What Happened?
The mayor and comptroller of New York City recently established a comprehensive subcontracting database that will support new requirements to have payments publicly reported for increased transparency into governmental financials.
So What?
Calling for public reporting of payments made by prime contractors to subcontractors will make it easier for city officials and the public to monitor financial activity and detect instances of fraudulent billing practices. By making governmental payment information more accessible, there should be less instances of misuse of funds or other wasteful practices. The database will enable oversight officials to track public agency performance to ensure the most efficient strategies are in place and costly disruptions are avoided or corrected. The requirements include:
- Disclosure of payment information via the City’s Payee Information Portal for all contracts valued at more than $1 million
- Listing of subcontractors hired and each payment made to them
- In June, all contracts above $250,000 will be reported on the database, accounting for 96 percent of all city dollars spent on subcontractors
- If information is not provided, the city can withhold payments
Breakdown of the Portal
The Checkbook NYC 2.0 website allows the public, as well as city officials, to browse New York City expenditures in a centralized database, segmenting the information by budget, revenue, spending, contracts and payroll. The website includes graphs, charts, tables and other interactive features to clearly illustrate where taxpayer money is being used to increase financial responsibility and accountability. Users can view data on individual agencies, access financial resources to further understand municipality financials and follow trends in budgeting and spending based on:
- Financials
- Revenue Capacity
- Debt Capacity
- Demographics
- Operational Needs
New Policy in PA
Officials in Montgomery Township, Pennsylvania, recently approved a new policy to guarantee the municipality’s bookkeeping practices are compliant with the latest federal reporting rules for tax-exempt bonds. By following the federal requirements, the township will be able to maintain the tax-exempt status of its debt instrument, or the $8.75 million bond that is being tapped into to support a new community center. To be compliant with the rules, both the borrower and issuer of the bond must track all financial activity with detailed records of expenditures and investments involving the funds. Each year, the city will produce disclosure information explaining the project’s financial status to keep accurate tabs on how the bond’s money is being allocated.
The U.S. Internal Revenue Service recommends municipalities maintain clear tax records related to such financial activity for the lifespan of the project as well as three years following in case of an audit. The IRS may not inquire on certain records until after a project is complete, and detailed documentation must be made available for a swift resolution.
The IRS has also released the Avoiding Troubled Tax-Advantaged Bonds report to assist issuers of tax-advantaged municipal bonds with taking the proper steps to avoid complications in transactions. The report discusses three phases of a bond’s lifecycle to breakdown issuer requirements:
- Development phase
- Execution phase
- Post-issuance phase
Other Financial Efforts
Monitoring city financial activity, Gov1 has reported on local bankruptcy trends and innovative funding solutions.