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NIFA Takes Control of Nassau Finances

State watchdog group cites $176 million budget gap as reason for decision.

Nassau County is now a ward of the state.

The six-member Nassau Interim Finance Authority Board of Directors voted unanimously to issue a control period for the county’s finances after the state watchdog determined that Nassau’s budget will reportedly run a deficit of approximately $176 million in the 2011 fiscal year.

The amount is more than the one percent necessary to trigger a control period, or $26 million of the adopted $2.6 billion budget. “This is not something that the law gives us any latitude,” NIFA Chairman Ronald Stack said, adding that purely in terms of cash on hand, there was an estimated $50 million gap.

The resolution was numbered 11 on the NIFA agenda Wednesday afternoon, as in the chapter associated with bankruptcy.

As part of the control period, County Executive Ed Mangano and the legislature would continue to manage the county “subject to provisions of the NIFA act,” meaning a number of restrictions, including halting issuing long and short-term debt, known as revenue anticipation notes (RANs) and tax anticipation notes (TANs) which are paid back once money from sales and property taxes, respectively, are received. All requests for borrowing must now be approved by NIFA.

A freeze on bonding would leave Nassau with few options to make up the lost revenue, either layoffs–extremely difficult with union members due to a no-layoff clause that expires at the end of the year–or to raise taxes, a notion Republican legislators–who are up for election this year–have vowed will not happen.

“There is clearly another agenda at play here,” Legislative Majority Leader Peter Schmitt, R-Massapequa, said Wednesday afternoon.

When questioned about both the existence of a deficit in Nassau’s finances in prior years and under previous administrations, Stack denied that the timing of the issuance of a control period was political in nature. “(It’s) not partisan, it is not political,” the chairman insisted.

At a press conference following the vote at the legislative building in Mineola, Mangano disagreed, saying that the move was in fact political and an attempt to discredit him and his administration in an election year by forcing the county to raise property taxes.

“(Residents) should question (NIFA’s) motivations,” Mangano said. “It’s to discredit the administration, the purpose of the administration, the purpose of the legislature and the pledge that we have made to the people of Nassau County which is clearly we will not be raising real property taxes in this economy.”

NIFA will also oversee all contracts approved by the county, except those which have already been approved. The oversight board has also asked for Mangano to present a revised budget by Feb. 15 that includes details on various contracts as well as a revised budget “that is balanced.” The group stopped short of declaring the more severe “fiscal crisis” label, which would have enabled them to freeze annual increases to union employee contracts, which is only expected to save $10 million.

In enacting the takeover, Stack said that a “likelihood and imminence” existed for the county to run into debt in the 2011 fiscal budget, namely $364 million in projected borrowing by the county to pay for property tax settlements over the next two years.

No timetable was set for when the control period might end, with Stack only saying it would depend on the level of county cooperation.

Mangano had recently submitted six letters detailing various contingencies for his 2011 budget, which Stack said “does not meet the standards necessary to project... balance.”

Mangano has maintained that the 2011 budget is balanced thanks to the numerous cuts enacted by his administration.

Stack said that the announcement of a new labor contract between the county and its largest union, the CSEA, had not been reviewed or submitted to the NIFA board before the takeover decision was made.  Stack confirmed that he had read a brief on the new contract but that savings for 2011 would only amount to $2 million, which “would not have any material impact upon our decision.”

Mangano had been invited to the meeting Wednesday but was not apprised of the vote or decision. In his stead, the county executive sent County Attorney John Ciampoli, who said that Nassau would review the 30-page documented decision and that a decision would be made regarding a lawsuit to stop the takeover of the county because the statute establishing NIFA has never been tested in court. The unions are expected to join in the suit against NIFA.

“We would hope that there’d be no (legal) action,” Stack said.

Mangano confirmed Wednesday that his administration would seek legal action against the board.

Richard Boodman January 27, 2011 at 09:16 PM
I have a lot of respect for what you have to say Denis. So... how would you reduce those killer school taxes? And... are you thinking of running for public office again?
Captain Kirk January 28, 2011 at 12:34 AM
Both parties and legislature took turns giving out great deals in order to get elected. Mangano hasn't been exec long enough to make much of a dent one way or another so let's not roast the guy. This non partisan board has a job to do. I really don't think they've been sitting around with nothing to do just waiting for an opportunity to take something over. Now having independant people looking at what has gone on here may be enlightening for the people and frightening to the politicians. While we're at it, please don't waste money we don't have by starting a lawsuit. That would not only be a big waste of money and will show a callous contempt for the people who will be footing the bill. Are we afraid that years of waste and sweetheart deals will come to light?
Jack O'Niel January 28, 2011 at 04:28 PM
School consolidation to save money but at what real cost? You think it will really get cheaper? Expect to spend what Garden City does across the board while the education level/results head to the cellar. Teachers will get gold and the students will all get a quality Hempstead education.
Richard Boodman January 29, 2011 at 02:54 AM
Charter schools and vouchers. Healthy competition for the privilege of educating the children.
Charlie Allnut March 12, 2011 at 05:45 PM
Just a few facts about Long Island from the Regional Plan Association. • Over the last decade, private sector jobs have declined by 27,000 as job losses between 2007 and 2010 negated all of the gains from earlier in the decade. • Average pay per employee is at a 10-year low, down 3% from 2000. Over the same period, average wages in the United States have grown by 4%. • In 2009, there were 15% fewer 25-to-34-year-olds than there were in 2000, a larger decline than in any other part of the New York metropolitan region and in contrast to a 5% gain for the nation. • Households paying more than 35% of their income for housing rose from 27% of all households in 2000 to 38% in 2009. As property taxes rise, affordability decreases and mortgage lenders factor these high property taxes into calculating how much of a mortgage a buyer can qualify for.

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