Nassau’s Balancing Act

“Most ‘A’-rated counties are smaller and poorer; in fact, the only other large county that we could find that is rated as low as Nassau County is Wayne County, Michigan,” its May 28 report charges. Wayne County includes the city of Detroit.

Source: Nassau County assessment administration system review, “Analysis and Recommendations,” May 29, 2009

A switch by NIFA to a “control period” would also affect any candidate who might be running on his/her fiscal track record.

“Just politically speaking, if the county executive has higher aspirations, he’ll make sure that does not happen,” says Naughton.

Cash Cow

Each year, about 110,000 residential property owners in Nassau file appeals challenging their property tax assessments. This process, known as tax certioraris, has been a shared source of damnation and lamentation between Nassau’s fiscal watchdogs and the county executive for years. Although residents file in the hopes of lowering property taxes, the system is grossly log jammed and costly for all parties involved.

According to NIFA, which since its inception has raised more than $800 million to help the county resolve its cert dilemma, the problem isn’t going away any time soon, nor is its hefty burden on taxpayers. Nassau has $1.2 billion in related outstanding debt—with debt interest payments estimated at $134.9 million for FY 2010—and a backlog of claims estimated at $139 million.

A constant point of contention between the administration and its watchdogs has been the county’s habitual paying tax cert refunds with bond proceeds, thus contributing to taxpayers’ future hardship instead of lightening it.

In addition, despite the historical price tag of $90 million annually, the county has only budgeted its expense at $50 million during FYs 2011, 2012 and 2013, sparking concern at NIFA that taxpayers could be saddled with an unbudgeted cost of $40 million annually.

“How do you make that up?” asks Naughton. “You have to borrow. So that puts more stress on future taxpayers.”
Stokes justifies the borrowing as a means of eating into the claims backlog, and stresses that its drop from $400 million to current levels is due to the Suozzi administration’s efforts.

A May 29, 2009, 78-page evaluation of the county’s assessment system by Nassau’s newly appointed Tax Assessor Thaddeus J. Jankowski, Jr. and ordered by Suozzi, detailed the scope of the tax cert problem. It also made recommendations and identified several “critical challenges” requiring “immediate attention.”

Among those identified: Nassau County has spent $90 million annually for tax refunds, 83 percent of them for commercial properties.

According to Jankowski’s report, commercial property challenges are most always a win-win for property owners and the firms representing them—and most costly to the county, due to incurred interest resulting from lengthy court calendars.

“Yet, the only ones making millions of dollars in this process are the commercial tax certiorari firms,” it reads.
The Suozzi administration has been no stranger to the magnanimous strain the tax cert calamity puts on the back of taxpayers. He’s been railing against the problem since his first year in office. It was Suozzi who ordered Jankowski’s analysis.

Yet the problem has continued throughout the years and brought a handful of cert firms considerable wealth at taxpayers’ collective expense. Included in the tax assessor’s May evaluation is a chart outlining estimated revenues for 11 commercial firms that have profited substantially from the dilemma. (See chart.)

At the front of the line is Mineola-based Koeppel Martone & Leistman, LLP, listed as raking in an estimated $33.1 million from 2003 to 2008.

Fourth in revenues, according to Jankowski’s report, is Uniondale-based Forchelli, Curto, Deegan, Schwartz, Mineo, Cohn & Terrana, LLP, listed as having conducted an estimated $16.4 million worth of business between those years.
The sixth most-profitable firm at the tax cert trough, in terms of estimated revenues, says the analysis, is Meyer Suozzi English & Klein, PC, where Suozzi’s father is a partner and NYS Gov. David Paterson’s father is a member. The firm raked in an estimated more than $10.6 million between 2003 and 2008, it says.

No Direction Home

The tax certiorari mess will continue to hemorrhage, and the future of sales tax receipts in the county remains questionable. It’s uncertain how long the recession will last and how much further into the trenches the downturned economy will slide—some local economists predict a recovery could be some time down the line, say the watchdogs’ reports.

Among other contingencies is the fate of interest rates in the oncoming years, which could have serious effects on the roughly $600 million Nassau has invested in variable-rate bonds.

How the county executive will handle these challenges, regardless of which candidate wins this November is another guessing game. The only certainties are that whoever it is has some difficult decisions ahead, and that Nassau County taxpayers will be paying for those choices for a long time coming.

And it’s the taxpayers, Naughton believes, who are the ultimate litmus test of what exactly that future will include.
“It really comes down to the taxpayers, what is it that they are willing to pay for,” he explains. “If they want the same services, then you have to educate them that this is how much it costs and we’re going to have to charge you more. If they say, ‘We can’t afford anything else, we’re ready to cut back, then, that’s what you need to start doing.”

Something needs to be done, soon, before Nassau’s fiscal future comes tumbling down.