Archive for April 2014

Memo to NIFA members on union deals – By George J. Marlin

April 28, 2014

The following appears in the April 25-May 1, 2014 issue of the Long Island Business News:

The Nassau Interim Finance Authority was created as an independent state authority in 2000 to help restore the county’s fiscal health, which had been suffering from mismanagement, cronyism and sleaze.

Prior to the state taking action, the Nassau County Legislature unanimously approved a home rule message requesting that Albany create a state oversight panel to guide the county’s budget policies. By asking for an authority possessing budgetary oversight powers, legislators conceded they couldn’t trust the elected government to manage the county’s finances responsibly.

To give elected officials time to reform the tax certs mess and to achieve a structurally balanced budget, the NIFA Act also permitted the county to borrow – and count as “operating revenues” – money to pay down accumulated tax certs refunds totaling $947 million through the end of 2007 only.

NIFA’s authority to approve or disapprove budgets and fiscal plans expired in 2008. Sadly, Nassau pols quickly reverted to bad fiscal behavior, forcing NIFA to impose a control period in January 2011.

By approving in April 2014 the Kaiman union deals, Nassau elected officials proved, once again, they are incapable of managing the county’s finances responsibly. They succumbed to pressure to approve contract amendments that every objective analysis concluded are not cost neutral and could cause the county to become insolvent.

NIFA directors are required to bring their own independent judgment to the table. Now it’s up to you to exercise that vested authority, to decide whether to approve or reject the Kaiman deals. But before casting your vote, here’s some food for thought for directors who either voted “yes” on the plan when it was presented, fact-free, on March 10, or from whom the public has yet to hear on the matter:

Director John Buran: As the CEO of a major banking institution, if a proposal came before your loan committee with questionable revenue streams and inaccurate cost assumptions similar to those in the Kaiman deals, would you vote for it?

Director Paul Leventhal: As a certified public accountant, would you sign off on a deal with these numbers? Would Nassau’s cash flow projections survive the analysis required to consider a “clean opinion?”

Director Lester Petracca: As a successful commercial real estate developer, would you invest in a project based on financial projections similar to those in the Kaiman deals?

Director Paul Annunziato: As a federally licensed financial advisor, would you recommend to your clients an investment with rose-colored estimated revenues and blinders-on cost estimates similar to the Kaiman deals?

The first control board was created in 1975 to prevent NYC from becoming a Detroit. To eliminate excessive short-term borrowing and to achieve a GAAP-balanced budget, the city had to eliminate 20 percent of the workforce and abolish scores of programs and departments.

The NYC Control Board succeeded because its members did their jobs and made unpopular decisions. Since 1982, NYC has had a GAAP-balanced budget every year and, as a result, the city has prospered.

If you vote to approve the Kaiman deals, you will cause irrevocable harm to existing and future control boards. You’ll destroy the belief that control boards are above the political fray. Ratings agencies and investors will lose all faith in them.

Approval of the Kaiman deals will also cause the county to issue more short-term debt to pay bills. Since rating agencies are very sensitive to such cash flow problems, expect county debt ratings to be downgraded.

Whether or not Nassau becomes a Detroit is up to you. How you exercise the independent judgment required of you is also up to you, not anyone else. You own your own votes and the consequences will inure to your personal and professional reputations.

I recommend you contemplate the words of Sir Thomas More: “When statesmen forsake their own private conscience for the sake of their public duties, they lead their country by a short route to chaos.”

Advertisements

Nassau: The Fiscal Shenanigans Go On – By George J. Marlin

April 14, 2014

The following appears in the April 11-17, 2014 issue of the Long Island Business News:

On Jan. 26, Nassau County marked the third anniversary of the day directors of the Nassau Interim Finance Authority voted unanimously to declare a control period, as required by state law, because it was determined that “a major operating funds deficit of 1 percent or more, … assuming all revenues and expenditures are reported in accordance with generally accepted accounting principles,” was haunting the county’s finances.

NIFA had to impose controls because Nassau had not adequately addressed the fiscal deficit it inherited; had failed to declare a fiscal emergency or implement a plan of shared sacrifice; and had approved a budget that had a projected GAAP deficit of more than $120 million.

Nassau began its fourth year under a control period still in denial. The county has refused to come to grips with the fact that its budgets in 2011, 2012, 2013 have been woefully out of balance, despite the wage freeze that NIFA has imposed.

A crisis of confidence in the county’s fiscal management continues because it refuses to halt illusory budgeting practices. It’s still juggling money to keep on the budgetary lid, still failing to manage fiscal realities or to actually govern.

Time and again, county officials have lied about Nassau’s fiscal condition. In August 2011, for instance, one newspaper reported that Deputy County Executive of Finance Tim Sullivan told the Nassau Legislature that the county will have a balanced budget in 2011 – and if [NIFA] continues to say otherwise, Sullivan said, the state oversight authority should tell the county how to bring it into balance.

“I know the budget is balanced when a big four audit company signs off on it,” Sullivan reportedly said.

The county ended fiscal year 2011 with a GAAP deficit of $173.4 million.

In December of that year, NIFA directors approved a 2012-2015 fiscal plan that included $449 million in borrowing to pay tax cert judgments, county settlements and termination pay. In return for imposing another multi-generational backdoor tax increase, the county pledged to obtain $150 million of union givebacks or other recurring cuts totaling $150 million; to fully fund with operating revenue all tax certs, judgments and settlements and termination expenses beginning in 2015; and to have a GAAP-balanced budget in 2015.

To date, the county has failed to meet these conditions. Blatantly so, in fact, and without remorse or explanations.

Now, NIFA staff analyses project deficits of $157 million in fiscal year 2015, $190 million in 2016 and $235 million in 2017.

And now we get NIFA Chairman Jon Kaiman’s bogus union deal, which if approved would lift the wage freeze. The claim that this deal is cost-neutral is false.

An analysis released April 4 by the county’s independent fiscal watchdog concluded the new labor amendments would cost Nassau somewhere between $120 million to $292 million.

NIFA member Chris Wright said the report confirms that Nassau “does not have the revenue to pay for the contracts.” The report is “credible, objective and hopefully sobering for those people who are high on the fumes of short-term political gain,” Wright declared.

NIFA lost its objectivity concerning union proposals the day Kaiman became the county’s chief negotiator. And if the NIFA board discards its fiduciary responsibilities and approves this bogus union deal, it will destroy its integrity and purpose for being. NIFA will become a shell of its former self and the county, at some point in the near future, will become insolvent.

Nassau’s fiscal crisis is the direct result of mismanagement, extravagance and political cowardice. And if the bogus union deal is approved, county officials will once again be rewarded for their failures – and county taxpayers will be stuck footing the bill for NIFA negligence for decades to come.

Andrew Cuomo, the Catholic Anti-Catholic – By George J. Marlin

April 9, 2014

This article I wrote appeared on The Catholic Thing web site on April 9, 2014.

Can a ne’er-do-well get Bishop re-elected? – By George J. Marlin

April 1, 2014

The following appears in the March 28-April 3, 2014 issue of the Long Island Business News:

For decades, New York’s 1st Congressional District, which encompasses the East End of Long Island, has been viewed by political analysts as a highly competitive “swing” district.

In the 1950s, the district was reliably Republican. But in 1960, Democrat Otis Pike, who lost his first run for the seat in 1958, won a rematch with 50.4 percent of votes cast. Pike went on to win eight more times, garnering on average about 52 percent of the vote in each election.

When Pike retired in 1978, the district was captured by William Carney, a registered Conservative who had also received the nomination of the Republican Party. Carney stepped down in 1986 and was succeeded by Democrat George Hochbrueckner, who lost in the 1994 GOP sweep to Michael Forbes.

Forbes switched to the Democratic Party in July 1999 and went on to lose the Democratic primary in 2000. Republican Felix Grucci retained the seat, but went down in 2002 to Tim Bishop, who squeezed in by 1 percent.

Since then, Bishop has managed to be re-elected by narrow margins in hotly contested and well-financed races.

This year, Bishop is on the GOP hit list because of the Independent Office of Congressional Ethics finding that there’s “substantive reason” to believe the congressman violated the law when he sought a donation from a Sagaponack resident while assisting that person in getting a fireworks permit.

The obvious candidate to knock off Bishop is State Sen. Lee Zeldin. He cut his political teeth running unsuccessfully for the 1st district seat in 2008, then bounced back in 2010 to win the state Senate seat. He was easily re-elected in 2012.

Zeldin has an impressive résumé. A Suffolk County native, he passed the bar exam at 23 and went on to serve four years active duty in the U.S. Army. He was a member of the 82nd Airborne Division that was deployed to Iraq during Operation Iraq Freedom. Today, he holds the rank of major in the Army Reserves.

Unfortunately, Zeldin faces a GOP primary and must expend financial resources to fend off opponent George Demos.

Demos, who entered the primary in 2012 then abruptly dropped out, is a former SEC lawyer who apparently married into a wealthy family and has been living the life of a ne’er-do-well. Federal financial disclosure records reveal that since he married Chrysa Tsakopoulos, his personal assets have increased from $365,000 to about $5 million. This is interesting, considering he declared that he had zero salary income in 2012 and 2013.

More interesting is his campaign war chest. Demos loaned his campaign $2 million and, according to recent federal filings, of the $201,000 he has additionally raised, 73 percent ($147,000) came from 96 California residents – a vast majority of whom have previously given to Democratic candidates. Demos only raised $4,300 on Long Island.

Why California? Demos’ father-in-law, Angelo Tsakopoulos, is a major California Democrat fundraiser and supporter of President Barack Obama. Demos’ sister-in-law, Eleni Tsakopoulos Kounalakis, a buddy of Nancy Pelosi, became Obama’s ambassador to Hungry in 2010.

Dark blue California Democrats giving contributions to an East Coast Republican? Well, it wouldn’t be the first time Democrats gave money to a weak Republican to help re-elect a Democrat.

I, for one, am tired of rich guys who actually earned their money telling us we need them in public life. But a guy living off the largesse of others? No, that’s not for me. And hopefully it’s not for Republicans and Conservatives in the 1st district.

Residents in eastern Long Island need a representative in Washington who has worked hard to earn their respect and votes. That’s Lee Zeldin.