The following appears in the December 6-12, 2013 issue of the Long Island Business News:

Here’s my take on those who gained and those who lost in this year’s game of Long Island politics.

WINNERS

Ed Mangano: The Nassau County executive handily won a second term with 59 percent of the vote. He was re-elected despite a NIFA control period and his failure to fix the county’s structural operating budget deficit and its broken assessment system.

Ronald Stack: The 10-year chairman of the NIFA board proved to be a statesman of the first rank who was not under any politician’s thumb. Thanks to his municipal expertise, he was a strong and fair guiding hand in tackling Nassau’s fiscal problems.

Peter King: The congressman stood up to many in his own party when he opposed the government shutdown. He was right – it was a bad tactic and took the spotlight off the disastrous rollout of Obamacare.

George Maragos: By re-electing him, voters gave the Nassau County comptroller the opportunity to advertise his ignorance of public finance for four more years.

Bruce Ratner: Knowing that Mangano was desperate to get a pre-election Nassau Coliseum deal, Ratner took him to the cleaners.

LIPA: Gov. Andrew Cuomo finally gutted the Rube Goldberg LIPA structure designed by Richie Kessel.

LOSERS

Tom Suozzi: The man who claimed he would one day be president of the United States ended his political career not with a bang, but a whimper.

John Ciampoli: As Nassau County attorney, he lost every lawsuit he filed against NIFA and now he has lost his job. Newsday’s editorial on his dismissal said it best: “Good riddance.”

Tim Bishop: 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 – doesn’t bode well for his political future.

James Carver: The Nassau Police Union president’s election-eve contract proposal, which alleged to save money, was stopped in its tracks when a NIFA analysis revealed it could cost Nassau taxpayers an additional $170 million to $240 million over the next four years. Mangano’s post-election announcement that he expects the NIFA control period to last through his second term will continue to ensure Carver’s membership will receive no raises.

Long Island Senate Republicans: Their support of Cuomo’s ill-conceived gun control law earlier this year is expected to cost them dearly in next’s year’s election.

Nassau taxpayers: They are stuck with four more years of inept county officials who govern by press release and are taking Nassau down the road to fiscal perdition.

Statement by

George J. Marlin

Director

Nassau Interim Finance Authority

Monday, November 25, 2013

               When I joined this board four years ago, NIFA warned the County was utilizing blue smoke and mirrors budgetary gimmicks similar to those employed in the 1990s that brought Nassau to the edge of bankruptcy.

             Refusing to adequately address the fiscal deficit County officials inherited, NIFA was compelled by state law to invoke a control period on Wednesday, January 26, 2011.

             While the County on the one hand claimed it wanted to “cooperate” with NIFA, on the other hand it publicly vilified NIFA board members and brought a suit to enjoin and restrain NIFA from continuing to impose the control period.

             After the Supreme Court ruled against the County citing that the NIFA control declaration was neither unconstitutional nor arbitrary and capricious, the board reminded the County that the estimated $176 million budget deficit was “real,” “substantial” and “the deficit [was] in accordance with GAAP as it must according to State law.”

             The NIFA warnings that the County stop illusory budgeting practices and actually govern and manage fiscal realities fell on deaf ears.  The County continued to refuse to come to grips with the fact that its budget was woefully out of balance and that 2012 threatened to be even worse.

             The County Executive claimed “Nassau’s 2011 budget is balanced and maintains significant contingencies.”  As late as December 2011, Newsday reported that County CFO Timothy Sullivan said in a statement, “There is no deficit.”  The Wall Street Journal reported “Mr. Mangano insists the budget is balanced and has said NIFA is requiring him to come up with unnecessary contingency plans.”  Mangano also told The Long Island Press, “I put forth a budget that is definitely balanced.”

             Meanwhile, in the last quarter of 2011, the Nassau County Comptroller estimated a $134 million budget shortfall; the Nassau Legislative Budget Office put the deficit at $118 million; and NIFA’s revised projection for the 2011 budget deficit was $153 million.  (The actual 2011 GAAP deficit was $173 million.)

             In December 2011, this board agreed to a 2012 Fiscal Plan that included $449 million in Tax Cert and other borrowings.  In return for imposing on taxpayers another multi-generational backdoor tax increase, the County pledged it will either obtain $150 million of union givebacks or make other recurring costs in the budget totaling $150 million.  In addition, the County promised to have a GAAP balanced budget in 2015 and that it would fully fund with operating revenue all tax certs, judgments and settlements and termination expenses beginning in 2015.

             Obviously, the County’s approved budget and fiscal plan for 2014-2017 repudiated those promises, hence the conditions this board imposed on the County today.

             Since December 2011, the County has continued playing fiscal games and has failed to adequately address its structural deficit.  NIFA had the good sense to derail two County schemes.  The first one was a potential sewer system deal that would have included approximately $750 in borrowing of which up to $300 million of the proceeds would have been used as “one shot’ revenues to balance operating budgets.  NIFA effectively killed a scheme that would have forced the next two generations of Nassau residents to pay ever increasing toilet flushing taxes for “one shot” dollars that would have plugged deficit holes in current operating budgets. 

             The other scheme NIFA derailed was a deal to finance property tax judgments that would have evaded the legal approval process to borrow money. 

             In 2013, the County made the 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.  The NIFA analysis of the 2012 budget revealed that the County incurred an $85.5 million GAAP deficit.

             And as the County claims they want to “cooperate” with NIFA, they continue their shenanigans.  The budget they presented to this board projects operating deficits as far as the eye can see.

            After four years on this board I have learned that the County’s definition of “cooperation” means “do what we want.”  Cooperation for the County is a one-way street.

             NIFA is a New York State control board.  The Oxford Dictionary defines control as “the act or power of directing or regulating.”  NIFA’s task is to judge financial numbers and contracts and to direct the County accordingly.  Therefore, it cannot judge and be part of any negotiations.  NIFA must never have its role as an independent State body compromised by the political desires of any elected official, whether it be State or County.

             Good corporate governance mandates that the board be independent if it is to meet its fiduciary responsibility as a New York State Public Authority.  This is clearly delineated in the Public Authorities Reform Act.

             It has been a privilege to serve for four years on this board.  Throughout my tenure whenever I have had to make an important public policy decision, I have looked for guidance to Sir Thomas More, who observed almost five hundred years ago, “When statesmen forsake their own private conscience for the sake of their public duties, they lead their country by a short route to chaos.”

             I am pleased that my colleagues and I carried out our fiduciary responsibilities by judging the County’s actions based on rational analysis and not ill-tempered emotions or election results.  I am also grateful to Ronald Stack who served on this board for 12 years, ten of them as Chairman.  His wise counsel and his expertise in municipal finance were invaluable to the decision making process of this board.  He is a statesman of the first rank who was never under anyone’s thumb.

             My thanks to the NIFA staff who have performed their duties and have provided us with first rate analysis during very trying times.

             I wish my colleagues good luck as they continue to grapple with the County’s dismal fiscal condition.  It is my sincere hope that they uphold NIFA’s excellent reputation as an independent body that stays above the political fray.