1. As used in this section: a. "Annual budget" means the annual budget or estimate, as finally adopted, of a municipal corporation which is required by law to adopt an annual budget or estimate of the expenditures to be made for a fiscal year for the general support or for the expenses of the government of such municipal corporation during such fiscal year. b. "Base year" means the most recent fiscal year for which an annual report has been filed with the state comptroller pursuant to section thirty of this chapter. c. "Chief executive officer" means a chief executive officer as defined in paragraph five-a of section 2.00 of the local finance law. d. "Chief fiscal officer" means a chief fiscal officer as defined in paragraph five of section 2.00 of the local finance law. e. "Eligible portion of the annual budget" means:

1. (1) in the case of a contingency and tax stabilization reserve fund established for a county, city, village or fire district, the general fund portion of the annual budget;
2. (2) in the case of a contingency and tax stabilization reserve fund established for a town, the town-wide general fund and highway fund portions of the annual budget; and
3. (3) in the case of a contingency and tax stabilization reserve fund established for the part of a town outside any villages, the general fund and highway fund portions of the annual budget for such part of the town. f. "Estimated revenue" means revenue from a specific source which is expected to be received during a fiscal year and which is included in the annual budget as finally adopted for that fiscal year. g. "Governing board" means a governing board as defined in section two of this chapter and, in the case of a fire district, shall mean the board of fire commissioners. h. "Municipal corporation" means a municipal corporation as defined in section two of this chapter and shall also include a fire district. i. "Public emergency" means an epidemic, conflagration, riot, storm, flood or other sudden, unforeseen or unexpected occurrence or condition which requires the immediate expenditure of moneys to protect the public health, safety or welfare of the inhabitants of the municipal corporation. j. "Tentative budget" means the tentative budget prepared pursuant to section three hundred fifty-four of the county law, section one hundred six of the town law or section 5-504 of the village law, the statement of expenditures prepared pursuant to section one hundred eighty-one of the town law, or similar document prepared pursuant to general, special or local law. k. "Unanticipated expenditure" means an expenditure for a specific purpose for which there is no or insufficient appropriation or which will cause an appropriation to be insufficient that is necessitated by a change in federal or state laws, rules or regulations, a court order, judgement or decree, a public emergency, or an industry-wide price, rate or premium increase, which takes effect or occurs after final adoption of the annual budget and which could not have been reasonably anticipated prior to final adoption of the annual budget. l. "Unanticipated revenue loss" means estimated revenue which is rendered unreceivable because of a change in federal or state laws, rules or regulations, a court order, judgement or decree, or other circumstance, which takes effect or occurs after final adoption of the annual budget and which could not have been reasonably anticipated prior to final adoption of the annual budget. m. "Unappropriated unreserved fund balance" means the difference between the total assets for a fund and the total liabilities, deferred revenues, encumbered appropriations, amounts appropriated for the ensuing fiscal year's budget, and amounts reserved for stated purposes pursuant to law, including reserve funds established pursuant to the general municipal law for the fund, as determined through application of the system of accounts prescribed by the state comptroller pursuant to section thirty-six of this chapter. n. "Voting strength" means the aggregate number of votes which all the members of the governing board are entitled to cast.

4. a. The moneys in a contingency and tax stabilization reserve fund may be expended only pursuant to an appropriation for a purpose authorized by this subdivision. Except as provided in paragraph e of this subdivision, such an appropriation shall be made only upon the recommendation of the chief executive officer and the adoption of a resolution appropriating the recommended amount by at least two-thirds of the voting strength of the governing board. b. The moneys in a contingency and tax stabilization reserve fund may be used to finance an unanticipated revenue loss chargeable to the eligible portion of the annual budget, subject to the following limitations:

1. (1) the maximum amount of moneys in the fund that may be used to finance an unanticipated revenue loss shall equal either the amount of the revenue actually received for the base year or the amount of the estimated revenue for the current fiscal year, whichever is less, minus the amount of the revenue actually received for the current fiscal year; and
2. (2) the moneys in the fund may be used only to finance that portion of the unanticipated revenue loss which, as a matter of law, cannot be financed with amounts available in any other account or fund. c. The moneys in a contingency and tax stabilization reserve fund may be used to finance an unanticipated expenditure chargeable to the eligible portion of the annual budget, subject to the following limitations:
3. (1) the maximum amount of moneys in the fund that may be used to finance an unanticipated expenditure shall equal the sum of the amount of the unanticipated expenditure and the amount appropriated for that purpose for the current fiscal year minus either the amount appropriated for that purpose for the current fiscal year or the actual expenditure for the same purpose in the base year, whichever is greater; and
4. (2) the moneys in the fund may be used only to finance that portion of an unanticipated expenditure which, as a matter of law, cannot be financed with amounts available in any other account or fund. d. The moneys in the contingency and tax stabilization reserve fund may be used to lessen or prevent any projected increase in excess of two and one-half percent in the amount of the real property tax levy needed to finance the eligible portion of the annual budget for the next succeeding fiscal year. The maximum amount of moneys in the fund that may be used for this purpose shall equal the difference between the projected amount of such real property tax levy and one hundred two and one-half percent of the amount of the real property tax levy needed to finance the eligible portion of the annual budget for the current fiscal year. e. When preparing the tentative budget of a municipal corporation, if the current balance of a contingency and tax stabilization reserve fund, as shown by the statement of the chief fiscal officer required by subdivision six of this section, exceeds ten percent of the eligible portion of the annual budget for the current fiscal year, such excess shall be used to reduce the amount of real property taxes needed to finance the eligible portion of the annual budget for the next succeeding fiscal year.