Fiscal Emergency Law and Legal Definition
A fiscal emergency is a financial crisis, especially of a government or public entity. A fiscal emergency is generally the last and most severe stage of an entity's financial solvency problems. The entity may be legally required to develop a financial plan to alleviate the financial crisis.
The following in an example of one state's law governing a fiscal emergency:
" The existence of a fiscal emergency condition constitutes a fiscal emergency. The existence of fiscal emergency conditions shall be determined by the auditor of state. Such determination, for purposes of this chapter, may be made only upon the filing with the auditor of state of a written request for such a determination by the governor, by the county budget commission, by the mayor of the municipal corporation, or by the presiding officer of the legislative authority of the municipal corporation when authorized by a majority of the members of such legislative authority, by the board of county commissioners, or by the board of township trustees, or upon initiation by the auditor of state. The request may designate in general or specific terms, but without thereby limiting the determination thereto, the condition or conditions to be examined to determine whether they constitute fiscal emergency conditions. Promptly upon receipt of such written request, or upon initiation by the auditor of state, the auditor of state shall transmit copies of such request or a written notice of such initiation to the mayor and the presiding officer of the legislative authority of the municipal corporation or to the board of county commissioners or the board of township trustees by personal service or certified mail. Such determinations shall be set forth in written reports and supplemental reports, which shall be filed with the mayor, fiscal officer, and presiding officer of the legislative authority of the municipal corporation, or with the board of county commissioners or the board of township trustees, and with the treasurer of state, secretary of state, governor, director of budget and management, and county budget commission, within thirty days after the request. The auditor of state shall so file an initial report immediately upon determining the existence of any fiscal emergency condition."
The state above also defines a fiscal emergancy as "(1) the existence of a default on a debt obligation for more than thirty days; (2) the existence of a failure for lack of funds to make payment of all payroll to employees of the municipal corporation for more than thirty days or beyond an agreed period of extension; (3) an increase in the minimum levy of the municipal corporation that results in a reduction in the minimum levies for one or more other subdivisions or taxing districts; (4) the existence of a condition in which accounts due and payable at the end of the preceding fiscal year, less the year-end balance, exceeded one-twelfth of the available revenues during the preceding fiscal year; (5) the existence of a condition in which the aggregate of deficit amounts of all deficit funds at the end of the preceding fiscal year, less the year-end balance, exceeded one-twelfth of the total of the general fund budget for that year and the receipts to those deficit funds other than from transfers from the general fund; and (6) the existence of a condition in which, at the end of the preceding fiscal year, moneys and marketable investments in or held for the unsegregated treasury of the municipal corporation, minus outstanding checks and warrants, were less than the aggregate of the positive balances of the general fund and those special funds whose purposes the unsegregated treasury meets, and such deficiency exceeded one-twelfth of the total amount received into the unsegregated treasury during the preceding fiscal year."