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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
LOCAL LAWS -- Procedural Requirements (mandatory referendum - curtailing powers of city board of estimate)
MUNICIPAL FUNDS -- Budget Procedures (increase in items by city council in city of the second class) -- Contingency Funds (in cities of the second class)
PUBLIC OFFICERS AND EMPLOYEES -- Powers and Duties (city council in city of the second class - budget items)
CITIES -- City Council (authority to increase budget items) -- Powers and Duties (supersession of Second Class Cities Law)
SECOND CLASS CITIES LAW, §§4, 75; MUNICIPAL HOME RULE LAW, §23(2)(f): A city of the second class has implied authority under Second Class Cities Law, §75 to include in its annual estimate a reasonable amount for general contingent purposes. A city council of a city of the second class which is governed by Second Class Cities Law, §75 may not increase any item in the annual estimate submitted by the board of estimate and apportionment, including an item for general contingent purposes. The city council may be authorized to make such increases, however, by local law subject to mandatory referendum.
You have asked whether section 75 of the Second Class Cities Law (SCCL) would permit a city council to increase any item set forth in the annual estimate prepared by the city's board of estimate and apportionment and whether an amount estimated for contingencies would constitute "an item" for this purpose. If the city council does not have the power to increase items in the annual estimate, you ask whether a local law granting the council that power would be subject to a mandatory referendum.
You have advised us that the city is subject to the provisions of section 75 of the Second Class Cities Law, except that its charter has been amended to authorize the city council to increase, decrease or reject salary items in the annual estimate submitted by the board of estimate and apportionment (cf. SCCL, §75, which otherwise prohibits a city council from diminishing or rejecting any items related to salaries). You alsostate that the city adopted plan F of the Optional City Government Law (L 1914, ch 444, §115), establishing a strong mayor form of government.
Pursuant to SCCL, §75, the board of estimate and apportionment, which is composed of the mayor, comptroller, corporation counsel, president of the common council, and the city engineer (SCCL, §71), must submit to the city common council its "annual estimate", which is an itemized statement of the estimated revenues and expenditures of the city for the fiscal year (cf. 1982 Opns St Comp No. 82-293, p 370, with respect to a city of the second class in which the board of estimate and apportionment has been abolished). The estimate of expenditure must include "an estimate of the several amounts of money which the board ... deems necessary to provide for the expenses of conducting the business of the city in each board, department and office thereof and for the various purposes contemplated by this chapter and otherwise by law for the said fiscal year" (SCCL, §75; emphasis added).
Within 30 days of the submission of the annual estimate and after a public hearing, the city council must "adopt such estimate so submitted or shall diminish or reject any items therein contained, and adopt said estimate as so amended" (id.). The council is barred from diminishing or rejecting certain items such as those which relate to indebtedness or estimated revenues, and is further enjoined not to "increase any item, for any purpose contained in said estimate" (id.; emphasis added).
The word "item" is not defined in the SCCL. Its meaning, however, may be determined from the context of the statute of which it is a part (see McKinney's Vol. 1, Statutes, §97; see also Block v Sprague, 285 NY 69; People v Tremaine, 281 NY 1; Pryor v City of Rochester, 166 NY 548). Considering SCCL, §75 as a whole, since the annual estimate must consist of an "itemized statement", we believe the word "item" refers to each of "the several amounts of money ... necessary for the various purposes" of the city set forth in the estimate of expenditure (cf. SCCL, §36 providing that "[n]o appropriation of money shall be made for any purpose except by ordinance specifying each item, the amount thereof, and the department or specific purpose for which the appropriation is made").
With respect to whether the amount in the annual estimate designated for contingencies constitutes an "item" for this purpose, we note initially that neither the SCCL, nor the General City Law expressly authorizes cities to include in their budgets amounts for general contingent purposes (cf. County Law, §365; Town Law, §§107, 112; Village Law, §§5-506[a], 5-520, which authorize counties, towns and villages, respectively, to establish contingency funds). The question of whether a municipality, in the absence of express statutory authority, may provide in its budget an amount for general contingencies was addressed in Coggeshall v Hennessey, 254 App Div 374, 5 NYS2d 312, affd 279 NY 438. In that case, a taxpayer brought an action to declare illegal the levying of taxes for certain items in a town budget, including items for "miscellaneous" purposes and "contingencies". At the time, former section 112 of the Town Law contained a requirement similar to that in SCCL, §75 that "the town board [annually] shall prepare an itemized statement in writing of the estimated revenues and expenditures for the next ensuing fiscal year ...". The Appellate Division held that both items were legal and further stated as follows:
Such items are indispensable in the practical carrying on of the affairs of a town. It may not be presumed that these moneys will be diverted to other than truly miscellaneous or contingent expenses. In view of the size of the town and the extent of its budget, it may not be said that the amounts of these items have been fixed in bad faith to effect an illegal purpose. (5 NYS2d at 314).
In affirming the Appellate Division's decision, the Court of Appeals noted that the amounts for miscellaneous items and for contingencies were "not at all unreasonable". (279 NY at 443).
Based on Coggeshall, supra, therefore, it is our opinion that the city has implied authority under SCCL, §75 to include in its annual estimate an amount for general contingent purposes. The amount so provided, however, must be fixed in good faith and must not be unreasonable in relation to the size and character of the city and the total amount of the annual estimate (see also Korn v Gulotta, 72 NY2d 363, 374, 534 NYS2d 108, 113; see Town Law, §107, Village Law, §5-506[a], and County Law, §365, containing limitations on the contingency funds of towns, village and counties, respectively).
As to a local law authorizing the common council to increase items in the annual estimate, we note that cities of the second class are subject to the SCCL until it or a provision thereof "is superseded pursuant to the municipal home rule law, was superseded pursuant to the former city home rule law or is or was otherwise changed, repealed or superseded pursuant to law" (see SCCL, §4). Thus, the city, by local law, may supersede the budget provisions of section 75 of the SCCL.
Pursuant to the Municipal Home Rule Law (MHRL), §23(2)(f), a local law which "[a]bolishes, transfers or curtails any power of an elective officer" is subject to a mandatory referendum. In Neils v City of Yonkers, 38 Misc 2d 691, 237 NYS2d 245, the court held that former City Home Rule Law, §15, a predecessor statute to MHRL, §23(2)(f), applied to a proposed local law which, inter alia, would have subjected the mayor's power to appoint a commission for the preparation of new ward boundaries to the advice and consent of the common council. The court stated that the local law amounted to a "curtailment" of the mayor's power (see also, Shilbury v Board of Supervisors of Sullivan County, 54 Misc 2d 979, 284 NYS2d 124; Yevchak v Raymond, 63 AD2d 197, 407 NYS2d 83; cf., Fisher v Kelly, 289 NY 161).
Under the SCCL, the board of estimate and apportionment, in submitting its estimate of expenditures, is effectively empowered to establish a maximum amount to be appropriated for each purpose specified in the estimate (see SCCL, §§75, 76). Further, three of the five members of that board (the mayor, the comptroller and the president of the common council) are elected officers, unless otherwise provided by State or local law (see SCCL, §4). Thus, to the extent that the board of estimate and apportionment is composed of elected officers, a local law which would authorize the city council to increase estimates for any item in the budget would effect a diminution in the powers of those officers because it would curtail their power to establish the maximum amount to be appropriated for each purpose specified in the annual estimate. Therefore, it is our opinion that such local law would be subject to a mandatory referendum.
March 27, 1991
Linda S. Kingsley, Esq., First Ass't. Corp. Counsel
City of Binghamton