Opinion 93-11


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

BONDS AND NOTES -- Debt Limit (computation of with respect to installment purchase contracts)

PUBLIC CONTRACTS -- Installment Purchase Contracts (computation of 115% limitation)

WORDS AND PHRASES -- "Outstanding Indebtedness" (meaning for purposes of General Municipal Law, §109-b[6][c])

GENERAL MUNICIPAL LAW, §109-b(6)(c); LOCAL FINANCE LAW, §104.00: The term "outstanding indebtedness" as used in General Municipal Law, §109-b(6)(c) includes only outstanding indebtedness which is not excludable pursuant to law.


This is in reply to your inquiry asking whether the term "outstanding indebtedness" as used in General Municipal Law, §109-b(6)(c) in connection with the "115% limitation" contained in that section, applies to all outstanding indebtedness of the political subdivision without regard to whether the indebtedness is excludable from the political subdivision's debt limit.

General Municipal Law, §109-b(6)(c) contain three limitations pertaining to installment purchase contracts of political subdivisions. It provides that: (1) the aggregate amount of unpaid periodic payments, excluding interest, to be made under any outstanding installment purchase contract is deemed to be existing indebtedness for purposes of determining the political subdivision's power to contract indebtedness under Local Finance Law, §104.00; (2) no political subdivision may enter into an installment purchase contract if the amount of unpaid periodic payments, excluding interest, proposed to be made under the installment purchase contract plus those outstanding, would exceed 40% of the political subdivision's debt limitation prescribed in Local Finance Law, §104.00; and (3) no political subdivision may enter into an installment purchase contract if the total amount of the unpaid periodic payments, excluding interest, proposed to be made under the installment purchase contract plus those outstanding, together with the amount of "outstanding indebtedness, would exceed one hundred fifteen percent of the limit prescribed by [Local Finance Law, §104.00]". Your question pertains to the computation of the third limitation.

The phrase "outstanding indebtedness" is not defined in section 109-b. In the absence of a contrary definition, we believe that if the term were used by itself, it would generally encompass all outstanding indebtedness, whether or not excludable from a political subdivision's debt limitation (cf. Local Finance Law, §§20.00, 124.10). It is a fundamental rule of statutory construction, however, that a statute must be construed as a whole and that statutory words must be read in their context (McKinney's Statutes, §97). Applying this general principle, the term "outstanding indebtedness" must be read together with the clause following it, which provides that the limitation is 115% of the "limit prescribed by [Local Finance Law, §104.00]".

Section 104.00 prescribes limitations on the amount of "indebtedness" which may be contracted by a municipality, school district or fire district (see also State Constitution, art VIII, §4). Section 104.00(a) defines "indebtedness", for purposes of calculating the limitations under that section, to mean "indebtedness other than an indebtedness which would be excluded, pursuant to law, in ascertaining the powers of [a] county, city, town, village, school district or fire district to contract indebtedness". Therefore, since the limitation in General Municipal Law, §109-b(6)(c) is 115% of the limit prescribed by Local Finance Law, §104.00 and since the calculation of the limit in section 104.00 does not include indebtedness "which would be excluded, pursuant to law", it is our opinion that only outstanding indebtedness which is not excludable pursuant to law is considered in determining the 115% limitation.

March 11, 1993
Cornelius F. Healy
Deputy State Comptroller