Statement by

George J. Marlin

Director

Nassau Interim Finance Authority

Wednesday, October 9, 2013

on

The Nassau Events Center

I am skeptical of a deal of this proportion when:

• The Party to the agreement is a shell corporation with no assets;

• The agreement is subject to financing that the shell corporation does not possess;

• The agreement is subject to numerous other conditions.

(Frankly, I doubt the conditions of the agreement will ever be met and I expect that in a year to eighteen months the shell corporation will try to renegotiate.)

Nevertheless, I would like to note that although we have decided that the particular structure of the coliseum redevelopment documents does not require our contract approval, we reserve our right to examine and consider any other contracts related or ancillary to the coliseum. We are not giving a blank check. And the decision that the current documents do not need our approval should in no way be construed or expanded to imply that we will hesitate to interject whenever we believe a commitment by the County constitutes a contract requiring our review under our statute which gives broad power to oversee contracts impacting the County’s finances.

The following appears in the September 27-October 3, 2013 issue of the Long Island Business News:

After Gov. George Pataki signed into law legislation creating the Nassau Interim Finance Authority in 2000, he appointed Ronald Stack as an initial member of NIFA’s Board of Directors. Two years later, Pataki named Stack NIFA’s chairman, a post in which he served with distinction under four governors until he stepped down Sept. 17.

Governors relied on Stack to help restore Nassau’s fiscal health because he was uniquely qualified to carry out that task.

In the 1970s and early 1980s, Stack served as Gov. Hugh Carey’s deputy chief of staff. During his tenure, he was present at the creation of the New York City Emergency Financial Control Board, the first of its kind.

In 1975, thanks to budgetary gimmicks, phantom revenues and capitalizing of expenses, NYC expenditures totaled $12.8 billion and revenues $10.9 billion. Fifty-six percent of locally raised taxes were appropriated for debt service, pension and Social Security payments. In addition, short-term debt, which in 1965 was $536 million (10 percent of total debt) ballooned to $4.5 billion (36 percent of total debt). With 1976 short-term debt needs projected at $7 billion, the financial markets closed their doors to New York City.

To keep the city operating and to avoid bankruptcy, Carey, with the help of Stack and other key members of his administration, developed legislation that created the EFCB, which was granted the power to monitor the city’s spending and to impose fiscal constraints.

The control board forced the city to reform itself, and to this day it has produced operating budgets annually balanced under Generally Accepted Accounting Principles.

After Carey left office in 1983, Stack began a new career in the municipal finance industry. He went on to become head of the Public Finance Department of Lehman Brothers and today is the managing director in charge of the Northeast region for Wells Fargo.

Stack has been recognized as one of the nation’s leading experts in his field and has received numerous industry awards. He has served as a financial adviser to NYC and the states of New York, New Jersey, Connecticut, Massachusetts and California, and many of their agencies.

He also had the distinction of serving as chairman of the Municipal Securities Rule Making Board, which formulates the rules regulating the municipal securities market including taxable and tax-exempt bonds and notes issued by states, local governments, school districts, government agencies and authorities.

I first met Stack when I was executive director of the Port Authority of New York and New Jersey. We worked together in 1996 to develop the plans to finance a new International Arrivals Building at JFK Airport.

At that time, the $1.2 billion deal was the largest public/private partnership in the nation. Working with Stack, I found him to be a true professional with a first-rate mind and impeccable standards.

During the past 3½ years, I have had the privilege to serve with Stack on the NIFA board. Once again, I found him to be a man of honor with sound judgment. Thanks to his municipal expertise, he was a strong and fair guiding hand in tackling Nassau’s fiscal problems.

As NIFA chairman, Stack established collegial unity among board members who came from all walks of political life. The votes to impose a control period on the county and a wage freeze requested by Nassau’s county executive were unanimous due to Stack’s reasoned and measured arguments.

In his work “Politics,” Aristotle described three qualities required of a statesman: an affection for the established rules of order, abilities wholly equal to the business of one’s office and the qualities of virtue and justice.

Ron Stack is the poster boy for Aristotle’s statesman.

The following appears in the September 13-19, 2013 issue of the Long Island Business News:

After 20 months in office, Suffolk County Executive Steve Bellone has learned that the job he craved is not a glamorous or easy one.

It’s not easy because executives who take on a fiscal crisis must actually govern if they are to succeed. And governing means making tough but responsible decisions that, by their very nature, will anger large segments of the population – particularly public service unions.

Bellone has also learned that many of the cost-cutting ideas promoted by his predecessor, Steve Levy, are not as draconian as he portrayed them in the election campaign.

Hence, Bellone’s referendum to merge the county’s Comptroller and Treasury departments, which he vigorously opposed in 2011 and now looks like a prudent plan – one that, if approved by voters in November, will save over $800,000 a year.

Other Levy proposals Bellone has embraced include the closing of the John J. Foley Skilled Nursing Facility and billing the county’s 10 towns for a piece of their out-of-county community college tuitions. These two actions will trim the projected $180 million deficit for 2014 by about $15 million.

Bellone claims the difference between himself and Levy is that he has been able to advance these policies because he has a good relationship with the members of the County Legislature. He will soon learn, however, that such lovefests are short-lived, because legislators, unlike executives, are free to be irresponsible, because they’re not responsible for upholding or administering the many feckless laws and flawed contracts they approve.

A legislator having a cocktail with union leaders or lobbyists after a round of golf can easily agree to honor a request to vote for legislation the unions favor, regardless of its long-term fiscal consequences, because he will not be the person who must live with it. The passed “buck,” as President Harry Truman put it, winds up on the chief executive’s desk and becomes his problem.

To further his education on the mindset of legislators, Bellone should read “Mayor,” the memoir of New York City three-term Mayor Edward Koch. This former legislator admitted he learned what a chump he was in Congress only after he became the city’s magistrate:

“I have publicly stated and referred to myself as “Mayor Culpa” for having voted for programs in the Congress which added to the city spending. I neither knew nor cared at the time how those wonderful programs would be paid for and by whom. Indeed, I have summed up my responsibility by saying that if I had the power I would punish every member of Congress who participated in those days, and perhaps even today, with some of their mandates imposed on cities, by having them serve one year as mayor.”

Finally, Mr. Bellone will have to learn – if he hasn’t already – that there are limits to budget cuts and to tax and fee increases. Severe service cuts and excessive taxes compound fiscal problems by hastening economic decline and the erosion of the tax base.

If Suffolk County is to avoid falling into the fiscal abyss, Bellone will have to convince Gov. Andrew Cuomo, a fellow Democrat, to fulfill his 2010 campaign pledge to help municipalities rein in costs by implementing genuine unfunded mandate relief.

And he must persuade the governor that if ever-rising county employee salary and benefit costs are to be contained, the Triborough Amendment – which provides that the provisions of a public employee contracts must remain in effect after the contract expires – must be repealed or significantly altered to favor elected officials and the taxpayers they represent.