News: Time’s Up For Nassau County
(Long Island, N.Y.)Today was the deadline given by the Nassau County Interim Finance Authority (NIFA) to Nassau County Executive Edward P. Mangano and legislatures to get the 2011 budget balanced without a 1% (or $26 million) increase in deficit. The deadline reflects the second financial crisis in a decade to reach the county, which has the second highest property tax in the country. NIFA and the Nassau County Legislature can’t agree on whether the budget has been balanced for 2011, but the greater question is how could the threat of a possible state takeover come to one of America’s four wealthiest counties?
Mangano and team must prove to NIFA board members that the $170 million projected in contingency plans are valid. Nassau County officials had to write up detailed statements in a series of six letters to NIFA describing the contingencies, which include the selling of county-owned property in Mitchell Field. One letter describes the county’s fund balance, which was estimated at $65.4 million over a year ago. Mangano contends that the balance is supposed to increase after implementation of the $5 million surplus of 2010.
Mangano has been silent about his dealings with five of the largest unions in Nassau County, though he says the negations are important for the projected budget of 2012. In addition to the contingency plans, Mangano must also legitimize $61 million in proposed labor savings. Of all the budgetary items, this is the most troublesome for NIFA board members because it seems the most farfetched of all of the county’s claims.
The next item of business, the $23 million in state risks, is supposed to come from a fee increase for red-light violations caught on cameras and an increase in surcharges on tickets for violators on the Long Island Expressway. Both of these suggested policies require state approval. They are said to be supported by $15 million in hiring freezes for employees that are deemed “non-essential,” and $8 million in cuts for office supplies and expenses. Topping off the tall order of tasks, Mangano must prove to NIFA another $75 million in bonding for tax cert settlements.
Mangano claims that since he turned the $130 million deficit of last year into a surplus, NIFA’s demands are unreasonable. He says that NIFA has done nothing but create unnecessary doubt in the county’s management skills. He wants to employ cost-cutting and real estate deals, which are not considered ideal ways to rake in revenue because they are not continual. He wants to reopen and alter existing contracts, though it may not be legal to do so. Nassau County unions are some of the best and strongest in the country, and consider the county the less-threatening entity because of the wage freezes that may occur in the hands of the state.
NIFA, which consists of a six member board of directors, uses the accounting firm Grant Thornton to audit the county’s budget. NIFA has reached a limit with the state to cover the financial woes of Nassau County, and cannot borrow more without state approval. The state faces its own budgetary issues and must cut billions in aid to maintain financial equilibrium. The county’s deficit is estimated at $343 million for 2011.
In the case of a state takeover, NIFA would have the ability to oversee the county’s operation and management. It would also have the power to approve borrowing and labor contracts and instill wage freezes. However, the decision to have a state takeover would be a slow one. NIFA needs to wait for the accountants to finish auditing and meet with its lawyers. It also has to provide 72 hours warning before declaring an official hearing on the matter.