U.S. Treasury Extends ARPA Reporting Deadline

The U.S. Department of Treasury has extended the reporting deadline for the Project & Expenditures Report for all recipients of the Coronavirus State and Local Fiscal Recovery Fund (SLFRF). According to NYGFOA and several other local government legislative advocacy groups across the country, the U.S. Department of Treasury sent an email out on Thursday, September 30, 2021 notifying states of the deadline change. Here is a link to the official addendum. According to the email correspondence, the deadline extension comes as a result of the feedback and comments gathered from recipients during that process. Please note:

  • States, Metropolitan Cities, Counties, Territories, and Tribal Governments will now report on January 31, 2022, instead of October 31, 2021 and will cover the period between award date and December 31, 2021.
  • The first reporting deadline for Non-Entitlement Units (NEUs) will be April 30, 2022, instead of October 31, 2021 and will cover the period between award date and March 31, 2022.

States have been sent a draft letter regarding the change by the Treasury which can be used to notify their NEUs. As an NEU you should continue working with your state or territory to take action on your allocated distribution and provide the necessary contact information to set up your account in Treasury’s Portal. In the event you decide to decline and request the transfer of funds, you will need to submit the Treasury form provided by your state or territory. Further instructions will be provided at a later date, including updates to existing guidance as well as a user guide to assist recipients to gather and submit the information through Treasury’s Portal. Please visit Treasury’s website at www.Treasury.gov/SLFRPReporting for the latest information. As always, if you have specific questions and would like to consult with one of our specialized RBT Government team members, contact us today.

Sources: U.S. Department of Treasury, NYGFOA

Why NY Lawmakers are Pushing for Local Changes After Surfside Collapse

Why NY Lawmakers are Pushing for Local Changes After Surfside Collapse

In the days and weeks following the sudden Surfside condo collapse, the nation watched in horror as the unimaginable loss of life unfolded.

According to a 2021 Statista Research Department data report, approximately 24 percent of New Yorkers live in apartment complexes. For many residents around the state, it raised safety concerns and questions about infrastructure closer to home. How safe are the apartment buildings and condominiums that house New Yorkers?

As a “municipal home rule” state when it comes to zoning regulations, local New York municipal governments adopt and enforce their own zoning ordinances rather than countywide zoning.

You might be familiar with the NYC Facade Inspection Safety Program (formerly known as Local Law 11), which requires NYC buildings taller than six stories to have their facades inspected and repaired every five years. But depending on what part of New York you call home, the rules will likely be very different. Every local government of the 42 municipalities within Orange County, for example, has its own zoning codes and zoning maps. Your local county Department of Planning likely strives to maintain current versions of zoning maps for all of the municipalities within your respective county. Taking the time to stay current with this information helps to inform planning policies, understand areas where future growth may likely occur, and assess the suitability and compliance of various land use proposals. But still, it’s important to ask: how often are your local leaders following up, or making necessary changes to zoning codes?

The next step would be evaluating the construction of buildings. For example, following the Surfside tragedy, The New York Times reported that “Three years before the deadly collapse… a consultant found alarming evidence of ‘major structural damage’ to the concrete slab below the pool deck…”

At the time the consultant noted, “Though some of this damage is minor, most of the concrete deterioration needs to be repaired in a timely fashion.” Although the engineer’s report helped shape plans for a multimillion-dollar repair project more than two and a half years after the building managers were warned, the collapse preceded any action. For many, the message rings loud and clear: some fixes can’t be delayed and that may mean local protocols need to be updated.

In the wake of this disastrous event, three New York state senators are pushing for stiffer building inspection requirements to prevent a repeat tragedy.

Legislators from Nassau County, Brooklyn, and Staten Island proposed a law requiring building owners to pay for periodic inspections of their properties, according to the news outlet The Patch. “How much do we know about the structural integrity of our buildings here?” asked Sen. Todd Kaminsky at a news conference announcing the plan. Little else is known about the proposed law or when the group of senators, which also includes Diane Savino and Roxanne Persaud, plan to introduce it. The group wrote a letter to New York’s Code Council, a body of 17 gubernatorial appointees empowered to update the fire and energy conservation codes and to adopt more restrictive local standards upon the recommendation of local governments.

The New York Department of State, which oversees the Division of Building Standards and Codes, said it has been reviewing building codes since the Florida collapse.

“We are reviewing the senator’s letter and will also carefully review the final investigative report regarding the building collapse in Miami to examine whether any changes may be warranted in New York State to prevent a similar tragedy from happening here, and to help keep New Yorkers safe,” state officials said in a statement. State officials said local governments are responsible for enforcing state codes, including building permits, construction inspections, fire safety, and property maintenance inspections.

Even if your hometown does not have oceanfront erosion to contemplate, every neighborhood faces its own set of unique environmental factors and challenges.

The Surfside condo collapse acts as a somber reminder for local government to take very seriously its responsibility to residents. Proactively maintaining the structural integrity of the buildings that make up your community today could save a life, tomorrow.

Sources: Forbes, The Real Deal, Statista

What You Need to Know About GASB 84

What You Need to Know About GASB 84

Ninety-nine percent of counties, cities, towns, villages, and fire districts in New York State use OSC’s electronic filing software for preparing and filing their Annual Update Document (AUD).

However, recently OSC updated the AUD filing software, moving from version 5.95 to 5.96, to assist with the implementation of GASB 84. Now that it has, it’s time to ensure your implementation is complete. As you may be aware, the Government Accounting Standards Board (GASB) has been issuing new standards over the last few years in a bid to improve the financial reporting of U.S. and local governments. The GASB’s goal is to provide better information to financial statement users. OSC has determined that Statement 84 should be implemented for AUD filling purposes. As a refresher, GASB 84 outlines the specific criteria needed to determine which activities are fiduciary. Local governments and school districts must assess which activities are fiduciary under the new standards because there are significant changes in the way items can be reported in the future.

There are three types of fiduciary activities defined in Statement 84:

  • Fiduciary component units, which include certain pension and other post-employment benefit (OPEB) arrangements and other component units that are fiduciary
  • Pension and OPEB arrangements that are not component units
  • Other fiduciary activities

Previously, agency fund activities only required balance sheet entries.

Now, however, activities that are reported in the governmental funds will need to also be included in the results of operation (revenues and expenditures). For example, when recording payroll expenditures in a governmental fund, local governments, and school districts will need to record a liability for withholdings and keep the related cash in the governmental fund until those amounts are cleared. While these concepts are not new from an accounting perspective, local governments and school districts need to be mindful of the differences between how assets were previously recorded in an agency fund and how they will now be recorded in a governmental fund. Should activities currently classified as fiduciary still be considered fiduciary in nature or should these activities now be reported in a governmental fund, as a business-type activity, or not even reported at all? Additionally, consider if any current unrecorded activities would now meet the fiduciary activities definition and need to be reported.

RBT CPA’s wants you to be prepared for crucial financial news that impacts you and your municipality.

We understand keeping up with these complex changes can sometimes be overwhelming. Our goal is to alleviate your stress by breaking down these important changes and making sure you can implement best practices for the most common situations you’re bound to run into. It’s important to start identifying your organization’s fiduciary funds as soon as possible, if you haven’t already done so. While complying with GASB 84 may be complicated initially, don’t worry—we’re here to help. We want to assist you in analyzing various activities and change the way you think about fiduciary activities so you’re never unprepared. You can click here to view our GASB 84 webinar with your team or contact our professional team to schedule an appointment and connect. Additionally, if your local government or school district would like to share examples of how you have implemented these changes successfully, please email me at lhannigan@rbtcpas.com – we would love to hear your insight.

How to Revamp Your Infrastructure with ARPA Funds

How to Revamp Your Infrastructure with ARPA Funds

While the nation’s infrastructure earned a C- in the 2021 Infrastructure Report Card, (yes, you read that right) New York faces infrastructure challenges of its own.

Luckily, the American Rescue Plan Act (ARPA) promises $350 billion dollars in emergency funding for state, local, territorial, and tribal governments to remedy the current mismatch between rising costs and falling revenues. The local funding portion is approximately $130 billion, equally divided between cities and counties. While there are various eligible uses of these funds, let’s dive into how your community can benefit from investing in infrastructure that’s in desperate need of an upgrade.

The deteriorating infrastructure plaguing local municipalities across the state continues to impede New York’s ability to compete in an increasingly global marketplace.

Did you know that driving on roads in need of repair in New York costs each driver $625 per year, and 9.9% of bridges are rated structurally deficient? Commuter hubs in some spots are so heavily used that they simply are not modern enough to handle current or future demands. The New York State Department of Transportation (NYSDOT) commented to the not-for-profit Hudson Valley Pattern for Progress on the state of repair that much of the roadway and bridge infrastructure in New York State, and in particular, in the Hudson Valley, is aging and can be a challenge to manage. NYSDOT further remarked, “The Hudson Valley has many roadways and bridges that were first constructed in the early part of the 20th century and at times lack the functionality afforded by current standards.” The New York State Department of Environmental Conservation (NYSDEC) has also documented infrastructure concerns, like how most of the 140 municipal wastewater-treatment plants between New York City and the Troy Dam are operating beyond their original design life. According to NYSDEC, 11% of sanitary-sewer pipes in the Hudson Valley, covering 2,600 miles, were installed before 1925. About 26% are over 65 years old.

Critical infrastructure updates are a well-suited use of ARPA funds because they are typically non-recurring expenses that can be strategically targeted to important long-term assets.

However, it’s always wise to assess any ongoing operating costs that may be associated with a specific project before committing ARPA funds. If reinvesting in deteriorating infrastructure is at the top of your to-do list, we have important factors you should consider to maximize your ARPA dollars and generate future economic recovery in your community.

  • When you select a project to focus resources on, ask yourself: can your team complete a structured quantification of public benefits? If the answer is no, go back to the drawing board. Develop projects with tangible, quantifiable benefits with clear metrics supporting their contribution to social and economic growth.
  • Consider establishing local or regional committees to minimize administrative barriers to coordinate project funding. By funding projects such as transportation or power grids that benefit surrounding communities, you are strategically investing to align objectives across departments and levels of government.
  • Opt for investing in infrastructure projects that support a geographically and demographically diverse range of residents across income levels, urban and rural areas, and racial and ethnic lines. Engage with the public, the private sector, and civil society stakeholders on design and implementation.
  • Whenever possible, use dedicated grants and programs, saving ARPA funds for priorities not eligible for federal/state assistance programs.
  • Whenever practical, costs related to ARPA funding should be spread over the qualifying period (through December 31, 2024) to strengthen budgetary stability.

Success in a 21st-century economy requires serious, sustained leadership on infrastructure investment at all levels of government.

Delaying these investments only escalates the cost and risks of an aging infrastructure system, an option that the country, New York, and families can no longer afford. Localities will receive the ARPA funds in two tranches – the first, after the U.S. Treasury certifies the proceeds to each jurisdiction and the second, one year later. Funding must be spent by the end of the 2024 calendar year. As the U.S. Department of the Treasury continues to issue additional detailed guidance, our team will continue to update you and help you to navigate this financial relief. For over five decades, our governmental clients have depended on RBT professionals for assistance with all types of financial issues. We encourage you to contact our team today if you have concerns about ARPA, or other questions surrounding the unique factors that impact the government sector.

Sources: GFOA, Infrastructure Report Card, McKinsey, Pattern For Progress

Should Your Team Make Vaccinations Mandatory

Have you considered making COVID-19 vaccinations mandatory? If so, you’re not alone. Government workers have navigated uncertainty and unprecedented challenges since March 2020, even as most other sectors of the economy shut down completely or moved to remote employment. Just a week ago, public-facing government and other public employees, non-profit workers, and essential public-facing business service workers were deemed eligible for the vaccine in New York. This includes public works employees, social service and child service caseworkers, government inspectors, sanitation workers, DMV workers, County Clerks, building service workers, and election workers. Yet as the COVID-19 vaccine does gradually become more widely available, the scientific community did not foresee the next hurdle being vaccine resistance, but it’s the reality that’s setting in across the country. Polling data continues to show that a significant percentage of Americans prefer not to receive the COVID-19 vaccine – in fact, research from the Society for Human Resource Management (SHRM) found that 28% of U.S. workers are willing to lose their job rather than get vaccinated. The risk of unnecessary interruptions or delays in local municipality duties due to increased COVID-19 infection within offices is of great importance as it will directly impact communities. So, how do local governmental leaders navigate this latest bump on the road to economic recovery? Read on for the latest guidance.

Can an employer make COVID-19 vaccinations mandatory for workers?

ANSWER: In December, the federal agency focused on workplace discrimination, the Equal Employment Opportunity Commission, said because the vaccination itself is not a medical examination, employers could make COVID-19 shots mandatory for their workers. Keep in mind that if employees have medical or religious reasons that prevent them from taking a coronavirus vaccine, employers could be legally required to give the workers some reasonable alternative to continue to work. Also, for employers with a unionized workforce, the employer must consider bargaining requirements before implementing a mandatory vaccine policy.

Can an employer ask an employee if he or she has already received the vaccine or require proof of vaccination?

ANSWER: Generally, yes. However, that inquiry can only be made, according to the EEOC, if the question is “job-related and consistent with business necessity” as provided under the ADA. To meet this job-relatedness standard, the employer will need to establish that the worker’s failure to be vaccinated would pose a “direct threat” to the well-being of that employee or others with whom the employee would have contact as part of his or her job duties.

Can an employer fire an employee who refuses to be vaccinated?

ANSWER: Possibly, in limited circumstances. The EEOC guidance reminds employers that it will need to make reasonable accommodations to employees seeking an exemption due to disability-related reasons or religious objections and will need to follow the established reasonable accommodation process under either the ADA or Title VII before taking any adverse employment actions. The EEOC cautions employers that if it can establish that an employee who is not vaccinated poses a direct threat (that cannot be accommodated without undue hardship), the employer can exclude the employee from the worksite, but the employer cannot terminate the employee without further consideration of the employee’s legal protections or other possible accommodation, including whether the employee can perform his or her job remotely.

President Biden recently moved up the timeline for vaccine allocation by ordering all states, tribes, and territories to make every U.S. adult eligible for the COVID-19 vaccines by May 1. According to New York State’s COVID-19 Vaccine Tracker, 13% of the population is currently completely vaccinated.

It is important to remember that the EEOC guidance is only that—guidance—and not a law. Consequently, some employees may legally challenge mandatory vaccination programs and there is no guarantee that a court will react favorably to a particular legal challenge. There are also important legal limitations with a mandatory program even under the EEOC’s guidance. Therefore, employers mandating the vaccine should be prepared for some resistance from employees, and many may opt to strongly encourage vaccination without requiring it. A recent survey found that while most employers have no plan to create a mandatory vaccination process, many do plan to encourage employees to get the vaccine. Nearly 90% said they would provide information to employees (e.g., how to get vaccinated, the benefits of doing so) and nearly 40% said they would offer vaccine administration at their facility to increase convenience – even though this may be easier said than done. A third said they would offer paid time off for employees to receive the vaccine and/or recover from any side effects.

We hope this summary provides some helpful information for your team to consider as you navigate this complex issue. Pursuing a mandatory vaccination program ultimately requires management, together with legal and HR teams, to engage in significant planning and develop a program detailing how the process will work from beginning to end. If you would like to talk to our dedicated team, please contact us today. Additionally, if you have HR questions, please reach out to our wholly-owned subsidiary Visions HR, and connect with Janet Giannetta.

Sources: PBS, AARP, NY.Gov, SHRM

4 Cyber Security Safety Steps: Is Your Municipality at Risk?

4 Cyber Security Safety Steps: Is Your Municipality at Risk?

If you don’t have a cyber security plan in place, you can’t afford not to.

Local municipalities are under a growing threat from cybercriminals. Now more than ever before, residents need reliable, real-time access to information from public officials. While there is never a convenient time for a cyber-attack to take place, imagine how damaging a data breach would be if it impacted the ongoing COVID-19 response or vaccine rollout? Since 2017, cyber-attacks on local government rose by almost 50%, according to the “State and Local Government Security Report” released by cybersecurity firm BlueVoyant in August 2020. Because of the large amount of highly sensitive personal information that can be accessed including date of birth, social security number, next of kin, and current and previous addresses, (all of which can be used to steal a person’s identity) local and state government data is a prime target for malicious cyber-criminals. If you fall into the pool of local municipalities that are unprepared for an attack since transitioning some (or all) of your employees to telework, read on to save your team and your community from a huge financial and emotional headache.

Following the simple steps below can help you avoid:

  • Financial losses from theft of banking information
  • Financial losses from disruption of governmental operation
  • High costs to rid your network of threats
  • Damage to your reputation after telling public their information was compromised

 

Start with the basics of data safety.

Keeping your community safe requires your own computer systems to be protected. It may feel overwhelming to revise an existing plan, but it is crucial to protect your municipality. For starters, make sure all computers are equipped with antivirus and antispyware software, consider whitelisting programs and automate software updates. Use firewalls and spam filters as an additional line of defense. Keep your Wi-Fi network secure and hidden and create a wireless network for guests. The most secure way to offer visitors Wi-Fi access without allowing access to your municipality’s entire network is to create a subnetwork. Anti-malware solutions that combine signature-based detection and cloud-assisted technologies can also defend your devices against new, sophisticated threats.

Hackers can’t steal what you don’t have.

The more data you collect and store, the higher your cybersecurity liability. Residents are already entrusting you with a lot of highly sensitive, personal information. Don’t collect additional information you don’t need and only store information for as long as you have a legitimate need. It’s a best practice to also store data backups offline, as malicious software like ransomware becomes increasingly problematic for governmental institutions. In many cases, the victim must pay the cybercriminal within a set amount of time or risk losing access forever. And since malware attacks are often deployed by cyber thieves, paying the ransom doesn’t ensure access will be restored. Even when municipalities don’t pay, the costs can be staggering. For instance, the 2019 ransomware attack on Baltimore cost the City more than $18 million in damages and remediation.

Require unique passwords.

You’d be surprised by how many people still use “password” as the one and only defense against hackers. Remember, hackers have access to software that guesses passwords with common dictionary words. Consider implementing two-factor authentication procedures to offer an extra level of protection from hackers who may try to guess passwords. From the top leadership to the newest employee, cybersecurity requires the vigilance of everyone to keep data, residents, and capital safe and secure. Your employees should also have their own individual account/passwords automatically reset every 30 or 60 days.

Frequently, cyber security breaches stem from human error.

These mistakes are easily preventable through training. Your municipality should have cybersecurity procedures in place that clearly outline employee responsibilities as well as reporting procedures for lost or stolen devices that contain sensitive data. The Federal Communications Commission offers a cyberplanner to help organizations create a plan to protect their information. (You can generate a customized plan at the bottom of the page after you create it.) Educate and re-educate employees on current best practices so they understand the implications of a data breach, as well as the magnitudes for violating your security protocols.

Ultimately, the way your municipality prepares for and responds to a potential data breach can make or break your reputation. Protect your reputation and your community’s valuable information by preparing for the worst-case scenario and recruiting teams of experts to assist you. From IT, to PR, to financial preparedness, make sure you have your bases covered, and your team is informed. To consult a trusted RBT advisor, don’t hesitate to contact us today.

The 411 on the 1099: What You Need to Know

The 411 on the 1099

Ready for a blast from the past?

OK, maybe that description is a bit ambitious, but we think it’s interesting that the government is now bringing back Form 1099-NEC, which was last used back in 1982, during the Reagan administration. For the last few decades, business owners and local government were responsible for using the Form 1099-MISC to report nonemployee compensation. But with the return of Form 1099-NEC, municipalities can say hello to a revamped form. We know it’s been a while since you dusted off your signature 80’s shoulder pads, leg warmers, and Walkman. So, we figured you’d want a refresher on this form as you head into the 2020 tax season. Here’s what you need to know:

You’re familiar with Form 1099-Misc – it’s like a W2 designed to report certain types of compensation to individuals and unincorporated entities based on what the business or municipality has paid them throughout the year. It’s not disappearing, but for the 2020 tax year, payors will no longer report nonemployee compensation, such as payments to independent contractors, on this form. Instead, that’s where Form 1099-NEC comes into play (download it here).

Generally, you’re required to file a Form 1099-NEC if you meet the following conditions:

  • You paid someone who’s not your employee
  • You paid for services during your trade or business
  • You paid an individual, partnership, estate, or corporation (in some cases)
  • You paid at least $600 to the payee during the year

Miscellaneous service payments other than nonemployee compensation should still be reported on Form 1099-MISC. This includes payments of at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest, and payments of at least $600 in:

  • Rents
  • Payments to an attorney (other than fees for services)
  • Section 409A deferrals
  • Nonqualified deferred compensation

There are other categories that are less likely to be applicable to local municipalities, for further clarification, please reference this IRS link.

For 2020, the IRS requires you to furnish the statements to recipients and file Form 1099-NEC on or before January 31, 2021. This differs from the Form 1099-MISC IRS filing deadlines: if you file on paper, you must file Form 1099-MISC by March 1, 2021; if you file electronically, you must file Form 1099-MISC by March 31, 2021. The deadline for furnishing the 1099-MISC to the recipient is the same, January 31, 2021. Determining which form you will need to file depends largely on the agreement or relationship your municipality has with a given recipient. As a best practice, we suggest that municipalities carefully review the IRS requirements for independent contractor status and always get W-9 forms completed before making any payment to a new vendor or independent contractor. This will save tremendous time at year-end and reduce your chances of getting slammed with IRS penalties. As always, if you run into confusion navigating this change, please contact our dedicated team at RBT.

 

Municipalities Can Build Financial Resilience in the COVID-19 Era and Beyond

Municiplaities Resilience Covid-19

The COVID-19 pandemic and the accompanying shutdown have brought financial challenges to municipal governments throughout New York State.

Sales tax revenues declined steeply across the state in April and May compared to 2019, and state aid will be cut or delayed. Unemployment rates may affect residents’ ability to pay property taxes, creating further worries about revenue as we head toward the fall budget season.

There are strategies that county, city, town and village governments can undertake to mitigate the effects of the crisis: finding alternate ways to generate revenue and to cut costs to address short-term needs in the next 12 to 18 months; and making the budgeting process and financial practices more resilient to address long-term goals for the next three to five years.

The starting point can be a two-part analysis: First, a short-term analysis of cash flow to ensure the municipality can keep running in the next few months. Then a long-term forecast can determine if an economic upturn will resolve issues, or if there are deeper problems that need repair.

The COVID-19 pandemic has caused immediate fiscal pain around the state.

A survey by the Association of Towns of the State of New York (AOT) found that in the month of March, towns in New York lost roughly $215 million in revenue between drops in sales tax, mortgage recording taxes, license and permit fees and justice court fines. AOT noted in its survey findings that businesses in the state were operating as normal for the first half of March. Sales tax made up the largest portion of the loss, according AOT.

The New York State Comptroller’s Office has reported that April sales tax revenues in New York’s counties and cities dropped by 24.4 percent compared to April 2019. May’s sales tax collections fell 32.2 percent compared to May 2019.

State tax receipts for May fell by 19.7 percent compared to May 2019, a drop of $766.9 million, the Comptroller reported. Personal income tax withholding revenues dropped 9 percent in May compared to May 2019.

In bad times, the Government Finance Officers Association recommends taking a financial diagnostic review of operations and the budgeting process to provide officials of a financially distressed municipality with an in-depth look at their budgeting and fiscal practices. This helps to assess financial health and to identify areas for strategic cost savings and alternative sources of revenues.

In such a climate, it is crucial that local governments find a way to create what the GFOA calls “culture of frugality,” and find responsible, cost-effective solutions

Short-term measures, meant to affect 12 to 18 months out, are cost-cutting and alternate-revenue strategies, such as dipping into reserves to bridge a budget gap. With each measure, a government must consider whether the move will be a sound long-term strategy, or if a cut today could lead to increased costs down the line.

A number of school districts in the Mid-Hudson region used a variety of these tactics to get through the 2020-2021 school budget season, avoiding deeper cuts to teaching staff or academic programs by leaving jobs unfilled after employee retirements, and using fund balance to offset tax levy increases to spare taxpayers and keep the budget under the statutory tax cap.

Longer-term planning for recovery after crisis requires a data-based approach that addresses root causes of financial stress. This means requires studying the economic and social environment of a municipality, analyzing budgeting processes and reforms, and creating an operational plan.

Now is the time for government leaders to look for ways to mitigate the crisis, to build resilience through 2020 and beyond.

Over the next several articles, we will discuss these approaches in more depth, with recommendations for concrete steps that local governments can take.