APA to Establish Workgroup to Address Local Fiscal Distress (language only)

Item 2 #1s

Language

Page 13, after line 7, insert:

"E.1. The Auditor of Public Accounts shall establish a workgroup to develop criteria for a preliminary determination that a local government may be  in fiscal distress.  Such criteria shall be based on information regularly collected by the Commonwealth or otherwise regularly made public by the local government.  Fiscal distress as used in this context shall mean a situation whereby the provision and sustainability of public services is threatened by various administrative and financial shortcomings including but not limited to cash flow issues, inability to pay expenses, revenue shortfalls, deficit spending, structurally imbalanced budgets, billing and revenue collection inadequacies and discrepancies, debt overload, and/or lack of trained and qualified staff to process administrative and financial transactions. Fiscal distress may be caused by factors internal to the unit of government or external to the unit of government and in various degrees such conditions may be controllable by management or uncontrollable by management.

2. Based on the criteria established by the workgroup, the Auditor of Public Accounts shall establish an early warning system.  Under the early warning system, the Auditor of Public Accounts shall establish a regular process whereby it reviews data on at least an annual basis to make a preliminary determination that a local government is in fiscal distress.

For local governments where the Auditor of Public Accounts has made a preliminary determination of fiscal distress based on the early warning system criteria, the Auditor of Public Accounts shall notify the governing body of its preliminary determination that they meet the criteria for fiscal distress.  Based on the preliminary determination based on the early warning system or the request of the local government, the Auditor of Public Accounts may conduct a review and request documents and data from the local government.  Such review shall consider factors including, but not limited to,  budget processes, debt, borrowing, expenses and payables, revenues and receivables, and other areas, and, if so, the scope of the issues involved.  After such review, if the Auditor of Public Accounts is of the opinion that state assistance, oversight, or targeted intervention is needed, either to further assess, help stabilize, or remediate the situation, the Auditor shall notify the Governor,  the Chairmen of the House Appropriations and Senate Finance Committees, and the governing body of the local government in writing, outlining specific issues or actions that need to be addressed by state intervention.

3. The notification issued by the Auditor of Public Accounts pursuant to paragraph 2 above shall satisfy the notification requirement necessary to effectuate the provisions of §4-1.05 6. of this act.".