and one shall be the fire chief of the district. The

budget commission shall act by a majority vote of all its members. The budget commission shall

initiate and ensure the implementation of appropriate measures to secure the financial stability of

the city, or town, or fire district. The budget commission shall continue in existence until the

director of revenue abolishes it.

     The budget commission shall be subject to chapter 2 of title 36, "Access to Public

LC000310 - Page 6 of 21

Records," and chapter 14 of title 36, "Code of Ethics". The budget commission shall be subject to

chapter 46 of title 42 "Open Meetings" when meeting to take action on the following matters:

     (1) Levy and assessment of taxes;

     (2) Rulemaking or suspension of rules;

     (3) Adoption of a municipal or fire district budget;

     (4) Approval of collective bargaining agreements and amendments to collective

bargaining agreements; and

     (5) Making a determination under § 45-9-7 that the powers of the budget commission are

insufficient to restore fiscal stability to the city, or town, or fire district.

     (b) Action by the budget commission under this chapter shall constitute action by the

city, or town, or fire district for all purposes under the general laws, under any special law, and

under the city, or town, or fire district charter.

     (c) Until the budget commission ceases to exist, no appropriation, borrowing

authorization, transfer, or other municipal or fire district spending authority, shall take effect until

approved by the budget commission. The budget commission shall approve all appropriations,

borrowing authorizations, transfers, and other municipal or fire district spending authorizations,

in whole or part.

     (d) In addition to the authority and powers conferred elsewhere in this chapter, and

notwithstanding any city, or town, or fire district charter provision, or local ordinance, or rule or

regulation to the contrary, the budget commission shall have the power to:

     (1) Amend, formulate, and execute the annual municipal or fire district budget and

supplemental municipal or fire district budgets of the city, or town, or fire district including the

establishment, increase, or decrease of any appropriations and spending authority for all

departments, budget commissions, committees, agencies or other units of the city, or town, or fire

district; provided, however, that notwithstanding §§ 16-2-9 and 16-2-18, this clause shall fully

apply to the school department and all school spending purposes;

     (2) Implement and maintain uniform budget guidelines and procedures for all

departments;

     (3) Amend, formulate and execute capital budgets, including amending any borrowing

authorization, or financing or refinancing of any debt in accordance with the law;

     (4) Amortize operational deficits in an amount as the director of revenue approves and for

a term not longer than five (5) years;

     (5) Develop and maintain a uniform system for all financial planning and operations in all

departments, offices, boards, commissions, committees, agencies, or other units of the city's, or

LC000310 - Page 7 of 21

town's, or fire district's government;

     (6) Review and approve or disapprove all proposed contracts for goods or services;

     (7) Notwithstanding any general or special law to the contrary, establish, increase, or

decrease any fee, rate, or charge, for any service, license, permit, or other municipal or fire

district activity, otherwise within the authority of the city, or town, or fire district;

     (8) Appoint, remove, supervise, and control all city, or town, or fire district employees

and have control over all personnel matters other than disciplinary matters; provided, that the

budget commission shall hold all existing powers to hire and fire and set the terms and conditions

of employment held by other employees or officers of the city, town, or fire district; provided,

further, that the budget commission shall have the authority to exercise all powers otherwise

available to a municipality or fire district regarding contractual obligations during a fiscal

emergency; provided, further, that no city, or town, or fire district employee or officer shall hire,

fire, transfer, or alter the compensation or benefits of a city, or town, or fire district employee

except with the written approval of the budget commission; and provided, further, that the budget

commission may delegate or otherwise assign these powers with the approval of the director of

revenue;

     (9) Alter or eliminate the compensation and/or benefits of elected officials of the city, or

town, or fire district to reflect the fiscal emergency and changes in the responsibilities of the

officials as provided by this chapter;

     (10) Employ, retain, and supervise such managerial, professional, and clerical staff as are

necessary to carry out its responsibilities; provided, however, that such employment, retention

and supervisory decisions are subject to the approval of the director of revenue; provided, further,

that the budget commission shall not be subject to chapter 2 of title 37 or chapter 55 of title 45 in

employing such staff; provided, further, that the budget commission, with the approval of the

director of revenue, shall have authority to set the compensation, terms, and conditions of

employment of its own staff; provided, further, that the city, or town, or fire district shall annually

appropriate amounts sufficient for the compensation of personnel hired under this clause as

determined and fixed by the budget commission; provided, further, that, if the city, or town, or

fire district fails to appropriate such amounts, the director of revenue shall direct the general

treasurer to deduct the necessary funds from the city, or town, or fire district distribution of state

aid and shall expend those funds directly for the benefit of the budget commission;

     (11) Reorganize, consolidate, or abolish departments, commissions, authorities, boards,

offices, or functions of the city, or town, or fire district in whole or in part, and to establish such

new departments, commissions, authorities, boards, offices, or functions as it deems necessary,

LC000310 - Page 8 of 21

and to transfer the duties, powers, functions and appropriations of one department, commission,

board, office, or other unit to another department, commission, authority, board, or office, and in

connection therewith, remove and appoint new members for any such commission, authority,

board, or department which appointees shall serve the remainder of any unexpired term of their

predecessor;

     (12) Appoint, in consultation with the director of revenue, persons to fill vacancies on

any authority, board, committee, department, or office;

     (13) Sell, lease, or otherwise transfer, real property and other assets of the city, or town,

or fire district with the approval of the director of revenue;

     (14) Purchase, lease, or otherwise acquire, property or other assets on behalf of the city,

or town, or fire district with the approval of the director of revenue;

     (15) Enter into contracts, including, but not limited to, contracts with other governmental

entities, and such other governmental entities are hereby authorized to enter into such contracts;

     (16) Adopt rules and regulations governing the operation and administration of the city,

or town, or fire district that permit the budget commission to effectively carry out this chapter

under § 42-35-3(b);

     (17) Alter or rescind any action or decision of any municipal or fire district officer,

employee, board, authority, or commission within fourteen (14) days after receipt of notice of

such action or decision;

     (18) Suspend, in consultation with the director of revenue, any rules and regulations of

the city, or town, or fire district;

     (19) Notwithstanding any other general law, special act, charter provision, or ordinance,

and in conformity with the reserved powers of the general assembly pursuant to Article XIII,

section 5 of the constitution of the state, a budget commission is authorized to issue bonds, notes,

or certificates of indebtedness to fund the deficit of a city, or town, or fire district without regard

to § 45-12-22.4, to fund cash flow and to finance capital projects. Bonds, notes, or certificates of

indebtedness issued under authority of this chapter shall be general obligation bonds backed by

the full faith and credit and taxing power of the city, or town, or fire district; provided, however,

that the budget commission may pledge future distributions of state aid for the purpose of retiring

such bonds, notes, or certificates of indebtedness. If any state aid is so pledged, the budget

commission shall execute on behalf of the city, or town, or fire district a trust agreement with a

corporate trustee, which may be any bank or trust company having the powers of a trust company

within the state, and any state aid so pledged shall be paid by the general treasurer directly to the

trustee to be held in trust and applied to the payment of principal and interest on such bonds,

LC000310 - Page 9 of 21

notes, or certificates of indebtedness; any earnings derived from the investment of such pledged

aid shall be applied as needed to the payment of that principal and interest and for trustee's fees

and related expenses, with any excess to be paid to the city, or town, or fire district. Bonds, notes,

or certificates of indebtedness authorized under authority of this chapter shall be executed on

behalf of the city, town, or fire district by a member of the commission and, except as provided

for in this chapter, may be subject to the provisions of chapter 12 of title 45 so far as apt, or may

be subject to the provisions of any special bond act enacted authorizing the issuance of bonds of a

city, or town, or fire district so far as apt; provided, however, that any bonds or notes issued for

school purposes must be approved by the general assembly in order to qualify for school housing

aid as set forth in chapter 7 of title 16; and

     (20) Exercise all powers under the general laws and this chapter, or any special act, any

charter provision or ordinance that any elected official of the city, or town, or fire district may

exercise, acting separately or jointly; provided, however, that with respect to any such exercise of

powers by the budget commission, the elected officials shall not rescind nor take any action

contrary to such action by the budget commission so long as the budget commission continues to

exist.

     (21) Certify to the Rhode Island department of revenue the need to advance payments of

the state's basic education program under chapter 7 of title 16 in the amount determined by the

budget commission. Said amount shall be advanced, subject to approval of the director of the

department of revenue, notwithstanding any general or public law to the contrary. The director of

the department of revenue shall provide notice of any advance payments to the fiscal advisors of

the house and senate finance committees. The state general treasurer shall deduct the estimated

cost to the state's general fund resulting from any advance payments.

     45-9-7. Appointment of receiver.

     (a) If the budget commission established by § 45-9-5 concludes that its powers are

insufficient to restore fiscal stability to the city, or town, or fire district, it shall so notify the

director of revenue and shall forward to the director of revenue a statement of the reasons why it

has been unable to restore fiscal stability to the city, or town, or fire district. Upon receipt of such

statement, the director of revenue shall terminate the existence of the budget commission,

notwithstanding § 45-9-5, and the director of revenue shall appoint a receiver for the city, or

town, or fire district for a period as the director of revenue may determine. The director of

revenue may, at any time, and without cause, remove the receiver and appoint a successor, or

terminate the receivership.

      (b) The receiver shall have the following powers:

LC000310 - Page 10 of 21

      (1) All powers of the fiscal overseer and budget commission under §§ 45-9-2 and 45-9-6.

Such powers shall remain through the period of any receivership;

      (2) The power to exercise any function or power of any municipal or fire district officer

or employee, board, authority or commission, whether elected or otherwise relating to or

impacting the fiscal stability of the city, or town, or fire district including, without limitation,

school and zoning matters; and

      (3) The power to file a petition in the name of the city, or town, or fire district under

Chapter 9 of Title 11 of the United States Code, and to act on the city's, or town's, or fire district's

behalf in any such proceeding.

      (c) Upon the appointment of a receiver, the receiver shall have the right to exercise the

powers of the elected officials under the general laws, special laws and the city, or town, or fire

district charter and ordinances and rules and regulations relating to or impacting the fiscal

stability of the city, or town, or fire district including, without limitation, school and zoning

matters; provided, further, that the powers of the receiver shall be superior to and supersede the

powers of the elected officials of the city, or town, or fire district shall continue to be elected in

accordance with the city or town or fire district charter, and shall serve in an advisory capacity to

the receiver. The receiver shall allow the city's, or town's, or fire district's elected officials to

serve their constituents by providing advice to the receiver on the matters relating to the operation

of the city, or town, or fire district. In the event a conflict arises between the chief elected official

or city or town council or fire district governing body and the receiver, the receiver's decision

shall prevail. The director of revenue shall determine the salary of the receiver, which salary shall

be payable by the city, or town, or fire district.

     45-9-8. Appointment of receiver in a fiscal emergency.

     In the event the director of revenue determines, in consultation with the auditor general,

that a city, or town, or fire district is facing a fiscal emergency and that circumstances do not

allow for appointment of a fiscal overseer or a budget commission prior to the appointment of a

receiver, the director of revenue may appoint a receiver without having first appointed a fiscal

overseer or a budget commission.

     45-9-9. Collective bargaining agreements.

     Notwithstanding chapter 7 of title 28 or any other general or special law or any charter or

local ordinance to the contrary, new collective bargaining agreements, and any amendments, to

new or existing collective bargaining agreements, (collectively, "collective bargaining

agreements") entered into by the city, town, or fire district or the school department, shall be

subject to the approval of the fiscal overseer, budget commission, or receiver if the fiscal

LC000310 - Page 11 of 21

overseer, budget commission, or receiver is in effect at the time. No collective bargaining

agreement shall be approved under this section unless the fiscal overseer, budget commission, or

receiver has participated in the negotiation of the collective bargaining agreement and provides

written certification to the director of revenue that after an evaluation of all pertinent financial

information reasonably available, the city's, or town's, or fire district's financial resources and

revenues are, and will continue to be, adequate to support such collective bargaining agreement

without a detrimental impact on the provision of municipal or fire district services. A decision, by

the fiscal overseer, budget commission, or receiver, to disapprove of a collective bargaining

agreement under this section shall be made in a report to the parties; provided, however, that the

report shall specify the disapproved portions of the agreement and the supporting reasons for the

disapproval. This section shall not be construed to authorize a fiscal overseer, a budget

commission, or a receiver under this chapter to reject or alter any existing collective bargaining

agreement, unless by agreement, during the term of such collective bargaining agreement.

     45-9-10. Appointment of administration and finance officer upon abolition of

receiver where petition filed under Chapter 9 of Title 11 of the United States Code.

     (a) Notwithstanding any general or special law or city or town ordinance to the contrary,

this section shall apply upon abolition of a receiver established under this chapter, where petition

was filed under Chapter 9 of Title 11 of the United States Code, upon a determination, in writing,

by the director of revenue, that the financial condition of the city or town has improved to a level

such that a receiver is no longer needed.

      (b) For a period of five (5) years after the abolition of a receiver in any such city, or

town, or fire district, there shall be in the city, or town, or fire district a department of

administration and finance that shall be responsible for the overall budgetary and financial

administration of the city, or town, or fire district. The department shall be under the direction

and control of the officer appointed pursuant to subsection (c) below. The officer shall report to,

and be under the charge and direction of, the elected chief executive officer, or in the case of a

municipality without an elected chief executive officer, then the city or town council, or in the

case of a fire district, the governing body of the fire district. Nothing in this section shall abrogate

the powers and duties of the school committee under any general or special law, except as

specifically provided in this section.

      Whenever the term "department of finance" or "finance department" appears in a general

or special law or an ordinance, regulation, contract, or other document with reference to the city,

or town, or fire district, it shall mean the department of administration and finance of the city, or

town, or fire district. Whenever the term "chief financial officer", "director of finance", "financial

LC000310 - Page 12 of 21

director", or "treasurer" appears in a general or special law or an ordinance, regulation, contract,

or other document with reference to the city, or town, or fire district, it shall mean the officer of

the city, or town, or fire district.

      (c) The elected chief executive officer, or in the case of a municipality without an elected

chief executive officer then the city or town council, or in the case of a fire district, the governing

body of the fire district, shall appoint the officer from a list of three (3) names submitted by the

division of municipal finance, for a term of not more than five (5) years, as provided in this

subsection. The officer shall be an employee of the city, or town, or fire district who shall be

appointed solely on the basis of administrative and executive qualifications and shall be a person

especially fitted by education, training, and experience to perform the duties of the office. The

officer need not be a resident of the city, or town, or fire district, or the state. In the event of a

vacancy in the office of officer the same process will be used.

      (d) While the process of appointing an officer under subsection (c) is proceeding, the

elected chief executive officer, or in the case of a municipality without an elected chief executive

officer then the city or town council, may appoint an acting officer, or in the case of a fire district,

then the governing body of the fire district may appoint an acting officer.

      (e) The appointment, including an acting appointment, or removal of the officer, shall

not take effect until it has been approved in writing by the division of municipal finance.

      (f) The powers and duties of the officer shall include the following:

      (1) Coordinating, administering, and supervising all financial services and activities;

      (2) Assisting in all matters related to municipal or fire district financial affairs;

      (3) Implementing and maintaining uniform systems, controls, and procedures for all

financial activities in all departments, boards, commissions, agencies, offices, or other units of

city, or town, or fire district government the operations of which have a financial impact upon the

general fund and enterprise funds of the city, or town, or fire district, and including, but not

limited to, maintaining all financial and accounting data and records;

      (4) Implementing and maintaining uniform financial data processing capabilities for all

departments, boards, commissions, agencies, and offices;

      (5) Supervising all financial data processing activities;

      (6) Implementing and maintaining uniform budget guidelines and procedures within all

departments, boards, commissions, agencies, offices, and other units of city, or town, or fire

district government;

      (7) Assisting in the development and preparation of all department, board, commission,

agency, and office budgets and spending plans;

LC000310 - Page 13 of 21

      (8) Reviewing all proposed contracts to which the city, or town, or fire district is party;

      (9) Monitoring the expenditure of all city, or town, or fire district funds, including

periodic reporting by and to appropriate agencies of the status of accounts;

      (10) Reviewing the spending plan for each department, board, commission, agency, and

office; and

      (11) Providing for the allotment of funds on a periodic basis as provided for in this

chapter.

      In all cases where the duty is not expressly charged to any other department, board,

commission, agency, or office, it shall be the duty of the officer to promote, secure, and preserve

the financial interests of the city, or town, or fire district.

      (g) All department, board, commission, agency, and office budgets and requests for

budget transfers shall be submitted to the officer for review and recommendation before

submission to the elected chief executive officer, city or town council, fire district governing

body, or school committee, as appropriate. For each proposed appropriation order, lease, or

contract arrangement for a term including more than one fiscal year; collective bargaining

agreement; and with respect to any proposed city or town council or fire district governing body

vote necessary to effectuate a financial transfer, ordinance revision, or special legislation that may

require the expenditure of funds or otherwise financially obligate the city, or town, or fire district

for a period in excess of one year; or with respect to a vote to authorize a borrowing under a law

other than §§ 45-12-4.1, 45-12-4.2 or 45-12-4.3; the officer shall, if it be the case, submit in

writing to the elected chief executive officer, city or town council, fire district governing body, or

school committee, as appropriate, a certification that it is the officer's professional opinion, after

an evaluation of all pertinent financial information reasonably available, that the city's, or town's,

or fire district's financial resources and revenues are, and will continue to be, adequate to support

such proposed expenditures or obligations without a detrimental impact on the provision of

municipal or fire district services. If the officer fails to provide this certification within seven (7)

days after a request for such certification from the elected chief executive officer, city or town

council, fire district governing body, or school committee, the appropriation order, financial

transfer, ordinance revision, special legislation, or borrowing authorization may nonetheless be

approved, but the absence of the certification of the officer shall be expressly noted in that order

or vote.

      (h) All departments, officers, boards, commissions, agencies, and other units of the city,

or town, or fire district shall submit budget requests to the elected chief executive officer, or

appropriate authority under applicable charter and ordinance provisions, upon the schedule and in

LC000310 - Page 14 of 21

the form established by the officer.

      (i) Annually, not later than ninety (90) days prior to the beginning of the municipality's

or fire district's fiscal year, the officer shall submit a four-year (4) financial plan and a five-year

(5) capital plan to the city or town council or fire district governing body that includes all capital

needs of the city, or town, or fire district.

      (j) The assessor, treasurer, finance director, controller, purchasing agent, labor relations

director, and employees performing similar duties but with different titles shall report to, and be

under the direction of, the officer. The officer, with the approval of the elected chief executive

officer or appropriate authority under applicable charter and ordinance provisions, shall appoint

all such officers and employees. The elected chief executive officer, or in the case of a

municipality without an elected chief executive officer then the city or town council, or in the

case of a fire district, the governing body of the fire district, may also place other positions and

departments under the direction of the officer.

      (k) The officer shall not assume the duties or responsibilities of the treasurer or the

finance director and shall not hold an elective office and shall devote the officer's full time and

attention to the officer's duties.

      (l) The city, or town, or fire district shall annually appropriate amounts sufficient for the

proper administration of the department. If the city, or town, or fire district fails to appropriate

such amounts, the division of municipal finance shall direct the general treasurer to deduct the

necessary funds from the city's, or town's, or fire district's distribution of the city's, or town's, or

fire district's state aid and shall expend those funds directly for the benefit of the department. The

city or town shall annually appropriate amounts sufficient to cover the costs of the administration

and finance officer. The state shall annually reimburse the city, or town, or fire district for fifty

percent (50%) share of such costs. The city, or town, or fire district at its expense shall provide

office space and adequate resources needed by the administration and finance officer in the

performance of his/her duties.

      (m) The officer shall comply with all requests of the school department to provide any

information relating to the operation of the school department held within the authority or control

of the officer as the result of the consolidation of school and city or town business and financial

functions under §§ 45-9-3 or 45-9-6. If the officer, or any employee under the control of the

officer, refuses to provide such information or engages in unreasonable delay, the school

department shall notify the division of municipal finance. The division of municipal finance shall,

within a reasonable time, make a determination whether any such information shall be provided

to the school department that shall be binding upon the officer and the school department. The

LC000310 - Page 15 of 21

division of municipal finance's determination shall not be an adjudicatory proceeding reviewable

under chapter 35 of title 42. Nothing in this subsection shall abrogate any of the other powers or

duties of the school committee under the general laws.

     45-9-10.1. Appointment of administration and finance officer upon abolition of a

fiscal overseer, or a budget commission or a receiver where no chapter 9, title 11 petition

filed.

     (a) Notwithstanding any general or special law, or city or town ordinance, or rule or

regulation to the contrary, this section shall apply upon the abolition of the fiscal overseer, budget

commission, or receiver where the receiver has not filed a petition for Chapter 9, Title 11 of the

United States Code, upon a determination, in writing, by the director of revenue that the financial

condition of the city, or town, or fire district has improved to a level such that a fiscal overseer,

budget commission, or receiver is no longer needed.

      (b) For a period of five (5) years after the abolition of a fiscal overseer, or a budget

commission, or a receiver, where the receiver has not filed a petition for Chapter 9, Title 11 of the

United States Code, a finance advisor shall be appointed for the city, or town, or fire district by

the director of revenue. The finance advisor shall be an employee of the city, or town, or fire

district. The finance advisor shall be responsible for monitoring the overall budgetary and

financial administration and fiscal health of the city, or town, or fire district. The finance advisor

shall report to the director of revenue.

      (c) The finance advisor shall be appointed solely on the basis of his or her qualifications

and shall be a person especially fitted by education, training, or experience to perform the

functions of the position.

      (d) The finance advisor shall have complete access to the financial books and records of

all offices, departments, and other agencies of the municipal fire district government and, without

limitations:

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

district governing body, and school committee sound fiscal policies for implementation and

monitor implementation;

      (2) Monitor and oversee all financial operations and activities including the city's, or

town's, or fire district's operating and capital financial plans to maintain fiscal stability;

      (3) Review operational results of various city, or town, or fire district funds and evaluate

the structural soundness of each;

      (4) Advise the assessor, director of finance, city or town treasurer, purchasing agent, and

employees performing similar duties but with different titles;

LC000310 - Page 16 of 21

      (5) Provide assistance in all matters related to municipal or fire district financial affairs;

      (6) Review and approve the development and preparation of the annual municipal or fire

district budget, all department operating and capital budgets, and spending plans;

      (7) Review and approve all proposed labor contracts and obligations to determine if

consistent with a structurally balanced, five-year (5) plan;

      (8) Monitor the receipt of revenues and expenditures of all funds with the assistance of

city, or town, or fire district staff;

      (9) Participate in rating agency calls pertaining to the city, or town, or fire district;

      (10) Determine compliance with the various ordinances, laws (federal and state), and

rules and regulations related to receipt and expenditure of city, or town, or fire district funds;

      (11) Provide comment to the local governing body on the annual or supplemental

municipal or fire district budgets of the city, or town, or fire district and all of its departments;

      (12) Report quarterly to the chief elected officer, city or town council, fire district

governing body, director of revenue, the auditor general, the governor, and the chairpersons of the

house finance and senate finance committees on the progress made towards maintaining fiscal

stability and all financial operations of the city, or town, or fire district;

      (13) Make recommendations to the elected chief executive officer, city or town council,

fire district governing body, school committee, and the director of revenue, as appropriate, to

begin to address any operational and/or structural deficit;

      (14) Make recommendations to the elected chief executive officer, city or town council,

fire district governing body, and school committee, as appropriate, to have operational,

performance, or forensic audits, or similar assessments conducted;

      (15) Report any: (i) Inappropriate expenditure; (ii) Any improper accounting procedure;

(iii) All failures to properly record financial transactions; and (iv) Other inaccuracies,

irregularities, and shortages, as soon as practical to the elected chief executive officer, or in the

case of a municipality without an elected chief executive officer, the city or town council, or in

the case of a fire district, the fire district governing body; and

      (16) Notify in writing as soon as practical, the elected chief executive officer or the city

or town council, or the fire district governing body; if the finance advisor discovers any errors,

unusual practices, or any other discrepancies in connection with his or her work.

      (f) The city or town, including the school department or fire district, shall provide the

finance advisor with any and all information requested in a timely fashion.

      (g) The city, or town, or fire district shall annually appropriate amounts sufficient to

cover the costs of the administration and finance officer. The state shall annually reimburse the

LC000310 - Page 17 of 21

city or town for fifty percent (50%) share of such costs.

      (h) The city, or town, or fire district, at its expense, shall provide office space and

adequate resources needed by the administration and finance officer in the performance of his/her

duties.

      (i) Nothing contained herein removes duties from existing positions in the city, or town,

or fire district.

     45-9-11. Expenditures in excess of appropriations prohibited.

     (a) No official of a city, or town, or fire district that is subject to the jurisdiction of a

fiscal overseer, budget commission, or receiver, except in the case of an emergency involving the

health and safety of the people or the people's property declared by the city or town council or

fire district governing body, shall knowingly expend, or cause to be expended, in any fiscal year

any sum in excess of that official's departmental or other governmental unit's appropriation duly

made in accordance with the law, nor commit the city, or town, or fire district, nor cause it to be

committed, to any obligation for the future payment of money in excess of that appropriation,

with the exception of court judgments.

      (b) An official who intentionally violates this section shall be personally liable to the

city, or town, or fire district for any amounts expended in excess of an appropriation to the extent

that the city, or town, or fire district does not recover such amounts from the person or persons to

whom such amounts were paid and shall not be indemnified by the city, or town, or fire district

for any such amounts. The superior court shall have jurisdiction to adjudicate claims brought by

the city, or town, or fire district, or on the city's, or town's, or fire district's behalf by a budget

commission established under this chapter, and to order relief that the court finds appropriate to

prevent further violations of this section. A violation of this section shall be sufficient cause for

removal.

      (c) For the purposes of this section, the word "official" shall mean means a city, or town,

or fire district department head, permanent, temporary, or acting, including the superintendent of

schools, and all members of municipal boards, committees, including the school committee, and

commissions that recommend, authorize, or approve the expenditure of funds, and the word

"emergency" shall mean a major disaster, including, but not limited to, flood, drought, fire,

hurricane, earthquake, storm or other catastrophe, whether natural or otherwise, that poses an

unexpected and immediate threat to the health and safety of persons or property.

     45-9-12. Conflicts with other laws.

     Notwithstanding any general or special law to the contrary, unless otherwise specified,

the provisions of this chapter shall supersede any conflicting provisions of the city's, or town's, or

LC000310 - Page 18 of 21

fire district's charter, local ordinance, rule or regulation.

     45-9-13. Other state receivership laws inapplicable.

     No city, or town, or fire district shall be placed into, or made subject to, either voluntarily

or involuntarily, a state judicial receivership proceeding, and nothing in this act shall in any way

pre-empt or restrict the powers and remedies available to a state-appointed receiver under Chapter

9 of Title 11 of the United States Code and the receiver's ability to exercise such powers and

remedies on a city's, or town's, or fire district's behalf in a federal proceeding filed under Chapter

9 of Title 11 of the United States Code.

     45-9-14. No state guarantee.

     Nothing in this chapter shall be construed to pledge the credit and assets of the state to

pay the obligations or indebtedness, including bonded indebtedness, of any municipality or fire

district.

     45-9-15. Inconsistent provisions.

     Insofar as the provisions of this chapter are inconsistent with the provisions of any

charter, other laws, or ordinances, general, special, or local, or of any rule or regulation of the

state or any municipality or fire district, the provisions of this chapter are controlling.

     45-9-18. Additional powers of receiver.

     The receiver shall be entitled to exercise all powers under the general laws, this chapter,

the state constitution, any special act, any charter provision or ordinance that any elected official

or any body of the city, or town, or fire district may exercise, acting separately or jointly;

provided, however, that with respect to any such exercise of powers by the receiver, the elected

officials or the body shall not rescind, nor take any action contrary to, such action by the receiver

so long as the receivership continues to exist.

     45-9-19. Expenditures by elected officials in excess of appropriations prohibited.

     (a) No elected official of a city, town, or fire district that is subject to the jurisdiction of a

fiscal overseer, budget commission, or receiver, except in the case of an emergency involving the

health and safety of the people or the people's property declared by the city or town council or

fire district governing body, shall knowingly expend, or cause to be expended, in any fiscal year

any sum in excess of that official's departmental or other governmental unit's appropriation duly

made in accordance with the law, nor commit the city, or town, or fire district, nor cause it to be

committed, to any obligation for the future payment of money in excess of that appropriation,

with the exception of court judgments.

      (b) An elected official who intentionally violates this section shall be personally liable to

the city, or town, or fire district for any amounts expended in excess of an appropriation to the

LC000310 - Page 19 of 21

extent that the city, or town, or fire district does not recover such amounts from the person or

persons to whom such amounts were paid and shall not be indemnified by the city, or town, or

fire district for any such amounts. The superior court shall have jurisdiction to adjudicate claims

brought by the city or town, or on the city's, or town's, or fire district's behalf by a budget

commission established under this chapter, and to order relief that the court finds appropriate to

prevent further violations of this section.

     45-9-20. Orders of the receiver.

     In the event a receiver is appointed pursuant to the provisions of this chapter, powers of

the fire district governing body or powers of the city or town council exercisable by resolution or

ordinance shall be exercised by order of the receiver.

     SECTION 2. This act shall take effect upon passage.

========

LC000310

========

LC000310 - Page 20 of 21

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES -- BUDGET COMMISSIONS

***

     This act would remove fire districts from budget commission oversight.

     This act would take effect upon passage.

========

LC000310

========

LC000310 - Page 21 of 21