The following appears in the January 14-20, 2011 issue of the Long Island Business News:

The Nassau Interim Finance Authority has been much in the news of late due to the county’s fiscal crisis. Because there has been considerable misinformation circulating about NIFA as well as claims that it is only a “so-called watchdog agency,” as a NIFA board member I believe it is appropriate to devote my LIBN column this week to setting the historical record straight.

Back in 2000, to help restore the county’s fiscal health, which had been suffering for years due to mismanagement and corruption, the Nassau County Legislature unanimously approved a home-rule message requesting Albany to create a state oversight panel with the power to guide the county’s budget policies. Both Nassau Legislator Peter Schmitt and then-Legislator Ed Mangano voted for the measure.

Responding to this request, then-Assemblyman Tom DiNapoli, D-Great Neck, and state Sen. Dean Skelos, R-Rockville Centre, crafted NIFA legislation that was intended to fix Nassau’s financial mess and to protect taxpayers from future irresponsible political behavior.

The state Legislature adopted the act to fulfill its constitutional duty “to restrict the power of taxation, assessment, borrowing money, contracting indebtedness and loaning the credit of municipalities so as to prevent abuses in taxation and assessments and in the contracting and loaning of credit by the county.” This visionary bipartisan bill was signed into law by Republican Gov. George Pataki on June 23, 2000.

Modeled on New York City’s Emergency Financial Control Board and the Municipal Assistance Corp. (which were created in the 1970s to address the city’s fiscal nightmare), NIFA is an independent public authority that has had budgetary oversight responsibilities and the power to provide the county with budgetary relief, to transmit state assistance grants and to issue NIFA bonds.

The authority’s governing body consists of seven members who serve without compensation and are appointed by the governor, Senate majority leader, Assembly speaker and the state comptroller. At the present time there is one vacancy.

Most of the public’s attention has been focused on NIFA’s power to declare a “control period” over county finances. Section 3669 of NIFA’s authorizing legislation states NIFA “shall impose a control period upon its determination at any time…. that there is a substantial likelihood and imminence [that] … the county shall have incurred a major operating funds deficit of 1 percent or more in the aggregate results of operations of such funds during its fiscal year assuming all revenues and expenditures are reported in accordance with generally accepted accounting principles.”

The phrase “substantial likelihood and imminence” means that NIFA has the authority to impose a control period based on the county’s budget not only when an operating deficit is incurred. In other words, NIFA must declare a control period if it concludes that the county’s budget does not meet the standards to project a balanced budget due to the degree of risk in various projected revenue sources and expects the deficit to be greater than 1 percent, or about $26 million on a budget of $2.6 billion.

If this were ever to occur, NIFA would work with the county in the preparation and implementation of a balanced financial plan. The county’s elected officials would continue to make all policy decisions and maintain direct responsibility for the day-to-day operations of county services. And when it is determined that the budget imbalance has been eliminated, NIFA would lift the control period.

Contrary to all the bombastic rhetoric heard in the public square, NIFA was created at the request of local elected officials in order to provide Nassau County with the opportunity to meet its obligations and to continue to function independently as a municipal entity.

This entry was posted on January 14, 2011 at 3:32 pm and is filed under Articles/Essays/Op-Ed. You can subscribe via RSS 2.0 feed to this post's comments. You can skip to the end and leave a response. Pinging is currently not allowed.