NIFA Statement, March 22, 2012 – By George J. Marlin

Statement by
George J. Marlin
Director
Nassau Interim Finance Authority

March 22, 2012

At NIFA’s December 8, 2011 meeting, I agreed to support the County’s multi-year plan to achieve a GAAP balanced budget contingent on the County cutting $150 million in spending from its 2012 operating budget.  In my statement that day I said:

And let me remind the County that approval of a plan is not approval of all the parts.  NIFA will base the approval of each part of the plan that comes before us in the coming months on whether the County carried out its responsibilities.

To date, the County has achieved, at best, only 60 percent of those cuts.  And the County is two months past its budget imposed deadline.

Today I voted for 60 percent of the County’s Capital spending request.  If the County does not quickly meet $150 million in cuts, I expect to vote No on future requests.

Some other comments:

  1. I am concerned that the Memos of Understanding with the police and detective unions announced this week may wipe out some, most or all of the police precinct closings projected savings.  I await back-up documentation from the County. 
  2. As promised at our last meeting, I sent a letter to the New York State Comptroller’s office outlining my concerns regarding Nassau County’s contracting procedures and its interaction with regulations and state and local laws.  In that letter I said:

The County, in 2011, may have violated regulations, procedures and laws related to contracts over $25 thousand on numerous occasions.  There appears to be a pattern of vendors being hired to perform non-emergency services without prior legislative or NIFA approval.  Time and again the County has submitted contracts to NIFA where work had been already completed or substantially underway.  There have also been complaints from charities that provide essential social services for the poor and disabled that the County has delayed, in many cases for months, forwarding their federally- and state-funded contracts to NIFA for approval.

In my judgment, the County’s actions make a mockery of the statutory responsibility delegated to NIFA to approve or disapprove contracts and effectively nullifies the clear legislative intent of the NIFA law, one enacted pursuant to a unanimous vote of the County Legislature in a home rule message, a vote that included that of then County Legislator Mangano.

I am pleased to report that I received a reply from the State Comptroller’s Examiner-in-Charge of the audit, Mr. Ira McCracken.  He has assured me that he will investigate the issues I raised.

      3.    The County has a habit of announcing deals before it has a deal.

The County announced it had a coliseum deal with Wang before it had a deal and subsequently were taken to the cleaners.  Fortunately the voters had the good sense to reject the plan.

Then there was the Mitchell Field borrowing.  The County announced it had a deal before it had a deal and the County was taken to the cleaners.  I voted against that borrowing.

Then the County announced it had a bus privatization deal before it had one—and the County was once again taken to the cleaners.  I reluctantly voted for that contract in late December because County residents needed bus service on January 1, 2012.  However, I predicted the bus contract would prove to be a disaster for commuters—and sadly that is coming to pass.

This week the County announced the makings of a new borrowing scheme—without a deal in hand.  If it becomes a reality it will be the biggest one-shot revenue fiscal abuse in the County’s history.  It will replace Governor Mario Cuomo’s sale of Attica Prison to the Urban Development Corporation as the poster child of one-shots.  (Just in case the County has forgotten, let me remind the County that any net revenue after Nassau sewer bonds are defeased would, under GAPP, have to be amortized over the life of the lease contract.)

As always, the devil will be in the details.  But I find it hard to believe that the County will negotiate a deal with a for-profit corporation that will not result in significant increases in sewer charges (a/k/a Toilet Flushing Tax) for Nassau’s over-taxed residents.

It appears to me that the sole motivation for leasing the Sewer Systems is to get one-shot revenue that at the end of the day will not fix the County’s structural operating deficit.  Whether or not it is good public policy does not appear to be part of the equation.

Personally, I agree with Governor Andrew Cuomo’s position, that government “has used a variety of financial gimmicks and one-shot revenues that hide the fact that spending is growing at an unsustainable rate.”

“One shots” do not eliminate structural deficits and excessive reliance on them is frowned upon by rating agencies and financial analysts.

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