Archive for March 2014

The Nassau County Mangano-Kaiman Watch, March 29, 2014 – By George J. Marlin

March 29, 2014

The Bogus Kaiman Union Deal:

Collapsing Under Its Own Weight

As “The Watch” predicted, the plan to railroad approval of the bogus Kaiman Union Deal through the County Legislature and the NIFA board—without proper vetting and financial analysis—on Monday, March 31, 2014 has collapsed. The NIFA meeting schedule for that night has been canceled.

The plot failed for several reasons:

  • Many County Legislators made it clear that they would not act until they received from Maurice Chalmers at the Office of Legislative Budget Review (OLBR) an analysis of the proposal;
  • Kaiman finally relented and NIFA consulted qualified outside labor lawyers. The lawyers had problems with the pension clause that “would require that new employees go to a Tier 6 pension level that would require increased employee contributions.” Apparently, it may not be legal to negotiate pension contributions in an existing contract. In Kaiman’s desperate rush to get a deal done to promote his languishing political career, he agreed to concessions that union lawyers had to know were bogus. (Union lawyers, who took Kaiman to the cleaners, must have had trouble keeping straight faces during the Kaiman negotiations. It’s easy to see how this would have unfolded, with a new employee suing—and winning—perhaps a year from now, and unraveling the savings from the pension system.)  It’s also important to note that the savings from lower pension costs are a key and significant component of the deal—a deal which already falls at least $150 million short of the mark even if everything in it works out.

Word is that the outside labor lawyers have pointed out that there are a number other financial and legal flaws in the Kaiman Union Deal.

Kaiman’s failure to do his homework before announcing an agreement nearly a month ago reminds one of Nancy Pelosi’s comment on Obamacare: “We have to pass the bill so that you can find out what is in it.” Fortunately, unlike Obamacare, we are learning bit by bit what a disaster the Kaiman Union Deal is before passage.

Also predicted by “The Watch,” Kaiman’s board approval deadline date of March 31, 2014 proved to be a false one. A state judge has extended for two weeks the start of a new police class, and it has been revealed that the County could seek the judge’s permission to continue using the expired police test results.

As of today, the OLBR has not received the backup information needed to properly analyze the financial impact of the Kaiman Union Deal. Why so? Because a genuine analysis would reveal that the Kaiman Union Deal is not cost neutral but will be $150 million or more short of that goal. This may explain why it is rumored that Nassau County’s Chief Financial Officer refuses to testify that the Kaiman Union Deal is cost neutral before the County Legislature.

This is precisely what happens when the chairman of a financial control board which is supposed to be impartial becomes the chief negotiator. All objectivity is lost, the details don’t matter and getting any deal done becomes more important than getting a good deal done.  It becomes not the County’s deal but “NIFA’s deal”—and NIFA’s board members should be wary of being associated with such a disaster-in-the-making. Hopefully those NIFA board members who were prepared to approve the Kaiman Union Deal have realized they have been had—and decide not to let it happen again.

Don’t count Astorino out in governor’s race – By George J. Marlin

March 20, 2014

The following appears in the March 14-20, 2014 issue of the Long Island Business News:

Many political wags are dismissing the gubernatorial candidacy of Westchester County Executive Rob Astorino – who on March 5 announced  his intention to win the Republican and Conservative party nominations – and that’s a grave mistake.

Astorino has had a remarkable political career thus far and has proven to be not only a fine campaigner, but a remarkably competent and principled government executive.

Back in 1991, he entered a race for the Mt. Pleasant Town Council that was considered hopeless, and beat an entrenched incumbent. He was reelected in 1995 and 1999 and in 2003 entered another tough race, this time winning a seat in the Westchester County Legislature.

Two years later, he took on two-term County Executive Andy Spano, arguing that Spano’s policies would drive Westchester government to the edge of the fiscal abyss. Astorino lost that one – but then his fiscal predictions came to pass, and he beat Democrat Spano in a 2009 rematch with 52.5 percent of the vote.

As county executive, unlike many other elected officials, Astorino was willing to govern. He made tough decisions, took on entrenched bureaucracies and unions and balanced county budgets without resorting to smoke and mirrors. He reduced taxes in 2011 and he kept them flat in 2012 and 2013, while preserving essential services.

Compare his record with his hapless Nassau County counterpart, Ed Mangano, who’s refused to govern, failed to balance budgets and, because of his fiscal incompetence, languished under the control of a state-appointed finance board for over three years.

As a result of Astorino’s successes, last November he was reelected – 56 percent to 44 percent – in a county with a 2-1 registered Democratic edge. He proved that if one has the guts to govern, one can confound the naysayers and beat the permanent government crowd.

So Astorino should not be counted out this fall. He runs a tenacious campaign and can articulate and expose New York’s fiscal, economic and cultural woes. He will also unite and bring out in force upstate pro-fracking and pro-gun voters and frustrated suburbanites.

Despite all of Gov. Andrew Cuomo’s rosy rhetoric, New York still has the highest combined taxes in the nation, the most debt as a percent of income and the worst state business tax climate in the country – and it’s the worst state on the U.S. Economic Freedom Index.

In addition, Cuomo broke his solemn pledge and raised state income taxes, and his 2013-14 budget was balanced with over $1 billion dollars in one-shot revenues, backdoor borrowing gimmicks and overly optimistic revenue estimates.

Cuomo’s vulnerability was revealed in a March 5 NBC/Wall Street Journal/Marist College poll that indicated his job performance rating has dipped 10 percentage points since November. Now at 42 percent, Cuomo’s job approval is the lowest it’s been since he took office in January 2011.

What’s hurting Cuomo is the negative outlook New Yorkers have about the state economy. A year ago, 58 percent believed the state was in an economic recession; today that number stands at 65 percent. Also, only 45 percent believe Cuomo is having a positive impact on the Empire State.

These are not numbers an incumbent can boast about nine months before a gubernatorial election.

At the moment, Astorino is an underdog in the race against Cuomo. Nevertheless, his message that he’s “tired of listening to the fairytale that everything is just great when it’s just the opposite … tired of watching New York’s decline” may just strike a chord with millions of frustrated voters.

Expect Rob Astorino to give the governor a run for his money.

The Persecuted Church 2013 – By George J. Marlin

March 19, 2014

This article I wrote appeared on The Catholic Thing web site on March 19, 2014.

The Nassau County Mangano-Kaiman Watch, March 17, 2014 – By George J. Marlin

March 17, 2014

The Bogus Kaiman Deal

 Will NIFA Discard Its Fiduciary Obligations And Squander Its Integrity By Approving An Incredulous Deal That Lifts The Wage Freeze?

This past week will go down in NIFA annals as an extraordinary one.  Extraordinary in terms of deceitful tactics and illusory pronouncements employed to procure a bogus deal to lift a wage freeze in a way that puts County finances in further peril.

Let’s review:

Monday, March 10, 2014

The primary reason Chairman Kaiman called a board meeting was to force a vote on a “sense of the board” symbolic resolution that laid out conditions to lift a wage freeze (a wage freeze that nevertheless needed to be renewed that same day due to an impending deadline later in the week).  That resolution was based on verbal representations of what parties said would be in the agreements—not on documented evidence supporting a cost neutral or revenue-funded deal, on the fear of losing the suit challenging the legality of the wage freeze that was pending in the State Supreme Court and other intangibles.  Another reason for the Monday resolution:  Kaiman wanted a public pat on the head at Mangano’s State of the County address on Tuesday.

Director Chris Wright rightly opposed the Kaiman resolution citing the likely double counting of most or all of the “savings” from attrition.  Director Dermond Thomas opposed it, as well, citing his discomfort with the County’s continuation of the freeze without making progress on balancing the budget.

Attrition, while expressly not named in the budget, is what the County uses to cover excessive overtime and other unbudgeted costs such as those associated with harsh winter storms.  Stripped bare of that cushion, which is a commonly used budgetary technique to keep governments liquid in the face of surprises which always seem to occur, the County could run out of cash.

Double counting means that the estimates of $129 million of net costs from these deals which require funding in order to lift the freeze are more likely in the range of at least $250 million, and as much as $285 million.

Even at $129 million, the County proposes (without yet documenting its proposal), and NIFA appears ready to accept inflated projected revenues from anticipated Albany approval of additional speed cameras, that are treated as “new” revenues to help pay for the deal even though a portion are already included in the multi-year plan.  More double counting.

Tuesday, March 11, 2014

At Ed Mangano’s State of the County Address, Kaiman gets his public recognition.

In his speech, Mangano made this ridiculous comment:  “In 2012, the County reported a $27.5 million dollar surplus on a GAAP basis and continues to show improvement with respect to the NIFA statute test, which is even more conservative than the GAAP reporting standard.”

After 4 years in office, Mangano has not learned there is only one “GAAP” and those accounting principles applied to the County determined it incurred, in 2012, an $85.5 million deficit (triple the NIFA threshold for a control period).

The County’s audit, based on the County’s chosen “budgetary basis” of accounting, came up with a “surplus” due to the fact that it 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.  The County considers such borrowings to be “revenue” in its results, despite the fact that such treatment is at odds with both GAAP and specific provisions of the NIFA statute.

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.  And then declaring the household budget “balanced.”

The County Executive’s other absurd boast is the “fund balance has increased 28% to $82 million.”  The fund balance did not increase because the County incurred a surplus; rather, it increased solely because it borrowed money.

Wednesday, March 12, 2014

Supreme Court Justice Arthur Diamond hands down an impeccably correct decision ruling that NIFA “did not exceed its authority to impose wage freezes in 2011, 2012, 2013.”  This decision is a major blow to the unions’ bargaining position.  This is one of the lawsuits of which the NIFA board was advised to believe it would lose.  Advised by those looking to make a deal—any deal—with the unions.  On the same day, the unions and the County filed agreements with the County Legislature which were at odds with what NIFA had been promised leading up to its Monday vote—the vote they took without the benefit of any documentation.  Thank heavens Monday’s vote wasn’t binding.

Thursday, March 13, 2014

Knowing the finance numbers don’t work, Kaiman attends a series of meetings with County and union officials where he acts as both a negotiator and a supplicant, acting as if he had no leverage and did not win a court case.  NIFA gives ground on a number of points, despite its court win.

Friday, March 14, 2014

More meetings.  It appeared as though Kaiman was headed toward appeasement and dereliction of duty.  What was a bad deal on Monday is a marginally worse deal on Friday, as more ground is given by the “winner”—something you wouldn’t see in any rational business deal.

Saturday, March 15, 2014

Kaiman, Mangano and union leaders announce a deal based on bogus numbers that if approved by the County Legislature, union members and NIFA will lift the Wage Freeze on thousands of unionized government workers.  The means to pay for these deals?  Nobody’s yet sure—they’re taking the County’s word for it for now.

* * * * *

Don’t expect the Bogus Deal to get to a NIFA vote until early April.  There is a false deadline of March 31 for the start of a new police class under the new arrangements, but this can be extended.  The Legislature will have to mull things over for a few weeks and, since it meets on Mondays, will likely consider the deals on March 31.  Many members—likely all nineteen—have asked Maurice Chalmers at the Office of Legislative Budget Review (OLBR) for analysis of the proposal.  (Chalmers is known as a first rate numbers guy who calls them as he sees them.)  Don’t be surprised if the OLBR determines that the negotiating parties will have to come up with $275 million or more—not $129 million.

At some point during this interim period, the NIFA board will realize that it’s not in on the joke—it is the joke.  It’s been said that a mind is a terrible thing to waste.  Well, a reputation—and NIFA had a good reputation, as did its individual members—is a terrible thing to waste, as well.  NIFA’s credibility is one of its prime assets.  Recent shenanigans represent a spend down of that asset.  That’s not good for NIFA or control boards around the State.

The Nassau County Mangano-Kaiman Watch, March 11, 2014 – By George J. Marlin

March 11, 2014

A PARODY…OF SORTS

From: Oyster Bay Republican Club

Re: Year End Wrap Up

Well, it was a mixed year.  We couldn’t take the luxury box at Giants Stadium paid for by our rich donors and so the Club didn’t have a place to hang out during the Super Bowl.

On the positive side, we did win the elections and no indictments have been issued.

NIFA’s Kaiman is one of us, a hack, sure, a Democratic hack, but one who recognizes how this game works.  Plus, he wants to be somebody and will stay in line.

The Club is worried about the County unions, especially the PBA.  I don’t know how much longer the PBA leadership will buy “Ed’s a nice guy and wants to help you.”   Even Carver will at some point say no mas.  This PBA forgot that police and other public employees need tax increases to get their steps, pay increases, etc.

Ed’s a Forrest Gump financial genius. He fought NIFA based on Ciampoli’s advice (Ciampoli was wrong on every legal case he touched). The County lost, an humiliating NIFA takeover was imposed on Ed and it’s the best thing that ever happened to Ed.

This wage freeze scheme saves the County hundreds of millions of dollars and avoids the need for a property tax increase maybe ever.  Ed’s dream of a third terms looks “100 percent.”

Ed “fights” the wage freeze but if it were lifted the required County property tax increase would make Suozzi (remember him?) look like a piker and we would beg to have it re-imposed.  Plus, Kaiman writes an essay on NIFA on the math section of the County SAT without a single number.  This thing will blow up some time but we’ll all be on OTB payroll by then trying to get a piece of VLT vendor action.

Some of the young cops will some day figure out that Mangano has played them but until then let’s keep Sandy funding coming in.

See you all at the Castle for poker and some extra-curriculars on Thursday.

Mangano loses another lawsuit – By George J. Marlin

March 3, 2014

The following appears in the February 28-March 6, 2014 issue of the Long Island Business News:

Since the Nassau County Interim Finance Authority declared a “financial control period” on Jan. 26, 2011, county officials have wasted hundreds of thousands of dollars of taxpayer’s money on “Hail Mary” lawsuits, all of which have been lost.

In February 2011, for instance, instead of coming to grips with the county’s fiscal problems, Nassau filed a suit claiming NIFA didn’t have the power to impose a control period. One month later, on March 11, 2011, the state Supreme Court ruled against the county, stating “the petitioners have failed to meet their heavy burden of showing the unconstitutionality of the control period statute.”

The court also ruled that NIFA was correct in disallowing borrowed funds as operating revenue when calculating a projected deficit. Despite the ruling, the county continues to erroneously declare at the end of every fiscal year that its budget is “balanced” by counting borrowed money and deferring the payment of outstanding liabilities until the next year.

This is akin to deferring your December mortgage payment to January, paying your bills with a credit card and boasting your checking account was balanced at year’s end.

Last week, Nassau suffered another major loss when the state’s highest judicial body, the New York Court of Appeals, ruled 7-0 against a tax refund case.

Instead of making every effort to fix the county’s broken property tax assessment system, the county Legislature – at the urging of County Executive Ed Mangano – passed a law in 2010 that repealed the provision of a 1948 state law that obligated the county, rather than local taxing districts like school districts, to pay any refunds “from the county’s erroneous assessment of real property taxes.” Gov. Thomas Dewey signed the legislation into law after the Nassau County Board of Supervisors sent to Albany a home rule message urging approval.

I can only conclude that county officials enacted this ridiculous repeal legislation because they failed high school civics courses, which teach that the local municipality is a creation of the sovereign state and subject to its laws.

Apparently, Mangano and his cohorts didn’t know they only have the power to amend local laws, not state laws. And while the county executive, in my judgment, is correct in arguing that it’s unfair that Nassau is the only county in the state required to pay its municipal subdivisions’ tax refunds, he must petition the state Legislature to abolish the 1948 guaranty law.

The court reminded the county that the state constitution establishes the state government as “the pre-eminent sovereign of New York” and the lawmaking power of a county or other political subdivision “can be exercised only to the extent it has been delegated by the state.”

The court also stated the New York constitution “expressly imbues the state government, rather than any locality, with the power of taxation.”

Concluding that the county superseded a special state tax law, the Court of Appeals unanimously declared that the repeal of the county guaranty is “unconstitutional, invalid, unenforceable and void.”

What an embarrassment! Arrogant county officials who have dithered with this case for almost three years have proven not only to be incompetent, but delusional.

Thanks to the character flaws of Nassau’s political class, overburdened taxpayers and their children and grandchildren will now be stuck paying off, for decades to come, the bonded debt the county will have to incur to pay off some $500 million in current property tax refunds.