New York lawmakers have renewed their push to speed payments to nonprofits that do vital work for the state but have long faced crippling waits to be paid for the services they render.
The cause is so popular that Democrats and Republicans alike unanimously approved a set of proposed reforms last year that included mandatory advance payments. But Gov. Kathy Hochul voted the bill in December for both legal and practical reasons, arguing in part that it could stick the state with big interest charges and force it to pay vendors before verifying their qualifications.
The two Westchester County Democrats who sponsored the bill — Sen. Shelley Mayer and Assembly Member Amy Paulin — have revised their plans and re-introduced them this month as two separate bills.
Why NY nonprofits are pushing for timely payment
And nonprofit leaders are now campaigning for the legislation as a critical path to financial stability for the many groups that care for New York’s most vulnerable populations, such as those with developmental disabilities and mental illness and survivors of domestic violence.
“It is really so simple that people should be scratching their heads,” Jan Fisher, executive director of Nonprofit Westchester, an umbrella organization for the county’s nonprofits, told the USA TODAY Network in an interview. “We do the services, and the state doesn’t pay us on time.”
According to a report last year by Nonprofit Westchester and its counterparts around the state, nonprofits are supposed to be reimbursed for services within 30 days under state law but often wait months to be paid, forcing them to borrow money or make cutbacks. The report estimated the state owed about $650 million, as one in three nonprofits awaited payments.
How would the bills speed payments to nonprofits?
One of the new bills aims to smooth and clarify the payment process for the state’s nonprofit contractors. It would require, for example, that state agencies provide schedules for submitting invoices and delivering payments. It also would hoist the amount nonprofits can borrow from a state loan fund to stay afloat while waiting for their contractual payments.
The other bill would force the state to pay nonprofits 25% of their contract up front to cover their initial expenses. To address a concern Hochul raised last year, that mandate would be set aside if federal funding is used and federal regulations prohibit advance payments.
Both bills would take effect within 180 days after being signed if that occurs.
Why did Hochul veto last year’s bill?
The single bill that Hochul vetoed last year also included advance payments and other pieces of the two-bill revision. But it also required the state to pay interest to nonprofits for delayed payments and reimburse those vendors for the interest they, in turn, must pay on lines of credit — stopgap funds they often use as they wait for their state money.
The governor raised four objections in her veto message. Among them: advance payments could violate the state constitution if they come before funding has been authorized; and the state could rack up “significant” interest charges for late payments even if the delays are not the state’s fault.
Hochul said she recognized “the vital work not-for-profit organizations do” and vowed to lift “administrative burdens” so they can be paid more quickly.
“However, this bill raises serious legal and fiscal concerns and increases the risk of fraud and abuse of state funds,” Hochul wrote.
It’s unclear if the revised legislation satisfied her concerns. She typically takes no position on pending legislation that her administration didn’t initiate until both chambers have passed it and delivered it to her desk.
Chris McKenna covers government and politics for The Journal News and USA TODAY Network. Reach him at CMcKenna@usatodayco.com.
This article originally appeared on Rockland/Westchester Journal News: Why NY lawmakers are renewing push to end pay delays to nonprofits.
Reporting by Chris McKenna, New York State Team / Rockland/Westchester Journal News
USA TODAY Network via Reuters Connect
