Statement by
George J. Marlin
Director
Nassau Interim Finance Authority

July 30, 2013

At the December 8, 2011 NIFA board meeting among other things I said:

“… The members of this Board are asked to approve a 2012-2015 Fiscal Plan that includes $305 million of new Tax Certs borrowing; $64 million in judgments and settlement borrowing and $80 million of borrowing for termination pay….

“In return for imposing on taxpayers another multi-generational backdoor tax increase, the County pledges it will … obtain $150 million of … cuts in the operating budget….

“Personally, I have very little faith in the County’s ability or will to achieve these goals.  In my judgment, the County has no creditability because time and again in dealing with fiscal matters, the County has been disingenuous, deceptive and delusional.

“However disturbed I am at the plan that the County has put before us today, and however skeptical I remain about its willingness to affect the measures necessary to effect fiscal change, I am also cognizant of our role as a Board and the repercussions our decision here today will have….

“To close the County, based on their unacceptable actions to date and on our fear that they will not do what they purport they will do, would not be unreasonable or unjustified.  Nevertheless, upon reflection, I believe that the Board should not exercise this Draconian option at this moment….

“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.”

Today I continue to have little faith in the County because it still fails to carry out its responsibilities.  The County broke its 2012 promise to obtain recurring cuts totaling $150 million.  And its claim that it did achieve $120 million in permanent cuts is suspect.

In 2012, for instance, the County closed not four police stations, as they budgeted, but only three.  In addition, the County’s claim that police station consolidations would achieve $18 million in annual savings has not materialized.  In fact, police overtime in 2013, year to date, versus the same period in 2012, is up $16 million.

Then there is the County’s absurd claim that it incurred a $41.5 million budgetary surplus in 2012.  The County came up with that number based on the fact that they failed to pay some current bills in 2012 and paid others by borrowing money.  For example, $88 million in tax cert refunds were not paid in 2012 but were pushed into fiscal 2013.  Also, there was an unbudgeted use of $10 million in reserves in 2012 and the use of $67.8 million in long-term borrowing to pay current bills such as termination payments.

These practices are like using one’s credit card to make current mortgage payments on one’s home and then making minimum payments on the credit card balance for the next thirty years.

The analysis of the 2012 budget based on Generally Accepted Accounting Principles (GAAP) reveals that the County incurred an $85.5 million deficit.

For this year, as of June 30, 2013, the GAAP deficit is projected to be $164 million.

Obviously, the County has learned nothing since the control period began two and a half years ago.  This may explain why the County’s ratings have been downgraded and may very well be downgraded again.

The County continues to kick the can down the road despite the County Executive’s statement to Meredith Whitney, author of Fate of the States, on July 3, 2012, “This ‘kick the can down the road’ policy has to stop.”

If the County is ever to get its fiscal house in order, officials must heed the recent comments of two people:

Kevyn Orr, Detroit’s Emergency Manager, gave this advice on July 22, 2013, to local officials with fiscal problems:  “Delay doesn’t produce positive outcomes.  So, whatever the problems are, deal with them.  Have the political will, the wherewithal, to deal with them now.”

Governor Andrew Cuomo, sitting between the Nassau and Suffolk County Executives in Albany on July 19, 2013, said:

“The difference between communities that thrive and communities that die is leadership.”

In other words, for Nassau to succeed there must be the will to govern.  Governing by press release will not cut it.

As for today’s motion—I remind the County of my words in December 2011 “that approval of a plan is not approval of all the parts.” 

Today I vote yea for this small sliver of the tax cert refunding plan because they did come up with some permanent cuts.  But if the County continues its fiscal shenanigans it cannot assume my support in the future.

The following appears in the July 5-11 2013 issue of the Long Island Business News:

Gov. Andrew Cuomo’s voter approval ratings have been dropping like a rock, from the high 70s to the mid-50s. Why? He’s been exposed as just another pol whose actions do not live up to his big talk.

To boast that his third budget in a row passed on time, Cuomo abandoned the sound and tough fiscal measures he employed in his first year in office.

Instead, he adopted the Mario Cuomo/George Pataki smoke and mirrors approach to balancing budgets.

Hence, the Cuomo budget for fiscal 2013-2014 is riddled with one-shot revenue, tax and fee increases, back-door borrowing and overly optimistic revenue estimates.

His most egregious budget gimmick is the $350 rebate check, to be delivered by mail to a select group of New Yorkers, which will cost taxpayers about $400 million. The checks will not be distributed during the present fiscal year, by the way, but in October 2014, one month before the state elections.

Another dismal failure has been Cuomo’s much heralded Public Integrity Act, which included the Joint Commission on Public Ethics.

The slew of state legislators indicted in May and the Assemblyman Vito Lopez scandal proved the “new and improved” ethics board is a toothless tiger.

As for Cuomo’s 2013 legislative achievements, there’s not much to write home about:

The Fiscal Restructuring Board Cuomo alleged will help financially distressed municipalities is nothing more than a subterfuge for the extension of the rigged mandatory arbitration law written by the public employee unions.

The pension budget relief program doesn’t curb ever-growing local government pension contributions. It merely sticks current liabilities to future generations of taxpayers.

The LIPA legislation will probably do little to help struggling commercial and residential ratepayers. The re-structuring of LIPA debt, particularly with interest rates trending upward, is not expected to achieve the projected $30 million in annual savings.

The governor blinked on the proposal to decrease LIPA/National Grid payments in lieu of taxes to local governments and school districts, which total $586 million annually.

He failed to acknowledge that the payments are based on outrageously over-assessed values of electrical facilities and are unfair subsidies to favored government sub-divisions.

The approved casino plan is irrational. Giving casino location preference to upstate communities and not to New York City and Long Island where there is demand could prove to be disastrous.

Private-sector investors may not have any interest in ponying up hundreds of millions of dollars for gambling ventures in areas that may not attract the “high-rollers” needed to make facilities profitable.

Don’t be surprised if voters reject the constitutional amendment to legalize casinos this November.

Cuomo’s over-hyped tax-free zones on state-owned land on or near public or private universities, which now includes New York City, will probably go the way of Pataki’s failed and scandal-ridden tax-free enterprise zones. Expect the politically connected to be awarded tax-free havens, with few jobs created.

Finally, Cuomo’s hastily drafted campaign finance bill and his fatally flawed women’s rights legislation – both introduced in the final days of the legislative session – got nowhere.

All the glowing press releases proclaiming the dawn of a new New York cannot cover up the fact that the governor’s drive to change the business climate by cutting taxes and regulations has stalled.

The proof Cuomo has failed: The dim-witted governor of Texas has figured the Empire State is ripe for the picking and has financed an advertising campaign aimed at poaching businesses.

If that’s not a wake-up call for Cuomo, I don’t know what it will take to jar him out of his political coma.