Statement
By
George J. Marlin
Director

Nassau Interim Finance Authority

Thursday, July 14, 2011

        Throughout the oversight period that began January 26, 2011, I have been gravely disappointed by the County’s fiscal and managerial behavior.  The County has exhibited delusions of fiscal balance.

• The County continues to refuse to come to grips with the fact that their 2011 budget is woefully out of balance and 2012 threatens to be even worse.  With overly optimistic revenue projections and cost savings not materializing, it is becoming apparent that the 2011 budget is a work of fiction.  This conduct concerns not only bondholders.  The real parties in interest are County families, small business owners, recipients of vital services, the County’s work force and future generations who will pay for County excesses.

• Not-for-profit contracts that were approved by the County months ago have been languishing in desk draws.  By refusing to dispense federal and state grants to non-profits—for whatever cynical reasons—the poor, the sick and the elderly have needlessly suffered.  Non-profits that do important work may go out of business.  The County has not been candid with taxpayers or with NIFA.  Contracts have not been promptly forwarded to NIFA and have been intentionally withheld.  That’s not acceptable.

• Many of the County’s assumptions have been for naught:  sales tax increases sought by the County; red light camera authorization from the state Legislature; labor concessions; and collection of FIT payments have all failed to materialize.  The County has not been candid with taxpayers or with NIFA as to the status of negotiations with public employee unions over the last year.  That’s not acceptable.

• The revised three-year plan is another example of unacceptable wishful thinking.  For instance, to assume revenues in 2012 of $150 million (a number revised upward by $25 million) from the privatization of the sewer systems, which the County has not even commenced despite having it in its financial plan, is a cruel hoax and an insult to the intelligence of Nassau taxpayers.  The County is duty bound to provide bondholders and NIFA complete and accurate information.

        Today there is a crisis of confidence in the County’s fiscal management.  If corrective actions are not pursued now to cure the County’s fiscal ailments, Nassau will be plunged into fiscal chaos.

       The time has come for the County:

• To stop illusory budgeting practices;

• To stop juggling money to keep on the budgetary lid.

       The time has come for the County:

• To actually govern;

• To manage fiscal realities;

        The County owes taxpayers two things:  First, candor.  Second, a plan to make up the missing revenues or missing cost reductions.  Those have both been in short supply.

        The County must also recognize that governing entails more than finger-pointing, issuing rosy press releases, attending ribbon-cutting events and fireworks displays.  Governing means making difficult and sometimes unpopular executive decisions.  It means implementing credible fiscal and management reforms in order to avoid the unparalleled disaster that looms over the County.

        In 1975 Felix Rohatyn said this about New York City’s fiscal crisis:  “The dykes are crumbling and we’re running out of fingers.”  That metaphor applies to Nassau’s present crisis.

        It is my sincere hope the County abandons delusions of fiscal balance, drops its amateur political public relations campaign and finally agrees to wage a genuine reform campaign to prevent fiscal catastrophe and restore taxpayer confidence.

 The following appears in the July 15-21, 2011 issue of the Long Island Business News:

During the 2010 election cycle, GOP state Senate candidates swore up and down the state they had “found their way;” were cured of their tax, borrow and spend addiction; and if given another chance, would be the taxpayers’ champions.

It appears to me, however, that in 2011 the GOP Senate’s pledge got lost in the Capitol’s halls. They reverted to their old habits of approving fiscal gimmicks and placating lobbyists and were weak negotiators at the bargaining table. Let’s review:

When Gov. Andrew Cuomo was fighting to close a $10 billion hole in the state budget, instead of insisting on shared sacrifice, Republican senators insisted on restoring education cuts. This action not only made it harder to balance the budget but also disincentivized overpaid school district superintendents to cut their bloated budgets.

In the battle for the tax cap, instead of supporting a permanent 2 percent cap, they surrendered to the special interests and agreed to a cap that exempts school district pension contributions and expires in five years. With pension contributions expected to skyrocket to north of 20 percent of total school district spending by 2016, this exemption will neuter the cap.

To make matters worse, the Republicans also sponsored and passed legislation that further cripples the effectiveness of the tax cap. The bill, S.4067-A, will permit school districts to use the proceeds from the issuance of 15-year bonds to pay current pension contributions. E.J. McMahon of the Manhattan Institute has reported that the measure was passed “at the behest of the N.Y.S. United Teachers as a way of reducing pressure on teachers to make contract concessions.”

This borrow-and-spend tactic is the worst fiscal abuse. Borrowing to pay today’s operating bills brought New York City to the brink of bankruptcy in 1975 and Nassau County to its fiscal knees in 2000.

If this installment debt measure was signed into law, taxpayers would have gotten hit with a double whammy – tax increases to pay for pension benefits and additional taxes imposed to pay for the interest on 15-year pension bonds. Fortunately, the governor had the good sense to veto this measure.

Then there was the extension of that World War II relic – rent control in Manhattan and Nassau County. The Republican senators were afraid to let the law sunset and were too cowardly to insist on genuine free market reforms. They not only rolled over dead, they surrendered reforms they achieved in the 1990s.

Under the new law, rent control ceilings are to increase to $2,500 per month and income ceilings will go from $175,000 to $200,000. People who are defined as “millionaires” by Assembly Speaker Sheldon Silver for income tax purposes will now be eligible for rent-control subsidies. How crazy is that?

In addition, the Senate GOP passed a bill requiring the state to pick up $10 million of annual liability for New York City Off-Track Betting workers laid off when the failed OTB closed last year. This creates a terrible precedent when Suffolk OTB closes – it is in bankruptcy already – and other OTBs around the state also go broke.

Finally, the Republican Senate Conference permitted the same-sex marriage bill to come to the floor for a vote and provided the votes to pass into law. By this action, they alienated their most loyal supporters: social conservatives. Their public rationale that the days of bottling up bills are over is absurd. Every year at least 90 percent of all legislation introduced is bottled up and dies in committee by design. Republican senators will learn, however, that actions have consequences. State Conservative Party Chairman Mike Long’s promise of just retribution could cost them their majority in November 2012 when Long denies recalcitrant GOP senators the party’s line.

New York Republicans fail to grasp that voters have had it with political chameleons. If they do not quickly learn that holding a consistent set of principles enhances their esteem with voters and strengthens their hand at the bargaining table, they will go the way of the 19th century Whig Party.

The following appears in the July 1-7, 2011 issue of the Long Island Business News:

For most of our nation’s history, public officials governed part time and then returned to their day jobs outside of politics. In towns, villages and neighborhoods, storefront entrepreneurs served as mayors, legislators or on boards because they believed it was their civic responsibility to do so.

Local residents, working hard to raise families and to make ends meet, and without the time to stay on top of community issues, were grateful they had neighbors willing to take on these low-paying or volunteer positions and act for the common good.

In the early 1970s, however, there appeared a new careerist political class whose members pushed out part-timers from the public arena. Seeking and holding public office meant everything to them. Their career, livelihood and self-identity depended on it.

These “me generation” narcissists craving political power believe they are the only ones fit to govern, not because they are lovers of the downtrodden or have experience, but because they are measurably smarter than the public at large and that society will benefit from their counsel.

They also possess grandiose views of their talents, excessive interests in themselves, a craving for attention and admiration, and a consciousness of superiority. This type of narcissist, according to the noted social philosopher Christopher Lasch, “depends on others to validate his self-esteem. He cannot live without an admiring audience.

“For the narcissist, the world is a mirror, whereas the rugged individual saw it as an empty wilderness to be shaped to his own design.”

Success for these narcissists “consists of nothing more substantial than a wish to be vastly admired, not for one’s accomplishments, but simply for oneself, uncritically and without reservation.”

The poster boy for this new class of political narcissism is recently deminted Congressman Anthony Weiner – although there are numerous other examples in New York.

Weiner, for example, has never had a real job in the private sector. Straight out of SUNY Plattsburgh, he went to work as an aide to then-U.S. Rep. Charles Schumer. In 1991, at age 27, he was elected to the New York City Council and in 1998 was elected to Congress.

Weiner is a political narcissist who has excelled at self-promotion, campaigning, fundraising and self-exaltation. “Please understand I am a very important man,” he lectured an Internet groupie. All that mattered was his political ambitions and sexual prowess, not sound judgment, duty or character.

Shameless, he was willing to do whatever it took to cling to his office. His handling of Tweetergate proves it: When lying didn’t work, he tried public flagellation, and when that failed, he declared himself a victim, an expectant father and then checked into a treatment center. He held out as long as he could because he has had no existence apart from his role in public life. Weiner will never adjust to civilian life. He will be a lost soul forever living off of past glories and attempting political comebacks.

Weiner and fellow political narcissists – New York Power Authority chief executive Richie Kessel springs to mind – have in common an inflated sense of themselves. For them the world is an extension of their wills and emotions. Because they are the anointed ones, the people should be submissive to their exercise of power. Any who challenge their vision are unworthy, insensitive, evil and intellectually and morally bankrupt.

Since they venerate only their egos, they are willing to disregard law and shame in pursuit of accolades and power.