BACK TO THE FUTURE
NIFA was born in 2000, when the county’s credit rating had fallen to one level above junk status, and its borrowing costs were enormous. To pay for its tax refunds, the county borrowed more each year. As NIFA recounts in its control resolution, the county’s “elected officials refused either to raise recurring taxes or to cut recurring expenditures, instead relying on a series of temporary, or ‘one-shot,’ fixes, such as sales of County property, tapping financial reserves and more borrowing.”
If that sounds like déjà vu all over again, as Yogi Berra might say, it should, because that’s the same argument being heard today.
Back in 2000, the debt service was almost a fourth of the budgeted spending. Something had to be done to restore the county’s fiscal stability, and the NIFA Act, the result of a bipartisan effort, passed the state Legislature in June of that year. Both Ed Mangano and Peter Schmitt, as Nassau legislators, voted to approve the home-rule message requesting the bill’s passage as “necessary and in the public interest.” To sweeten the pot, Albany also provided $100 million, to be disbursed in $25 million chunks over four years.
But that was then; these days the Empire State faces a $9 billion deficit, and there’s no sweetener to be had. One immediate advantage NIFA had over the county is the ability to borrow at more favorable rates, which cut the county’s debt service by millions of dollars. So far, according to NIFA, the state has given Nassau “more than $500 million in budgetary relief.” [About $5 million or so earmarked at its inception for technological improvements to the system that to date are still not fully implemented.]
So back to the crux of the argument. The county executive, the presiding officer and the comptroller, all elected, insist that the 2011 budget is balanced. The NIFA directors do not. NIFA explains that “it would make little sense for the county’s own budgeting predictions simply to stand as the final word when the very purpose of NIFA, as directed by the New York State Legislature, is to provide meaningful oversight of the county’s finances.”
Mangano and Schmitt waved the NIFA reports from years past when it suited them. Now, Mangano is using his anti-NIFA stance on campaign fundraising literature mailed out to constituents.
On June 18, 2008, NIFA warned Suozzi that the county “has returned to its former practice of bonding tax certiorari refunds, a fiscally imprudent practice, which led to the creation of NIFA.” In 2009, NIFA “found an unacceptable level of $125 million in risk, but the County Legislature reduced the risk to $53 million, which NIFA found manageable given contingencies identified and available for immediate use as required.”
As NIFA put it in its recent control announcement: “NIFA and the county have worked cooperatively to avoid the imposition of controls, with NIFA signaling undue risk and the county acting to address the problem.”
“That is an absolute and utter misrepresentation,” Mangano says sternly, insisting it was not he but NIFA who was uncooperative. “I reached out. Anyone that knows me, look, I’m looking for solutions. I’ll work with anybody that has a solution.”
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