author: Rosenblatt, J.

text:
    [813 NE2d 609, 780 NYS2d 529]
    The People of the State of New York, Respondent, v Patricio Linares, Appellant.
    Argued April 29, 2004;
    decided June 3, 2004

      POINTS OF COUNSEL

      Jeffrey I. Rickman, Kew Gardens, and Laura R. Johnson for appellant.
    I. Defendant was denied his right to counsel when the court refused defendant’s pretrial request for the assignment of new counsel despite a complete breakdown in communication and lack of trust between defendant and defense counsel. (Gideon v Wainwright, 372 US 335; People v Droz, 39 NY2d 457; People v Ortiz, 76 NY2d 652; People v Medina, 44 NY2d 199; People v Sides, 75 NY2d 822; People v Sawyer, 57 NY2d 12; Ungar v Sarafit, 376 US 575; People v Brown, 305 AD2d 422; People v Smith, 92 NY2d 516; People v Gilchrist, 239 AD2d 306, 91 NY2d 834.) II. Defendant was denied his right to be present at all material stages of his trial when the court questioned defense counsel, in defendant’s absence, as to whether or not he should represent defendant at trial and, if so, how the court could best protect defense counsel from defendant. (Snyder v Massachusetts, 291 US 97; People v Ciaccio, 47 NY2d 431; People v Cain, 76 NY2d 119; People v Mehmedi, 69 NY2d 759; People v Roman, 88 NY2d 18; People v Favor, 82 NY2d 254; People v Engleton, 207 AD2d 262; People v Velasco, 77 NY2d 469; People v Rodriguez, 76 NY2d 918; People v Dokes, 79 NY2d 656.)

      Robert M. Morgenthau, District Attorney, New York City (Christopher P. Marinetti and Hilary Hassler of counsel), for respondent.
    I. The trial court properly denied defendant’s request for new counsel and defendant’s right to counsel was not otherwise abridged. (People v Baghai-Kermani, 84 NY2d 525; People v Smith, 68 NY2d 737, 479 US 953; People v Lineberger, 98 NY2d 662; Mathis v Hood, 937 F2d 790; People v Narayan, 54 NY2d 106; People v Sawyer, 57 NY2d 12, 459 US 1178; People v Medina, 44 NY2d 199; People v Arroyave, 49 NY2d 264; People v Tineo, 64 NY2d 531; People v Allen, 88 NY2d 831.) II. Defendant has failed to provide an adequate record for review of his claim that he was not present for a material stage of his trial. In any event, his claim is meritless. (People v Kinchen, 60 NY2d 772; People v Foster, 1 NY3d 44; People v Mullen, 44 NY2d 1; Synder v Massachusetts, 291 US 97; People v Rodriguez, 76 NY2d 918; People v Roman, 88 NY2d 18; People v Sprowal, 84 NY2d 113; People v Rodriguez, 85 NY2d 586; People v Camacho, 90 NY2d 558; People v Morales, 80 NY2d 450.)
   OPINION OF THE COURT

Rosenblatt, J.

This appeal calls upon us to consider when a defendant is entitled to the substitution of assigned counsel.

I

Following an undercover police investigation, defendant was charged with two counts of criminal sale of a controlled substance in the second degree. As trial approached, defendant wrote to Supreme Court (Snyder, J.), expressing his dissatisfaction with assigned counsel. He claimed that his attorney was not providing him with documents and not acting in his best interests. Defendant added that he planned to retain new counsel.

A month later, still with the same counsel who had represented him in the 14 months since arraignment, defendant moved to suppress identification testimony. At the Wade hearing, the court (Kahn, J.) asked why defendant was handcuffed. Defense counsel stated that defendant had verbally abused him and threatened to “cut” his face. Defendant denied making any threatening comments or gestures, but said that he had no confidence in counsel because he was urging defendant to accept a plea offer of four to eight years. Defendant then asked the court to assign a new attorney.

Justice Kahn rejected defendant’s request and observed that defense counsel was simply discharging his duty in advising defendant to accept the People’s plea offer. In response to defendant’s claims that he could not trust his attorney and that counsel “never does anything in my behalf, never ever,” the court replied, “If you were telling me anything specific about . . . [counsel’s] failure to do his job here, I would not hesitate to replace him, but I’m not hearing anything specific from you about how he’s failed to do his duty, in fact, just to the contrary.” The court observed that counsel had made suppression and speedy trial motions on defendant’s behalf, communicated with the prosecutor, and hired an investigator and a Spanish interpreter to assist in the defense. Defense counsel, the court concluded, was both experienced and conscientious.

The next day, jury selection began before a different judge (Altman, J.). Although the minutes of proceedings that day and the next were lost, a reconstruction hearing before Justice Altman indicates that the court conducted a colloquy with the parties to discuss security arrangements for defendant and whether defense counsel believed he could continue representing defendant. Defense counsel informed the court that his ability to represent defendant had not been impaired by his client’s threatening conduct. In addition, the court discussed the possibility of seating a uniformed officer between defendant and his counsel at trial, but concluded that it would be less prejudicial for defense counsel to hire a plainclothes investigator to sit between them.

A jury found defendant guilty as charged, and the court sentenced him to concurrent terms of 12 years to life. On appeal to the Appellate Division, defendant argued that Supreme Court’s refusal to furnish him with another lawyer effectively denied him his right to counsel. The Appellate Division affirmed (see 302 AD2d 256 [2003]), holding that Justice Kahn properly exercised her discretion in denying defendant’s request for new counsel. We affirm.

IL

The Federal and State Constitutions guarantee criminal defendants the right to effective representation by counsel (see US Const 6th Amend; NY Const, art I, § 6; see also People v Stultz, 2 NY3d 277 [2004]; People v Baldi, 54 NY2d 137 [1981]). This right does not begin and end with the assignment of counsel. As we recognized in People v Medina (44 NY2d 199, 207 [1978]), trial courts must “carefully evaluate serious complaints about counsel.” This is an ongoing duty. Although defendants have no choice in selecting their assigned counsel, trial courts should substitute counsel when a defendant can demonstrate “good cause” (id.).

In determining whether good cause exists, a trial court must consider the timing of the defendant’s request, its effect on the progress of the case and whether present counsel will likely provide the defendant with meaningful assistance. Good cause determinations are necessarily case-specific and therefore fall within the discretion of the trial court. In Medina, however, we articulated two clear-cut instances in which a trial court’s failure to find good cause for substitution would amount to an abuse of discretion: first, when an attorney is assigned to represent two defendants between whom there is a conflict of interest and second, when the defense counsel has “not adequately investigated his client’s history of mental disorder” (id. at 208). We also emphasized that good cause does not exist when defendants are guilty of delaying tactics or where, on the eve of trial, disagreements over trial strategy generate discord. While the State can guarantee a defendant meaningful representation, it cannot possibly ensure a harmonious relationship between defendants and their attorneys, particularly where defendants are contumacious or violent (see Morris v Slappy, 461 US 1, 13-14 [1983]).

We revisited Medina’s good cause standard in People v Sides (75 NY2d 822 [1990]). There, the attorney stated that there had been a total breakdown of communication and trust with the defendant. Although this Court reversed the defendant’s conviction, we did not predicate our holding on that ground. Instead, we concluded that the trial court abused its discretion by conducting only a perfunctory inquiry into defendant’s serious request for the assignment of new counsel. In the face of a potentially irreconcilable conflict between the defendant and counsel, the trial court in Sides failed to make even a minimal inquiry or ask anything about the nature of the disagreement or whether it could be resolved.

Evaluated under the standard enunciated in Medina and Sides, Supreme Court’s denial of defendant’s motion to substitute counsel constituted a proper exercise of discretion. We are satisfied that Justice Kahn’s inquiry into defendant’s request for new counsel was diligent and thorough. The court repeatedly allowed defendant to air his concerns about defense counsel, and after listening to them reasonably concluded that defendant’s vague and generic objections had no merit or substance. As the court observed, defendant was unable to articulate a single specific reason for the court to assign another lawyer.

Further, looking past defendant’s stated objections, there is nothing in the record indicating that defense counsel had a genuine conflict of interest with defendant or that he was in any way deficient in representing him. To the extent defendant’s relationship with counsel soured with the approach of trial, the fault lies wholly with defendant. Defendant and counsel worked together for over a year before defendant, perhaps for reasons of delay or differences over strategy, manufactured a conflict with counsel on the very eve of trial. As we indicated in Medina, tensions arising out of differences over strategy do not compel the trial court to delay the proceedings and bring in a new lawyer. That defendant backed his objections to counsel’s advice with the threat of violence does not alter our analysis. Substitution of counsel is an instrument designed to remedy meaningful impairments to effective representation, not to reward truculence with delay. Defendant’s other contentions are without merit.

Accordingly, the order of the Appellate Division should be affirmed.

Chief Judge Kaye and Judges G.B. Smith, Cipaeick, Geaffeo, Read and R.S. Smith concur.

Order affirmed.

        See People v Brabson (9 NY2d 173, 181 [1961] [holding that “as long as assigned counsel” have “ability and integrity, the discretion and responsibility for their selection rest with the court, to be exercised free of outside interference”]).


source: Caselaw Access Project

author: Read, J.

license: Public Domain

text:
    [813 NE2d 602, 780 NYS2d 522]
    In the Matter of Town of Southampton, Appellant, v New York State Public Employment Relations Board et al., Respondents.
    Argued May 5, 2004;
    decided June 3, 2004

      POINTS OF COUNSEL

      Law Office of Vincent Toomey, Lake Success (Vincent Toomey, Thomas J. Marcoline and Christine A. Gaeta of counsel), for appellant.
    I. The Public Employment Relations Board (PERB) erroneously proceeded without or in excess of its jurisdiction by asserting jurisdiction over this improper practice charge, and PERB acted arbitrarily and capriciously by failing to articulate a rationale for asserting jurisdiction. (Matter of Roma v Ruffo, 92 NY2d 489; Matter of Glens Falls Police Benevolent Assn, v New York State Pub. Empl. Relations Bd., 195 AD2d 933; Matter of Barry v O’Connell, 303 NY 46; Matter of New York Water Serv. Corp. v Water Power & Control Commn. of State of N.Y., 283 NY 23; Matter of Elite Dairy Prods. v Ten Eyck, 271 NY 488; Matter of Collins v Behan, 285 NY 187; Matter of Scudder v O’Connell, 272 App Div 251; Matter of New York State Inspection, Sec. & Law Enforcement Empls., Dist. Council 82 v Kinsella, 197 AD2d 341.) II. The Public Employment Relations Board’s (PERB) decision that the Town of Southampton violated section 209-a (1) (d) of the Civil Service Law by refusing to continue terms of an expired interest arbitration award is affected by an error of law, is arbitrary and capricious, and/or is an abuse of PERB’s discretion. (Matter of Rosen v Public Empl. Relations Bd., 72 NY2d 42; Matter of City School Dist. of City of Elmira v New York State Pub. Empl. Relations Bd., 74 NY2d 395; AP Propane v Sperbeck, 157 AD2d 27; Finger Lakes Racing Assn. v New York State Racing & Wagering Bd., 45 NY2d 471;
      Riley v County of Broome, 95 NY2d 455; State Div. of Human Rights v Genesee Hosp., 50 NY2d 113; Matter of Jones v Berman, 37 NY2d 42; Matter of SIN, Inc. v Department of Fin. of City of N.Y., 71 NY2d 616; Ragsdale v Wolverine World Wide, Inc., 535 US 81; City of Amsterdam v Helsby, 37 NY2d 19.)

      Gary Johnson, Albany, for respondents.
    I. The Appellate Division correctly deferred to the Public Employment Relations Board’s expertise in administering the Taylor Law. (Matter of Incorporated Vil. of Lynbrook v New York State Pub. Empl. Relations Bd., 48 NY2d 398; Matter of West Irondequoit Teachers Assn. v Helsby, 35 NY2d 46.) II. The Appellate Division correctly held that the Public Employment Relations Board has jurisdiction over a claim that a public employer failed to continue the status quo regarding terms and conditions of employment in violation of Civil Service Law § 209-a (1) (d). (Matter of Roma v Ruffo, 92 NY2d 489; Matter of Northwestern Stud Welding Corp. v Webster, 211 AD2d 889; Matter of County of Niagara v Newman, 104 AD2d 1.) III. The Appellate Division correctly confirmed the Public Employment Relations Board’s determination that the Town of Southampton violated Civil Service Law § 209-a (1) (d). That determination has a reasonable basis in law and is supported by substantial evidence. (Matter of City of Newburgh v Newman, 69 NY2d 166; City of Amsterdam v Helsby, 37 NY2d 19.)
   OPINION OF THE COURT

Read, J.

On February 2, 2001, the Public Employment Relations Board (PERB) found that the Town of Southampton had violated section 209-a (1) (d) of the Taylor Law (Civil Service Law § 200 et seq.) by failing to continue the status quo during negotiations with the Police Benevolent Association of Southampton Town, Inc. (PBA) for a successor collective bargaining agreement. The issue on this appeal is whether PERB properly defined the status quo to encompass an overtime provision in an expired interest arbitration award. Because PERB’s definition of the status quo to include this provision is reasonable, the Appellate Division properly confirmed PERB’s determination.

I.

The complicated history of this case begins on December 31, 1994, with the expiration of the 1992-1994 collective bargaining agreement between the Town and the PBA. After negotiations for a successor agreement reached an impasse, the PBA sought interest arbitration under section 209 (4) of the Civil Service Law. Section 209 (4) was enacted in 1974 to prescribe compulsory and binding arbitration to resolve an impasse in collective negotiations between employee organizations representing police and firefighters outside the City of New York and their local government employers.

The three-person arbitration panel made findings as to disputed items and, at the parties’ request, incorporated into the award uncontested items, which were spelled out in an exhibit entitled “Items agreed to between the parties and incorporated into Award.” This exhibit included a provision governing overtime pay as follows:

“Overtime: Effective upon the issuance of this Award employees [sic] hourly and daily rate of pay shall be calculated incorporating longevity pay, night differential pay, and holiday pay earned the previous calendar year, into base pay.”

This provision set forth a new understanding between the parties, which was not part of the 1992-1994 agreement.

On September 20, 1996, the arbitration panel issued an interest arbitration award, which included the supposedly agreed-upon overtime language. The Town subsequently protested, arguing that inclusion of the words “and daily” was erroneous because the PBA’s demand, which the overtime provision was intended to cover, only sought to change how the Town calculated the hourly rate of pay in conformity with the Fair Labor Standards Act. The PBA countered that any mistake was not mutual, that it had always intended and understood the overtime provision to change the method for calculating both the hourly and daily rates of pay.

On October 21, 1996, the arbitration panel issued its final opinion and award for the period of January 1, 1995 through December 31, 1996. The 20-page opinion discussed the statutory factors that the panel was required to consider (see Civil Service Law § 209 [4] [c] [v]), focusing on the Town’s ability to pay. The panel did not change the disputed language of the overtime provision, stating that it was “powerless” to alter the parties’ stipulation, and that the cost impact of their disagreement over the overtime provision’s scope did not affect the award’s analysis and outcome.

After issuance of the interest arbitration award, the Town calculated the hourly rate of pay, but not the daily rate of pay, in conformity with the award’s overtime provision. As a result, the PBA filed a grievance on January 22, 1997, which the Town denied on January 31, 1997.

In May 1997, the PBA filed a demand for arbitration with PERB, and moved in Supreme Court to confirm the interest arbitration award. By stipulation dated June 27, 1997, the Town consented to confirmation, with the understanding that the award would be interpreted by a grievance arbitrator in accordance with the terms of the parties’ 1992-1994 agreement, and without prejudice to the Town’s right to challenge the grievance award.

In the subsequent grievance arbitration, the PBA took the position that the award’s overtime provision changed the formula for calculating the daily rate of pay for holiday and sick leave pay; the Town asserted that the overtime provision affected only hourly and daily overtime rates. The arbitrator concluded that the Town was violating the award by refusing to apply the overtime provision to calculate the daily rate of pay for holidays, but that the overtime provision did not apply to sick pay.

Pursuant to the terms of the parties’ 1992-1994 agreement, the grievance award, which was issued on January 4, 1999, was retroactive to December 6, 1996. By an order entered on October 12, 1999, Supreme Court granted the PBA’s application to confirm the award, and denied the Town’s cross motion to vacate or modify it. Supreme Court declined to address whether the grievance award extended beyond December 31, 1996, when the interest arbitration award expired, suggesting that this might be “an issue that should be raised as an improper employer practice before [PERB].”

At the same time as the PBA was pursuing its grievance in 1997, the Town and the PBA were negotiating a successor collective bargaining agreement for the period January 1, 1997 through December 31, 2000. Through mediation, the parties arrived at a memorandum of agreement, dated June 16, 1997. The memorandum set forth the parties’ “tentative agreement” to enter into a new agreement within 90 days to continue all undisputed terms of the 1992-1994 agreement as well as incorporate the uncontested provisions of the interest arbitration award. The parties, however, never executed a new agreement.

In August 1999, the PBA filed an improper practice charge to contest the Town’s refusal to calculate holiday pay in accordance with the grievance award for periods after December 31, 1996, the interest arbitration award’s expiration date. The Town argued that PERB lacked jurisdiction because the PBA was attempting to enforce an agreement between the parties, and under Civil Service Law § 205 (5) (d), PERB cannot exercise jurisdiction over such disputes. PERB’s Administrative Law Judge (ALJ) rejected the Town’s jurisdictional argument because the PBA “[was] not seeking to enforce the terms of either the interest arbitration or grievance award, but [was] challenging] the right of the Town to alter the status quo after the expiration of the award” (33 PERB 1t 4600, at 4791 [2000]). The ALJ concluded that PERB had jurisdiction, and that if proven, the charge would be actionable under section 209-a (1) (d) for refusal to negotiate in good faith.

After conducting a hearing, the ALJ determined that, by failing to calculate daily rates of pay for holidays in accordance with the grievance arbitration award, the Town was unilaterally changing the status quo and thus violating section 209-a (1) (d). The ALJ relied on Matter of Blooming Grove Police Benevolent Assn. (33 PERB U 4581 [2000]) for the proposition that “the status quo after the expiration of an interest arbitration award is defined by reference to the terms of that award, and by the expired [collective bargaining agreement], to the extent that the terms of the [collective bargaining agreement] are not super-ceded by the award” (33 PERB 1i 4600, at 4791).

The ALJ rejected the Town’s argument that, by defining the status quo in terms of the interest arbitration award, he was, in fact, extending the award’s term beyond Civil Service Law § 209 (4) (c) (vi)’s statutory two-year limit. The ALJ concluded that “[w]hile the effect may at times be the same, the term of the award itself is not extended, only the terms and conditions of employment incorporated therein” (id.).

The ALJ ordered the Town to apply the overtime provision in the interest arbitration award to calculate daily rates for holiday pay, and to make PBA members whole for holiday pay received since December 31, 1996. The Town filed exceptions with PERB.

PERB characterized the issue in this case—“whether the terms of an interest arbitration award can set the status quo between the parties until a new collective bargaining agreement is negotiated”—as “one of first impression” (34 PERB 1i 3007, at 3011 [2001]). Adopting and applying the rationale in Blooming Grove, PERB denied the Town’s exceptions and affirmed the ALJ’s decision, concluding that “the status quo is set forth in the terms of the interest arbitration award, as construed by the grievance arbitration award” (id.). The award thus defines “the terms and conditions of employment between the parties unless and until the terms are varied by a subsequent collective bargaining agreement or interest arbitration award” (id.).

The Town then commenced this CPLR article 78 proceeding in Supreme Court. Upon transfer of the proceeding, the Appellate Division, with two Justices dissenting, confirmed PERB’s determination, dismissed the Town’s petition and granted PERB’s application to enforce the determination (307 AD2d 428 [3d Dept 2003]). We now affirm.

II.

As an initial matter, we conclude that PERB has jurisdiction over the parties’ dispute. The PBA’s charge involves the Town’s conduct after the expiration of both the 1992-1994 collective bargaining agreement and the interest arbitration award, and during the time when the parties were under a duty to negotiate a successor agreement. Contrary to the position taken by the Town, this dispute does not involve enforcement of an agreement and does not invoke the limitation on PERB’s jurisdiction found in section 205 (5) (d) of the Civil Service Law (see e.g. Matter of Roma v Ruffo, 92 NY2d 489, 498 [1998] [commenting that “the courts have deferred to PERB’s interpretation of the restriction on its jurisdiction in Civil Service Law § 205 (5) (d)”]).

Moreover, we reject the Town’s characterization of the issue on this appeal as whether PERB impermissibly extended the interest arbitration award in violation of the two-year limitation in Civil Service Law § 209 (4) (c) (vi). No request was made for PERB to extend the award’s term, and PERB did not take this action. Rather, PERB defined the status quo as comprising the terms and conditions of employment set forth in the expired award and the 1992-1994 agreement, to the extent that the agreement’s terms were not superseded by the award’s. The distinction between defining the status quo for purposes of an improper practice charge and extending an interest arbitration award is real, with important consequences for the parties’ bargaining status. If, as the Town suggests, the interest arbitration award has been extended, the duty to negotiate over the overtime provision would be suspended. Instead, the parties remain under a duty to negotiate a successor agreement, and if they fail to reach agreement, the impasse procedures in section 209 are available. Moreover, the provisions of the Taylor Law defining the parties’ rights and responsibilities while under this duty—including those defining improper employer and employee organization practices—remain in effect. Although we recognize that in this case the “net effect” of PERB’s decision is that the Town “is bound to comply with the terms of the [interest arbitration award] beyond the two years fixed by the Legislature” (307 AD2d at 433 [Kane, J., dissenting]), this does not affect the characterization of the dispute. Instead, it goes to the reasonableness of PERB’s definition of the status quo.

In sum, we agree with PERB’s characterization of the issue in dispute, and so conclude that this appeal’s outcome turns on whether PERB properly defined the status quo to encompass the overtime provision in the expired interest arbitration award. Since definition of the status quo “relies upon the special competence [PERB] is presumed to have developed in its administration of the statute,” we ultimately must afford great deference to PERB’s determination (see Matter of Rosen v Public Empl. Relations Bd., 72 NY2d 42, 47 [1988]).

III.

While the precise issue in this appeal may be novel, we are not bereft of guideposts. In Matter of Triborough Bridge & Tunnel Auth. (District Council 37 & Local 1396) (5 PERB 1i 3037 [1972], confirming 5 PERB 11 4505 [Hearing Officer 1972]), PERB considered what terms govern during the “hiatus between an expired contract and the conclusion of negotiations for a successor contract,” a period otherwise known as the “status quo” (5 PERB 1i 4505, at 4521-4522). The parties in Triborough negotiated a provision in their collective bargaining agreement whereby salary increments would be based on longevity. The agreement expired and was silent as to whether the provision was intended to survive its fixed term. The employer failed to continue the increments after the agreement’s expiration, and while a successor agreement was being negotiated. As a result, the employee organization filed an improper practice charge, alleging that the employer had refused to negotiate in good faith in violation of Civil Service Law § 209-a (1) (d).

The Hearing Officer held that so long as an employee organization does not engage in an illegal strike, the duty to negotiate in good faith prohibits an employer from “unilaterally alter[ing] existing mandatory subjects of negotiations while a successor agreement is being negotiated” (5 PERB 11 4505, at 4522). This principle, referred to as the “Triborough doctrine,” follows from the proposition that “the statutory prohibition against an employee organization resorting to self help by striking imposes a correlative duty upon a public employer to refrain from altering terms and conditions of employment unilaterally during the course of negotiations” (5 PERB H 3037, at 3064).

PERB subsequently decided that a unilateral change to an employer’s past practice regarding a mandatory subject of negotiation also constitutes an improper employer practice under section 209-a (1) (d) (see Matter of New Berlin Faculty Assn., NYSUT, AFT, AFL-CIO, 25 PERB 1Í 3060 [1992]; Matter of Milonas v Public Empl. Relations Bd., 225 AD2d 57, 64 [3d Dept 1996] [“The duty to negotiate in good faith includes an obligation to continue past practices that involve mandatory subjects of negotiation, even in the absence of a provision to that effect in the contract”]). In 1982, the Legislature expressed its approval of the Triborough doctrine by expanding it to include not just mandatory subjects of negotiation, but all terms of a collective bargaining agreement (see Civil Service Law § 209-a [1] [e]).

Here, the issue is a corollary of Triborough, first resolved by the ALJ in Blooming Grove, the reasoning of which PERB expressly adopted. In Blooming Grove, the parties submitted to interest arbitration, and the employer complied with the interest arbitration award during its term. After the award’s expiration, the employer reverted to the terms of the expired collective bargaining agreement, and the employee organization filed an improper practice charge under section 209-a (1) (d).

Relying principally on Triborough and PERB’s decisions in Matter of Massapequa Union Free School Dist. (8 PERB 1Í 3022 [1975]) and Matter of City of Kingston (18 PERB 1Í 3036 [1985]), the ALJ in Blooming Grove held that

“the parties’ expired collective bargaining agreement defines the status quo in employees’ terms and conditions of employment pursuant to § [209-a (1) (d)] only to the extent that the compulsory interest arbitration award does not supercede the terms of the contract. To the extent that the terms of an award supercede mandatorily negotiable terms of employment in an expired agreement, absent objection from the employee organization, the award redefines the status quo which must be maintained under § [209-a (1) (d)] of the Act” (33 PERB 1i 4581, at 4710).

In Massapequa, a legislative imposition of new terms and conditions of employment under section 209 (3) (e) (iv) resolved an impasse. PERB concluded that the legislative imposition constituted the status quo that the employer was obligated to continue until the parties reached a new agreement. For purposes of defining the status quo in Blooming Grove, the ALJ viewed an interest arbitration award, which is imposed on the public employer by an arbitration panel for a two-year period, as analogous to a legislative imposition, which is imposed on a public employer by its legislative body for a one-year budget cycle (see Matter of City of Mount Vernon, 5 PERB 1! 3057, at 3101 [1972] [when contesting parties cannot reach agreement, “the function of a local legislature is similar to that of an arbitrator” while “the power of the local legislature is limited to taking such action as is necessary to bridge a single budget period”]).

In City of Kingston, PERB addressed the effect of Civil Service Law § 209-a (1) (e) on the rights of the parties to seek interest arbitration under section 209 (4). PERB concluded that an employee organization had the option either to extend an expired collective bargaining agreement under section 209-a (1) (e) or to demand interest arbitration. If the employee organization submitted to arbitration, it waived its right to require the employer to continue the terms of the expired agreement.

Moreover, PERB determined that section 209-a (1) (e) placed a limitation on the employer’s right to seek arbitration. Because an employee organization was entitled to have the terms of an expired collective bargaining agreement continued under section 209-a (1) (e), an employer could not avoid this obligation simply by requesting arbitration. As a result, an employer could only seek interest arbitration if the employee organization consented to it: “the terms of an expired agreement may not be changed except by a subsequent negotiated agreement unless the union involved agrees to the submission of the deadlock for resolution by an arbitration award or a legislative determination” (18 PERB 1i 3036, at 3076; see also Matter of City of Buffalo, 19 PERB 1f 3023 [1986] [union that participates in impasse procedures under section 209 to obtain improvements in terms and conditions of employment may not demand that the employer continue the terms of the expired agreement that the union sought to modify]).

Thus, PERB’s longstanding precedent supports its decision to define the status quo to include the expired interest arbitration award to the extent its provision for overtime, as interpreted by the grievance award, superseded the parties’ 1992-1994 collective bargaining agreement. The award effectively redefined the parties’ agreement on this mandatory term and condition of employment. If the Town wanted to alter the change wrought by the award, it was obligated to obtain the employee organization’s consent through collective bargaining.

Finally, we note that PERB’s decision in this regard fosters the finality and harmony that the Taylor Law was intended to achieve by maintaining the extant terms and conditions of employment rather than looking back to what existed before impasse resolution. PERB has not impermissibly extended the term of an interest arbitration award; rather, PERB has reasonably balanced the bargaining rights of the parties by requiring good faith negotiations consonant with the Taylor Law’s objectives.

Accordingly, the judgment of the Appellate Division should be affirmed, with costs.

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo and R.S. Smith concur.

Judgment affirmed, with costs.

      . An interest arbitration panel must consider, among other factors, “the interests and welfare of the public and the financial ability of the public employer to pay” (Civil Service Law § 209 [4] [c] [v] [b]).

      . Section 209 (4) (c) (vi) limits the terms of an interest arbitration award to no more than two years from the termination date of the expired collective bargaining agreement or, if there was no previous agreement, to two years from the date of the arbitration panel’s determination.

      . The Taylor Law provides that “[n]o public employee or employee organization shall engage in a strike, and no public employee or employee organization shall cause, instigate, encourage, or condone a strike” (Civil Service Law § 210 [1]).


author: G.B. Smith, J.

text:
    [813 NE2d 587, 780 NYS2d 507]
    Local Government Assistance Corporation et al., Appellants-Respondents, v Sales Tax Asset Receivable Corporation et al., Respondents-Appellants.
    Argued April 28, 2004;
    decided May 13, 2004

      POINTS OF COUNSEL

      Davis Polk & Wardwell, New York City (Guy Miller Struve, Russell L. Lippman and. Douglas K. Yatter of counsel), Kornstein Veisz Wexler & Pollard, LLP (Alexander H. Shapiro of counsel), and Thuillez, Ford, Gold, Johnson & Butler, LLP, Albany (Dale M. Thuillez of counsel), for appellants-respondents.
    I. The Municipal Assistance Corporation Refinancing Act violates article VII, § 11 of the State Constitution by creating an absolute legal obligation to pay $170 million per year which is not subject to legislative appropriations. (Schulz v State of New York, 84 NY2d 231; Matter of Wood v Irving, 85 NY2d 238; People ex rel. Alpha Portland Cement Co. v Knapp, 230 NY 48, cert denied sub nom. State Tax Commr. of State of N.Y. v People ex rel. Alpha Portland Cement Co., 256 US 702; Matter of Westinghouse Elec. Corp. v Tully, 63 NY2d 191; People v Dietze, 75 NY2d 47; People v Smith, 63 NY2d 41, 469 US 1227; Bender v Jamaica Hosp., 40 NY2d 560; Bright Homes v Wright, 8 NY2d 157; United States v National Treasury Empls. Union, 513 US 454; National Adv. Co. v Town of Niagara, 942 F2d 145.) II. The Municipal Assistance Corporation Refinancing Act violates the ban on revenue financing in article VIII, § 2 of the State Constitution by authorizing the City of New York to obtain financing backed only by the assignment of future revenues of the City. (Flushing Natl. Bank v Municipal Assistance Corp. for City of N.Y., 40 NY2d 731; Wein v City of New York, 36 NY2d 610; Schulz v State of New York, 193 AD2d 171, 84 NY2d 231; McCabe v Gross, 274 NY 39; Kelly v Merry, 262 NY 151; Krons

      bein v City of Rochester, 76 App Div 494; Matter of Tierney v Cohen, 268 NY 464; Comereski v City of Elmira, 308 NY 248; Mnich v American Radiator Co., 263 App Div 573, 289 NY 681; Endico Potatoes, Inc. v CIT Group/Factoring, Inc., 67 F3d 1063.) III. The Municipal Assistance Corporation Refinancing Act unconstitutionally impairs the rights of Local Government Assistance Corporation’s bondholders. (Patterson v Carey, 41 NY2d 714; Matter of Westinghouse Elec. Corp. v Tully, 63 NY2d 191; United States Trust Co. v New Jersey, 431 US 1.)

      Michael A. Cardozo, Corporation Counsel, New York City (Leonard Koerner, John R. Low-Beer, June R. Buch and Elizabeth

      I. Freedman of counsel), and Greenberg Traurig, LLP, Albany (Henry M. Greenberg of counsel), for respondents-appellants. I. The Municipal Assistance Corporation Refinancing Act requires that the statutory payments be made subject to annual legislative appropriation. (Schulz v State of New York, 84 NY2d 231; Matter of Consolidated Edison Co. of N.Y. v Department of Envtl. Conservation, 71 NY2d 186; Besser v E.R. Squibb & Sons, 146 AD2d 107, 75 NY2d 847; People v Mancuso, 255 NY 463; New York State Bankers Assn. v Albright, 38 NY2d 430; Matter of Lower Manhattan Loft Tenants v New York City Loft Bd., 66 NY2d 298; Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Matter of Moran Towing Corp. v Urbach, 99 NY2d 443; TM Park Ave. Assoc. v Pataki, 214 F3d 344; Waste Recovery Enters, v Town of Unadilla, 294 AD2d 766, 100 NY2d 614, 1 NY3d 507.) II. The Municipal Assistance Corporation Refinancing Act does not authorize the creation of city debt. (Schulz v State of New York, 193 AD2d 171, 84 NY2d 231, 513 US 1127; Endico Potatoes, Inc. v CIT Group ¡Factoring, Inc., 67 F3d 1063; In re Golden Plan of Cal., Inc., 829 F2d 705; Major’s Furniture Mart, Inc. v Credit Corp., Inc., 602 F2d 538; Wein v City of New York, 36 NY2d 610; Comereski v City of Elmira, 308 NY 248; Schulz v New York State Legislature, 244 AD2d 126, 92 NY2d 818; Matter of Schulz v State of New York, 151 Misc 2d 594, 185 AD2d 596, 81 NY2d 336; Matter of Tierney v Cohen, 268 NY 464; Robertson v Zimmermann, 268 NY 52.) III. The Municipal Assistance Corporation Refinancing Act does not unconstitutionally impair the contract rights of Local Government Assistance Corporation bondholders. (Besser v E.R. Squibb & Sons, 146 AD2d 107, 75 NY2d 847; Iazzetti v City of New York, 94 NY2d 183; Matter of Jacob, 86 NY2d 651; TSC Indus., Inc. v North-way, Inc., 426 US 438.)

      Carter Ledyard & Milburn LLP, New York City (Vincent

      Monte-Sano, James Gadsden and Susan B. Kalib of counsel), for Bank of New York as Successor Trustee under the Local Government Assistance Corporation Bond Resolutions, amicus curiae.
    The trustee requires clarification as to the status of the Local Government Assistance Corporation bondholders. (.Patterson v Carey, 41 NY2d 714.)

      Donna M.C. Giliberto, Albany, for New York State Conference of Mayors and Municipal Officials, amicus curiae.
    Public authorities are created in response to state and local concerns coupled with the need to access alternative financing methods not readily available to cities without state legislative action. (Matter of Plumbing, Heating, Piping & A.C. Contrs. Assn. v New York State Thruway Auth., 5 NY2d 420; Matter of Lake-land Water Dist. v Onondaga County Water Auth., 24 NY2d 400; Grace & Co. v State Univ. Constr. Fund, 44 NY2d 84; Matter of Smith v Levitt, 37 AD2d 418, 30 NY2d 934; Wein v City of New York, 36 NY2d 610; Matter of Schulz v State of New York, 151 Misc 2d 594, 185 AJD2d 596, 81 NY2d 336; Comereski v City of Elmira, 308 NY 248; Union Free School Dist. No. 3 v Town of Rye, 256 App Div 456, 280 NY 469.)
   OPINION OF THE COURT

G.B. Smith, J.

This is a constitutional challenge to the Municipal Assistance Corporation Refinancing Act, which was enacted as part of a 2003 budget bill to assist the City of New York in retiring certain long-term debt. The wisdom of this legislation is not a matter for this Court to address (see Schulz v State of New York, 84 NY2d 231, 237 [1994]). As to its legality, we conclude that the Act does not violate the State or Federal Constitutions.

I.

In the 1970s, defendant City of New York experienced a serious fiscal crisis that brought it to the brink of bankruptcy. In an effort to save the City from default, the State Legislature created the Municipal Assistance Corporation (MAC), which issued long-term bonds and used the proceeds to refinance the City’s short-term debt. The bonds were to be financed over the next 30 years by diverting to MAC a portion of the state sales tax revenue that would otherwise be available to the City. The last remaining MAC bonds are scheduled to mature in 2008.

In 2003, with $2.5 billion left to pay on the MAC debt service (then due at a rate of $500 million annually for the remaining five years), the City faced another fiscal crisis. The Legislature sought to provide a financing mechanism to assist the City in satisfying the remainder of its MAC debt. In May 2003, over the Governor’s veto of the entire budget bill, the Legislature enacted the Municipal Assistance Corporation Refinancing Act (L 2003, ch 62, part A4; ch 63, part V) to achieve this purpose. The Act amended the Public Authorities Law by adding a new section, section 3238-a, and amending existing section 3240. In doing so, the Act allowed the City to receive the sales tax revenue that was being diverted to MAC and thereby retain the remaining $2.5 billion that it owed on the debt service, while requiring the State to make 30 annual payments to the City of $170 million, or a total of $5.1 billion. The City intended to use the annual payments to finance bonds to be issued by a public benefit corporation established for this purpose. The proceeds from the sale of the bonds were to be used to retire the City’s MAC debt.

Local Government Assistance Corporation

Plaintiff Local Government Assistance Corporation (LGAC) was charged with channeling the payments from a portion of state sales tax revenues. LGAC was established by chapter 220 of the Laws of 1990 as part of a state fiscal reform program. As a public benefit corporation, it was authorized to issue $4.7 billion in bonds to provide funding for public services. LGAC bonds were issued pursuant to general bond resolutions adopted in 1991 and in 2002. The resolutions constitute contracts between LGAC and its bondholders and contain promises that the bondholders would have first priority on the tax dollars available to LGAC for debt service, and included a pledge that no equal or prior lien on these funds could be created. Additionally, pursuant to Public Authorities Law § 3241 (1), the State has pledged not to limit or alter LGAC’s right to fulfill its agreements with its bondholders or to impair the bondholders’ rights or remedies.

The debt service on LGAC bonds is payable from revenues derived from state sales and compensating use taxes, one percentage point of which must be deposited in the Local Government Assistance Tax Fund (Tax Fund). The Tax Fund is held in the joint custody of the State Comptroller and the Commissioner of Taxation and Finance (see State Finance Law § 92-r [1]). Pursuant to Public Authorities Law § 3240 (1), each year the Chairperson of LGAC must certify to the Governor and the Comptroller its debt service requirements and certain other required expenditures for the upcoming fiscal year. Upon annual appropriation by the Legislature, the funds needed are transferred by the Comptroller (see Public Authorities Law § 3240 [3]; State Finance Law § 92-r [5]). Only after LGAC has received its funds in accordance with its certified request can the remaining revenues in the Tax Fund be distributed to the general fund of the State Treasury (see State Finance Law § 92-r [5]).

Although the State is not legally obligated to appropriate the funds that LGAC has sought in its certification (see Public Authorities Law § 3240 [5]), the State has a powerful incentive to make the requested appropriation because the Comptroller is prohibited from distributing any money in the Tax Fund to the state general fund unless and until LGAC receives the payments according to its certification (see State Finance Law § 92-r [5] [a] [i]). This incentive has been referred to as the statute’s “trapping mechanism.” Since the inception of LGAC, there has annually been a legislative appropriation and substantial excess funds have been transferred each year from the Tax Fund to the State Treasury.

The MAC Refinancing Act

The MAC Refinancing Act created Public Authorities Law § 3238-a, which requires LGAC to make annual payments of $170 million to the City during each City fiscal year until 2034. The first paragraph of that provision states:

“Notwithstanding any inconsistent provision of law, [LGAC] shall transfer to the city of New York [$170 million] from the resources of the corporation pursuant to section [3239] of this title. Such payment shall be made during each city fiscal year. Such payments from the corporation shall be made from the fund [i.e., the Tax Fund] established by [State Finance Law § 92-r] and in accordance with the provisions thereof’ (Public Authorities Law § 3238-a).

The Act also amended Public Authorities Law § 3240 (1) to require the Chairperson of LGAC to include in its annual certifications to the Governor and Comptroller the $170 million payments it is required to make to the City. The Act further amended Public Authorities Law § 3240 (5), which contained the executory clause and addressed the manner and timing of the State’s payments to LGAC, by adding a sentence at the end of the provision which stated, “Provided however, this subdivision shall not apply for payments made pursuant to section [3238-a] of this title.”

In addition, the Act permits the City’s Mayor to assign the $170 million payments to a new not-for-profit local development corporation (see Public Authorities Law § 3238-a). Once the Mayor gives notice to LGAC and the Comptroller of the assignment, the payments must be made directly to the assignee. The assigned payments then become the property of the assignee for all purposes. In accordance with this statutory scheme, the Mayor of the City of New York irrevocably assigned the City’s right to receive the LGAC payments to defendant Sales Tax Asset Receivable Corporation (STARC), the not-for-profit development corporation created for this purpose. Under the assignment agreement between the City and STARC, STARC would issue bonds financed by the LGAC payments. The proceeds from the bonds would be used to retire the City’s remaining $2.5 billion MAC debt. Any net proceeds not necessary to retire the remaining MAC debt would be paid to the City.

The Instant Litigation

On August 6, 2003, citing legal and policy concerns regarding LGAC’s obligations under the MAC Refinancing Act, LGAC’s three directors unanimously adopted a resolution (1) directing LGAC not to participate in the STARC transaction, (2) authorizing and directing its coexecutive directors to explore the legal issues and to hire litigation counsel and (3) declaring that LGAC had no intention of making the payments to the City on behalf of the State until the legal issues were resolved either by litigation or by legislative action.

As a result of LGAC’s resolution, STARC restructured its initial bond offering plan by reducing the amount of bonds it intended to offer and resolving to hold the proceeds from the bonds in escrow, pending resolution of the anticipated litigation, rather than paying the MAC debt. On August 11, 2003, the City issued a preliminary offering circular for $532.2 million worth of Series A bonds set to mature in 2029. The offering circular recognized the stance taken by LGAC with regard to its payment obligations and expressed the City’s intent to commence litigation to enforce its rights under the Act. The circular further stated that neither the State’s payments to LGAC nor LGAC’s payments to STARC constituted a debt of either the State or the City. The circular also acknowledged that LGAC’s obligation to pay STARC in accordance with the Act was subordinated to its obligation to pay its bondholders.

On August 13, 2003, LGAC commenced this declaratory action in Supreme Court, Albany County, seeking judgment declaring the MAC Refinancing Act unconstitutional. Specifically, LGAC alleged that the Act (1) violated New York State Constitution, article VII, § 11, by imposing upon the State a multiyear payment obligation without subjecting the payments to either a referendum or a legislative appropriation; (2) violated New York State Constitution, article VIII, § 2, because the assignment of the City’s payments to STARC constituted a contracting of debt without a pledge of the City’s faith and credit; and (3) violated United States Constitution, article I, § 10, by impairing the contractual rights of LGAC’s bondholders.

LGAC also sought a preliminary injunction to prevent STARC from issuing its bonds. In a decision dated August 20, 2003, Supreme Court denied LGAC’s motion for a preliminary injunction. On August 27, 2003, the Appellate Division issued a preliminary injunction pending the appeal. Both parties have agreed to comply with the injunction pending this Court’s decision. Thereafter, STARC, along with the City, moved for summary judgment seeking dismissal of the complaint and a declaration that the Act is valid under the State and Federal Constitutions. LGAC cross-moved for summary judgment seeking a declaration that the Act is unconstitutional.

Supreme Court granted the motion and denied the cross motion, declaring the Act constitutional as challenged. As to the challenge that the Act created a multiyear obligation not subject to legislative appropriation, the court reasoned that Public Authorities Law § 3238-a requires that LGAC make its annual $170 million payments from funds appropriated by the State pursuant to State Finance Law § 92-r. Thus, the court concluded, even if the executory clause of Public Authorities Law § 3240 (5) did not apply to LGAC’s payments to the City, other provisions of the Public Authorities Law ensured that the annual payments to the City would, as required, be subject to legislative appropriation.

Relying on this Court’s decision in Wein v City of New York (36 NY2d 610 [1975]), Supreme Court rejected LGAC’s argument that the City was unlawfully contracting a debt obligation without pledging its faith and credit. The court determined that no debt was being incurred by the City since the City was not liable to STARC bondholders in the event that LGAC failed to make the annual $170 million payments. Finally, the court concluded that LGAC’s payments to the City under the Act do not create obligations that are prior or equal to LGAC’s bondholders in that LGAC does not have to pay the City until there has been an appropriation and all of LGAC’s debt service obligations have been met.

Upon LGAC’s appeal, the Appellate Division, with one Justice concurring in part and dissenting in part, modified the order of Supreme Court by (1) reversing that part of the order granting STARC’s motion for summary judgment declaring constitutional the amendment to Public Authorities Law § 3240 (5) and denied LGAC’s cross motion as to that amendment; (2) denying STARC’s motion as to that amendment and granting LGAC’s cross motion as to that amendment; and (3) declaring the amendment unconstitutional and severing it from the remainder of the Act. The Court held that the amendment to section 3240 (5) eliminated the necessity of annual legislative appropriations in violation of the State Constitution. The Court determined, however, that the offending provision was severable because to sever would preserve the legislative objective in promulgating the Act, which was to assist the City in retiring its remaining payments due on the MAC indebtedness.

The Court also concluded that the City’s assignment of the $170 million payments to STARC did not create a debt for the City. Rather, the Court reasoned, only STARC would be liable if LGAC’s failure to make its payments to STARC resulted in STARC’s inability to pay its bondholders. Thus, the debt would be incurred by STARC, not the City. Moreover, the Court stated that LGAC’s obligations of first priority on tax dollars to its bondholders would not be impaired. It concluded that “nothing in the Act explicitly requires that the $170 million be paid at the expense of the existing LGAC bondholders. . . . [BJecause we have severed the constitutionally offensive amendment . . . the $170 million payment is subject to annual appropriation. The Act does not require LGAC to make the $170 million payment in the event of a shortfall in the appropriation.” (5 AD3d 829, 833 [2004].)

One Justice concurred in part and dissented in part. While he concurred in the Court’s conclusion that the Act, as severed, did not violate either of the state constitutional provisions invoked by plaintiffs, he disagreed with the majority’s holding that the Act did not impair the contractual rights of LGAC’s existing bondholders. He reasoned that if the Legislature appropriated funds sufficient for either LGAC’s debt service or STARC payments, but not both, the language of Public Authorities Law § 3238-a would mandate that LGAC pay STARC before the LGAC bondholders. Because LGAC’s contracts with its bondholders provide that they are to have first priority on money in the Tax Fund, the dissenting Justice concluded that the Act unconstitutionally impairs LGAC’s contracts with its bondholders.

Pursuant to CPLR 5601 (b), LGAC appeals and STARC and the City cross-appeal to this Court. We now modify the order of the Appellate Division and reinstate the order of Supreme Court, thus declaring the MAC Refinancing Act constitutional.

II.

On this appeal, LGAC argues that the MAC Refinancing Act unconstitutionally requires LGAC, acting on behalf of the State, to make multiyear payments which are not subject to legislative appropriations (see NY Const, art VII, § 11). LGAC contends that this infirmity is not severable from the remainder of the Act. Additionally, LGAC contends that the Act violates the prohibition against revenue financing by authorizing the City to assign the payments to STARC, and thereby to incur debt, without requiring the City to pledge its faith and credit (see NY Const, art VIII, § 2). LGAC urges further that the Act unconstitutionally impairs the contracts of LGAC’s existing bondholders (see US Const, art I, § 10). In their cross appeal, STARC and the City argue that the Act’s amendment to Public Authorities Law § 3240 (5) is constitutional and does not exclude the payments from legislative appropriations.

At the outset, we again note that the wisdom of this refinancing plan is not a matter for this Court to evaluate. Moreover, LGAC bears a heavy burden to overcome the strong presumption of constitutionality that attaches to every statute (see Schulz v State of New York, 84 NY2d at 241; Hotel Dorset Co. v Trust for Cultural Resources, 46 NY2d 358, 370 [1978]). Particularly where the statute concerns public financing programs, courts are required to exercise restraint and give deference to the legislative enactment, unless the program is “patently illegal” (Hotel Dorset Co., 46 NY2d at 370, quoting Comereski v City of Elmira, 308 NY 248, 254 [1955]; see also Schulz, 84 NY2d at 241). Thus, in order to prevail, LGAC must prove beyond a reasonable doubt that “in any degree and in every conceivable application the [legislative enactment] suffers wholesale constitutional impairment” (Matter of Moran Towing Corp. v Urbach, 99 NY2d 443, 448 [2003] [citation and internal quotation marks omitted]).

We conclude that LGAC has not satisfied this substantial burden.

Legislative Appropriations

New York State Constitution, article VII, § 11, provides, in relevant part, “[N]o debt shall be hereafter contracted by or in behalf of the state, unless such debt shall be authorized by law, for some single work or purpose . . . . No such law shall take effect until it shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for and against it at such election.” As this Court has recognized, a statute providing for multiyear payments pursuant to annual legislative appropriations does not create a debt within the meaning of article VII, § 11, and is not subject to the public referendum requirement (see Schulz, 84 NY2d at 249, 251). Thus, the 30 annual payments that LGAC is required to make pursuant to the MAC Refinancing Act, passed without a public referendum, must be subject to annual legislative appropriations in order to satisfy this provision of the State Constitution.

LGAC contends that the amendment to Public Authorities Law § 3240 (5) added a sentence at the end of that subdivision that renders the Act unconstitutional. Public Authorities Law § 3240 (5) reads as follows:

“The agreement of the state contained in this section shall be deemed executory only to the extent of appropriations available for payments under this section and no liability on account of any such payment shall be incurred by the state beyond such appropriations. The state, acting through the director of the budget, and the corporation may enter into, amend, modify, or rescind one or more agreements providing for the specific manner, timing, and amount of payments to be made under this section, but only in conformity with this section. Provided however, this subdivision shall not apply for payments made pursuant to section [3238-a] of this title ” (emphasis added).

LGAC argues that the final sentence of the subdivision exempts the payments to the City from the executory clause contained in the first sentence, and therefore obligates the State to provide the funds for LGAC’s payments even without an appropriation. We disagree.

Statutes must be construed to effectuate the intent of the Legislature. Reading the Act as a whole, we conclude that the amended sentence was intended to apply only to the previous sentence, not to the entire subdivision, and the failure to make that intent plain in the statute—the result of legislative haste— cannot serve to void the Act. The previous sentence permitted LGAC and the State to “amend, modify, or rescind one or more agreements providing for the specific manner, timing, and amount of payments to be made” by LGAC. In enacting the amended sentence, the Legislature sought to prevent the State from changing the specific timing of the payments mandated under the Act. The City’s fiscal year begins July 1, whereas the State’s fiscal year begins April 1. It was therefore important from a budgeting perspective that the $170 million be available to the City no later than July 1. Accordingly, the Legislature intended to remove the discretion of the State Budget Director and LGAC with respect to the timing of the annual payments, so as to ensure that LGAC’s payment to the City or its assignee would occur during each city fiscal year.

LGAC’s contrary contention—that the Legislature’s intent in amending Public Authorities Law § 3240 (5) was to exempt the payments to the City from the requirement of appropriation—is belied by the reality that the MAC Refinancing Act otherwise continues to explicitly require that the payments be subject to annual legislative appropriation.

Public Authorities Law § 3238-a states, in pertinent part:

“Notwithstanding any inconsistent provision of law, [LGAC] shall transfer to the city of New York [$170 million] from the resources of the corporation pursuant to section [3239] of this title. Such payment shall be made during each city fiscal year. Such payments from the corporation shall be made from the fund established by [State Finance Law § 92-r] and in accordance with the provisions thereof.”

As noted above, the fund established by State Finance Law § 92-r (1) is the Tax Fund. LGAC receives its revenue from the Tax Fund only by legislative appropriation. Section 92-r (5) (a) of the State Finance Law states that once the Comptroller receives the certification of LGAC’s payment requirements, submitted pursuant to Public Authorities Law § 3240, the Comptroller must pay the amount certified “pursuant to an appropriation.” The Act amended Public Authorities Law § 3240 (1) to require LGAC to include in its annual certification the $170 million payments it is required to make to the City. Moreover, section 3240 (3) states that the Comptroller must pay the amount certified by LGAC “provided that any such amounts shall have been first appropriated by the state.”

Thus, upon construing the Act as a whole and reading its parts together to determine the intent of the Legislature, as we must, we conclude that the intent of the Legislature is clear: to enact a constitutionally sound statute pursuant to which the State would assist the City in meeting its debt obligations to MAC by providing for annual payments to the City through legislative appropriations channeled through LGAC. Moreover, both STARC and the City acknowledge that LGAC’s annual payments to the City must be appropriated. Of course, if no appropriation is made from the Tax Fund, LGAC cannot access the funds from which it must make its payments to the City, and the City would not receive the payment. Notably, section 3238-a requires that LGAC’s payments be made from the Tax Fund, and even if revenue were available to LGAC from other sources, it could not be used to make the payments to the City. Thus, the Act ensures that any payments to the City are subject to an annual legislative appropriation notwithstanding the amendment to Public Authorities Law § 3240 (5). Indeed, the entire purpose of channeling the annual payments through LGAC is to make use of LGAC’s trapping mechanism, which gives the Legislature an incentive, but not an obligation, to appropriate; in fact appropriation remains, as it must, ultimately discretionary.

If, as plaintiffs contend, the Legislature had wanted to create an absolute and unconditional requirement of payments to the City, not subject to appropriation, it would simply have provided that in each of the next 30 years the State shall pay $170 million annually to the City. If the payments were meant to be mandated without the need for appropriation, there would have been no need to channel the payments through LGAC, using the incentive of the trapping mechanism of State Finance Law § 92-r. Therefore, we conclude that the MAC Refinancing Act does not violate article VII, § 11, of the New York State Constitution.

Municipal Debt

LGAC further contends that the Act violates New York State Constitution, article VIII, § 2, because it permits the City to assign to STARC its right to receive LGAC’s annual payment of $170 million. LGAC argues that the City’s assignment of this right to STARC, in exchange for the proceeds on the bonds that STARC would issue, constitutes a debt of the City, on which the City has not pledged its faith and credit. We disagree.

The State Constitution prohibits the City from contracting any indebtedness unless it pledges its “faith and credit” for the payment of the principal and interest on the debt (NY Const, art VIII, § 2). The purpose of this provision is obvious—to ensure that the municipalities honor their legal financial obligations to their creditors (see generally Flushing Natl. Bank v Municipal Assistance Corp., 40 NY2d 731 [1976]). Debt has a well-settled meaning within the contemplation of the State Constitution. A debt can arise only where the municipality has incurred a legal obligation to fund the public benefit corporation’s debt service to its bondholders should the corporation default on its obligation (see Wein v City of New York, 36 NY2d at 617-618; Schulz v State of New York, 84 NY2d 231, 247-249 [1994]). Thus, the City’s assignment to STARC of payments that the City would otherwise receive from LGAC can be considered a debt of the City only if the City could be held liable to STARC or its bondholders in the event that LGAC failed to make the payments to STARC.

Like Supreme Court and the Appellate Division, we conclude that our decision in Wein is dispositive of this issue. In Wein, pursuant to the New York City Stabilization Reserve Corporation Act, the Mayor of the City of New York was authorized to certify $520 million over the course of two succeeding fiscal years to the Stabilization Reserve Corporation (SRC). SRC would then sell $520 million of its own bonds and notes, the proceeds of which would be paid into the City’s general fund. Under the applicable statute, the bonds and notes were the sole obligations of the SRC, and neither the State nor the City would be liable for payment on the debt service. The bonds were financed out of SRC’s capital reserve fund. To assure proper maintenance of the fund, the City was to make a yearly appropriation to the fund. If the City failed to make the appropriation, the State Comptroller would pay SRC the amount certified out of revenue that would otherwise have been payable to the City (see Wein v City of New York, 36 NY2d at 614-615).

In rejecting plaintiff taxpayer’s article VIII, § 2 challenge to the New York City Stabilization Reserve Corporation Act, we noted that the terms of the statute precluded the City from becoming indebted to SRC or its bondholders. We held that article VIII, § 2 did not apply because the City could not be held liable to the bondholders even if the City failed to make the payments, thereby causing SRC to default (id. at 617-618).

In this case, as in Wein, the City has no legal obligation either to STARC or to its bondholders should LGAC fail to make its payments to STARC. Although the Act does not specifically state that the City incurs no obligation with respect to STARC’s bondholders, it does not impose such an obligation. And significantly, the City’s avoidance of this debt obligation is abundantly clear in the record. According to STARC’s certificate of incorporation, “no member of the City Group will guarantee debts of the Corporation.” Moreover, the assignment agreement between the City and STARC states:

“City Not Liable on Bonds. It is the intention of the City and [STARC], and they do agree, that the Fiscal 2004 Bonds shall not be a debt of the City and the City will not have any obligation or liability thereon.”

The preliminary offering circular on STARC’s Series A bonds states:

“None of the payments to LGAC, to [STARC] by LGAC or to the Bondholders by [STARC] constitutes a debt of the State or the City, and neither the faith and credit nor the taxing power of the State or the City is pledged to the payment of amounts to LGAC, to [STARC] by LGAC or to the payment of the Series 2004A Bonds.”

Finally, the preliminary offering circular on STARC’s Series B bonds states: The terms of the assignment between the City and STARC cannot be clearer on this point—the City has no obligation to STARC with regard to LGAC’s payments and has no liability to STARC’s bondholders in the event that STARC defaults. Therefore, the City has not incurred any enforceable debt with respect to the assignment and article VIII, § 2 of the State Constitution does not apply.

“Payments to the Series 2004B Bondholders by [STARC] do not constitute a debt of the State or the City, and neither the faith and credit nor the taxing power of the State or the City is pledged to the payment of the Series 2004B Bonds.”

We further reject LGAC’s contention that the assignment of the City’s right to receive the payments in exchange for bond revenues violates a purported “ban on revenue financing.” According to LGAC, “[t]he purposes of the prohibition are to prevent local governments from evading constitutional debt limitations and committing their revenues to long-term obligations that are not conditioned on future local legislative appropriations and that are therefore beyond any local legislative power to alter in response to changed needs and conditions.” Although LGAC couches this argument in terms of article VIII, § 2 of the State Constitution, this concern about inhibiting future local administrations from determining the use of its revenues has nothing to do with a city’s obligation to pledge its faith and credit to its debt obligations. Rather, it appears to be a separate policy consideration altogether.

In any event, here there is no diversion of a preexisting revenue stream that the City otherwise would have received. Rather, the Legislature created an additional revenue stream of state funds through LGAC which enabled the City to receive revenues that had been diverted for payment of debt service on the MAC bonds. Moreover, the assignment here does not affect the ability of future local administrations to determine how the payments from LGAC ought to be expended. Pursuant to Public Authorities Law § 3238-a, upon the City’s assignment of LGAC’s payments to STARC, the amount becomes “the property of [STARC] for all purposes,” and upon the City’s notice to LGAC and to the State Comptroller of the assignment, the payments must be made directly from LGAC to STARC. Thus, the assignment constitutes a transfer of the City’s entire property interest in the revenue stream. It is not a perpetual spending of the City’s revenue on STARC, but is rather a one-time assignment of a property right, and once it is made, the City has no interest in any of the LGAC payments. STARC thereby has full ownership of the entire revenue stream. Thus, there is no interference in the appropriation power of future local administrations. Simply stated, a city council cannot appropriate revenue that it does not own.

Still, even if the City would otherwise have an interest in the LGAC payments, this Court has held that the diversion of municipal funds to a public benefit corporation does not necessarily run afoul of the State Constitution. As earlier noted, we upheld the financing program in the Wein case, in which the corporation’s capital reserve fund was financed by city appropriation, and failing that appropriation, by the State’s diversion of city revenues to the corporation (see Wein v City of New York, 36 NY2d at 618). Indeed, we stated, “The fact that the comptroller is permitted, under certain circumstances, to pay a portion thereof directly to a public benefit corporation on behalf of the city, does not create any illegality, and we hold and find that no lien is thereby created on that fund” (id. at 619).

Also, in Comereski v City of Elmira (308 NY 248 [1955]), we recognized that it was constitutionally permissible for a municipality to provide in a contractual agreement with an authority that, on the one hand, the authority’s bonds create no liability for the municipality, and on the other hand, permit or mandate that the municipality make some kind of direct assistance to the authority (see id. at 254 [“(A) city’s nonliability on an authority’s bonds and the same city’s right or duty to assist the authority financially are part of the same conventional statutory pattern. We should not strain ourselves to find illegality in such programs”]). As we emphasized in both Wein and Comereski, if the State were to funnel money to a public benefit corporation that would otherwise be paid to the municipality, the payment would constitute a permissible gift under article VIII, § 1 of the State Constitution (see Wein v City of New York, 36 NY2d at 618; Comereski v City of Elmira, 308 NY at 252-253).

We recognize that there are numerous programs providing for the payment of a public benefit corporation’s debt service through the diversion of state aid paid on behalf of a municipality. The most obvious example of such a program, of course, is the diversion of the City’s interest in the state sales tax to MAC itself in order to pay the debt at issue in this litigation. Another prominent example is the utilization of public authorities by several counties of the State, including New York, Westchester, Erie and Nassau, for the issuance of bonds to provide immediate revenue to the respective counties, with the financing of these bonds secured by the proceeds the counties are to receive under the national tobacco settlement (Kasprak, Securitization of Tobacco Settlement Funds, Report of Conn Gen Assembly Off of Legis Research [Sept. 20, 2002] <http://www.cga.state.ct.us/ 2002/olrdata/ph/rpt/2002-R-0736.htm>). As we stated in Wein,

“While the constitutional validity of these other enactments is not before us, we must assume that the legal and constitutional basis for the funneling of a municipality’s State-aid moneys to these other public benefit corporations by the State Legislature, is founded on the similar right of a municipality to make gifts to a public benefit corporation pursuant to section 1 of article VIII of the Constitution and the other cited authorities. Upon a contrary holding it could be argued, successfully or otherwise, that their funding would be illegal.” (Id. at 619.)

We therefore conclude that the MAC Refinancing Act does not violate New York State Constitution, article VIII, § 2.

Impairment of Contracts

In its final constitutional challenge, LGAC maintains that the MAC Refinancing Act impairs the preexisting contractual rights of its bondholders (US Const, art I, § 10). Pursuant to the general bond resolutions adopted in 1991 and 2002, LGAC pledged to its bondholders that they would have first priority on the funds available to LGAC. While LGAC is permitted to issue other debt instruments, any obligations to disburse funds on such instruments must be subordinated to the bondholders’ rights and cannot adversely affect LGAC’s ability to satisfy its debt on the bonds. Under Public Authorities Law § 3241 (1), the State pledged to LGAC bondholders that it would not limit or alter their rights and remedies to receive the principal and interest due them on the bonds.

LGAC argues that the Act impairs the rights that LGAC bondholders enjoy under the bond resolutions in violation of United States Constitution, article I, § 10 (1), which states, in pertinent part, “No State shall . . . pass any . . . Law impairing the Obligation of Contracts.” LGAC rests its argument on the first sentence of Public Authorities Law § 3238-a: “Notwithstanding any inconsistent provision of law, [LGAC] shall transfer to the city of New York [$170 million] from the resources of [LGAC] pursuant to section [3239] of this title.” According to LGAC, this provision gives the payments to the City a greater priority than that afforded to the LGAC bondholders, even though LGAC’s contracts with its bondholders promised them first priority over any other debtors. LGAC urges that if there were a shortfall in the funds available for payment to the City and to LGAC’s bondholders, the language of section 3238-a would require LGAC to disburse payments to the City at the expense of monies due to LGAC bondholders. We reject this contention.

The interpretation that LGAC urges this Court to give to the Act would require us to find that the Legislature modified or repealed Public Authorities Law § 3241 (1) by implication. For us to do so would be to ignore the fundamental tenet of statutory construction that implied repeal or modification of a preexisting law is distinctly disfavored (see Iazzetti v City of New York, 94 NY2d 183, 189 [1999]; Matter of Consolidated Edison Co. of N.Y. v Department of Envtl. Conservation, 71 NY2d 186, 195 [1988]; Besser v E.R. Squibb & Sons, 146 AD2d 107, 114 [1st Dept 1989], affd 75 NY2d 847 [1990]). “[T]he judiciary should not lightly infer that the Legislature has repealed one of its own enactments when it has failed to do so expressly; the Legislature is hardly reticent to repeal statutes when it means to do so” (Alweis v Evans, 69 NY2d 199, 204 [1987]). Generally, a statute impliedly repeals a prior statute “only if the two are in such conflict that it is impossible to give some effect to both” (id.). “If by any fair construction, a reasonable field of operation can be found for [both] statutes, that construction should be adopted” (People v Newman, 32 NY2d 379, 390 [1973]). Thus, in the absence of some expressed legislative intent to limit or repeal the State’s guarantees to LGAC’s bondholders under Public Authorities Law § 3241 (1), we will not interpret the Act to have that effect. Rather, harmonizing the provisions of the statute, as we must (see Alweis v Evans, 69 NY2d at 204), we conclude that while section 3238-a requires LGAC to make annual payments to the City, it does not modify or repeal the State’s pledge to honor the contractual rights and remedies of LGAC’s bondholders pursuant to section 3241 (1).

Public Authorities Law § 3241 (1) was clearly intended to pledge to LGAC and its bondholders that the State would honor the rights and remedies that the bondholders enjoy under their agreement with LGAC. Indeed, the provision permitted the pledge of the State to be incorporated into the agreement of the bondholders, and it subsequently was so incorporated. Pursuant to their contract with LGAC, the bondholders have first priority on appropriated monies in the Tax Fund. Thus, section 3241 (1) constituted the State’s pledge to honor the bondholders’ prior lien on the appropriated funds.

The Legislature’s subsequent enactment of the MAC Refinancing Act did not modify or repeal the State’s pledge to honor LGAC’s contracts with its bondholders. As previously stated, the purpose of the Act was to provide for an annual appropriation of funds to the City in order to assist it in its repayment of the MAC debt. The Legislature sought to channel the payments through LGAC by way of its established certification process. In doing so, the Legislature sought to require LGAC to make the payments to the City using the same method by which it made payments on its debt service. A plain reading of the phrase ‘ ‘ [n] otwithstanding any inconsistent provision of law” in section 3238-a reveals an intent on the part of the Legislature to require LGAC to make the annual payments to the City, even if some other provision would prohibit LGAC from making payments of this sort. Section 3241 (1) merely confirms the priority of payment set forth in LGAC’s contract with its bondholders. It does not prohibit LGAC from making such payments to the City, and so is not inconsistent with the intent of section 3238-a. And importantly, nowhere in section 3238-a does the Legislature expressly undermine section 3241 (1) or otherwise establish a new order of priority on the payments that LGAC must make from its appropriated funds, and we decline to impose such a reading upon the statute.

Indeed, we find no intent on the part of the Legislature to give STARC bondholders an equal or greater priority than LGAC bondholders. After all, in the normal course of events, the amount of money in the Tax Fund would be substantially more than LGAC needs to satisfy its annual expenses, including that required to pay the City. The size of the Tax Fund even following a disbursement, coupled with the trapping mechanism of State Finance Law § 92-r (5)—which would prohibit the Comptroller from making the excess revenue available to the state general fund until LGAC receives its requested money— creates a powerful incentive for the Legislature to appropriate the entire amount requested in LGAC’s annual certification. Certainly, this was the result intended by the Legislature when it promulgated State Finance Law § 92-r (5). Reading the statute as a whole, it is apparent that the Legislature intended the size of the Tax Fund and the trapping mechanism to assure LGAC’s payments to the City, not an alteration to the lien status of the LGAC bondholders. To be sure, if for whatever reason there were not enough money appropriated to LGAC to meet all of its payment obligations, the LGAC bondholders would have first priority on the appropriated funds and the right of STARC to receive payment would be subordinate.

Indeed, STARC concedes that the rights of LGAC bondholders are superior to its right to receive payments pursuant to Public Authorities Law § 3238-a. This concession was expressed three times in STARC’s preliminary offering to prospective bondholders. In one of these instances, the offering states, “The payments LGAC is required by the [MAC Refinancing Act] to make to [STARC] from the Tax Fund will be subordinate to the payments LGAC is required to make pursuant to its bond resolutions.” STARC has also offered to enter into a contract with LGAC confirming that the rights of LGAC bondholders to the money appropriated to LGAC would have priority over the rights of STARC bondholders. While a concession of priority rights in STARC’s preliminary offering plan and in an agreement between the parties may not alter the statute, it is significant to note that as a practical matter, LGAC’s concerns about the impairment of its bondholders’ contracts simply will not come to fruition.

Accordingly, the order of the Appellate Division should be modified, with costs to defendants, by reinstating the September 17, 2003 order of Supreme Court and, as so modified, affirmed.

Chief Judge Kaye and Judges Ciparick, Rosenblatt, Graffeo and Read concur; Judge R.S. Smith taking no part.

Order modified, etc.

      . At the time LGAC was created, the State was encountering fiscal problems from so-called “spring borrowing,” which developed because the State’s fiscal year ends on March 31, whereas the fiscal year of local governments ends on June 30. Spring borrowing occurred when local governments, in the last quarter of their fiscal year, would borrow money from the State during the first quarter of its fiscal year. LGAC was created to eliminate this practice by providing funding for local government needs.

      . Prior to the amendment of the provision by the MAC Refinancing Act, Public Authorities Law § 3240 (5) stated:
      “The agreement of the state contained in this section shall be deemed executory only to the extent of appropriations available for payments under this section and no liability on account of any such payment shall be incurred by the state beyond such appropriations. The state, acting through the director of the budget, and the corporation may enter into, amend, modify, or rescind one or more agreements providing for the specific manner, timing, and amount of payments to be made under this section, but only in conformity with this section.”

      . Following the enactment of the MAC Refinancing Act, each house of the Legislature passed separate “clean-up” bills to correct drafting errors in the prepared budget bills, although neither clean-up bill was enacted (2003 NY Assembly Bill A 9097 part J; 2003 NY Senate Bill S 5692 part J). These bills were similar in that they both sought to substitute the amended sentence in Public Authorities Law § 3240 (5) with language providing that agreements relating to payments made under section 3238-a would not be contrary to the intent of that provision. In addition, both bills sought to delete from section 3238-a the phrase “Notwithstanding any inconsistent provision of law.” The bills also would have delayed the first payment to the City until the fiscal year ending June 30, 2005. Furthermore, both bills sought to add a sentence to section 3238-a which would have explicitly subordinated LGAC’s payments on behalf of the State to LGAC’s payments to its bondholders.

        , Laws of 1990, chapter 220, sec 1, § 3234 (1) reads as follows:
      “The corporation shall be administered by three directors, one of whom shall be the comptroller, one of whom shall be the director of the budget and one of whom shall be appointed by the governor. A director who is not a state official shall serve for a term expiring at the end of the term actually served by the officer making the appointment and may be removed for cause by such officer after hearing on ten days notice.”

      . On August 12, 2003, STARC issued a preliminary offering circular for approximately $24 million in Series B bonds, the proceeds of which would be used to finance the Series A debt service in the event that the City was unsuccessful in its anticipated litigation. Payment on Series B bonds would otherwise be made in the manner described in the prehminary offering circular for Series A bonds.

      . On August 13, 2003, Supreme Court issued a temporary restraining order preventing the issuance of STARC bonds.

      . We further reject LGAC’s contention that—by specifying that $170 million be transferred annually to the City by LGAC ‘‘ [n]otwithstanding any inconsistent provision of law” (Public Authorities Law § 3238-a)—the Act creates an “unambiguous” and “absolute” command that the $170 million be paid by the State each year, regardless of an appropriation. The challenged provision refers only to LGAC’s payments to the City, not to the State’s payments to LGAC, which must, of course, be subject to appropriation.

      . According to STARC, in the state fiscal year ending March 31, 2002, the amount in the Tax Fund was more than three times the amount of LGÁC’s payment requirements, including a $170 million appropriation.