On The Right: Saving Nassau from insolvency

On The Right: Saving Nassau from insolvency

Nassau County’s finances are in worse shape than when the Nassau Interim Finance Authority declared a control period in 2011.  

The projected 2015 operating deficit on a Generally Accepted Accounting Principles basis is $188.2 million while the GAAP deficit for 2011 was $160 million.

“How could this be?” you ask.  Here’s the explanation:

In December 2011, the NIFA board approved a 2012-2015 fiscal plan that included the continuance of a wage freeze and more than $400 million in borrowing for Tax Cert settlements, judgments and termination pay.

In return, the county pledged it would either obtain $150 million of union givebacks or make other recurring cuts totaling $150 million.  

In addition, the county promised it would fully fund with operating revenue all tax certs, judgments and settlements, and termination expenses beginning in fiscal year 2015.

Under these terms, it was projected that the county could achieve a GAAP-balanced budget in 2015 and the NIFA control period could be lifted.

Even though Nassau County Executive Mangano dragged his feet in making all the promised cuts, the plan appeared to be working because NIFA helped it along by rejecting more than $200 million in borrowing deemed non-essential.  The county ended fiscal year 2012 with a $64.1 deficit (down 60 percent from the previous year) and in 2013 the deficit was $73.6 million.  

Clearly, the 2015 budget balance was on its way.

However, that positive trend ended in 2014 when the 2011 bargain was discarded in favor of political expediency.  

As a result, the GAAP deficit grew to $189.2 million in fiscal year 2014 and is projected to be $188.2 million in 2015, $211.4 million in 2016, $302.1 million in 2018 and in 2019, a staggering $351.3 million.

The rapidly deteriorating finances are due to the reckless antics of two people: Jon Kaiman, who became chairman of NIFA in 2013 and County Executive Ed Mangano.

Kaiman’s boast that the deal he negotiated to lift the county’s public employee wage freeze was cost-neutral or fully funded was, as predicted, false.  

It is costing taxpayers over $70 million a year more.  And Mangano has failed to produce cuts and other sources of revenue to fund the added labor costs.

Fortunately, the adults on the NIFA board stepped forward — leaving Kaiman to lead from behind — and crafted a resolution rejecting the county’s multi-year financial for 2016-2019.  

The resolution approved unanimously on November 19 boldly stated:

NIFA is charged with the responsibility to impose fiscal discipline on the county if the county cannot do so on its own.  

Today, NIFA’s disapproval of the adopted financial plan is the first step in such a process.  

As required by the NIFA Act, the county will be afforded one opportunity to get its own house in order by providing NIFA with a satisfactory modified financial plan by Nov. 30, 2015.  

If the county fails, then NIFA will have to power to adopt its own modifications to the financial plan. This is not a pleasant prospect, but the NIFA directors will fulfill their statutory responsibility.

The other good news that came out of the NIFA meeting:  the board retained as an advisor, the most highly regarded municipal budget expert in the state, Mark Page.

Page served in New York City’s Office of Management Budget as counsel or budget director from 1978 to 2013 in the administrations of mayors Koch, Dinkins, Giuliani and Bloomberg.

During the City’s 1970s fiscal crisis, Page was responsible for developing and executing fiscal plans that permitted the City to attain a GAAP-balanced budget.

Mr. Page — described in the New York Observer as a man with “little patience for what he sees as the inability of politicians to see beyond a short-term calculus” — no doubt will be shocked by Nassau’s fiscal shenanigans.  

But if any man can put the county on the path to fiscal righteousness, it’s Page.

Nassau’s taxpayers should be pleased the no nonsense NIFA board members have taken the lead to fix the ailing County.  

And with Mark Page working with them, they have a good chance of succeeding.

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