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Heavy Questions as NIFA Begins Control Period

Mangano, Schmitt Contest Takeover;

Lawsuit Filed, Deputy County Exec Resigns

To match the winter storm last week, Nassau County residents were buried in headlines about a NIFA takeover along with the piles of snow. This week began with little in the way of hard facts on how the news would affect the county or the lives of its residents and employees, after the Nassau Interim Finance Authority voted unanimously to enter a “control period” on Jan. 26.

At the close of 2010, NIFA gave County Executive Edward P. Mangano 20 days into this year to produce evidence that his 2011 budget plan was sound. If his proposal involved what they calculated to be more than a 1 percent deficit, they would be forced to enter a control period, as per the statute created in 2000, when the New York State Legislature and governor charged the group to restore Nassau’s fiscal health.

Last week, the board voted unanimously that their review of Mangano’s budget exposed the county to more than a 1 percent deficit - $176 million, Chairman Ronald Stack told reporters after the vote - and therefore a control period was effected.

Stack explained that the board members also could have enacted a “fiscal emergency,” which would then empower it to impose wage freezes on county employees, but they have not done that.

 What they have done, is begun the control period by asking Mangano for another revision to his budget, due by mid-February to “hopefully eliminate the major risks,” Stack said.

NIFA issued a statement that ensured that the county executive and legislature are still running the county. Vendors with existing contracts will be paid, as will all debt service. Union contracts will not be reopened.

So, the burden was turned solely on the elected county leaders to go back to the drawing board and reduce spending to match income in a way that satisfies the NIFA board and its own math.

Those in charge of the county have accepted this idea with less than open arms. The county executive and the Legislature’s presiding officer, Peter Schmitt had been suggesting that they might deliver NIFA a lawsuit in lieu of the requested budget revision, and on Jan. 31 the county did file a lawsuit against the NIFA board taking control of the county’s finances.

Immediately following the control period vote, the county executive said, “Today’s action is unfounded and premature since NIFA’s determination of county finances is not in compliance with the law nor is it consistent with the spirit of the law. I will take the necessary legal steps to protect our residents from property tax increases.”

At a press event later in the week, he accused the group of seeking to run the county without being elected, questioning why the group has moved to takeover in a way that offers no real help.

“The drumbeat was they can come in and freeze wages… but yet today it appears their comments are not to do that? …One has to ask what are their comments? …Their motivation isn’t pure in essence.”

Along these lines, Presiding Officer Schmitt began this week with a statement to the press discussing what he called “ethical and legal challenges to the NIFA takeover,” saying, “NIFA Chairman Ronald Stack, by assuming control of Nassau’s finances, has elevated his passive conflict of interest to an active conflict of interest in clear violation of this state’s Code of Ethics. As of today, over $80 million of Nassau County funds remain deposited in Wells Fargo Bank, of which Mr. Stack is a managing director.”

A steady counterpoint to Schmitt in the Legislature, Minority Leader Diane Yatauro called the county’s legal posturing “combative.”

“…Mr. Schmitt refers to NIFA members as ‘ethically challenged’… Mr. Schmitt used words that can only enflame what is a precarious situation. We don’t need vulgar, threatening language from elected officials especially following the violence in Tucson. This is not the time or place for inflammatory rhetoric or partisan pandering. All of us should work with the Nassau Interim Finance Authority (NIFA) board to develop a sound financial plan that will bring confidence to the marketplace and to our residents.”

The minority leader defended NIFA’s move, saying they were within their legal rights to call a control period. “NIFA is within its rights to declare the county’s 2011 budget unbalanced,” she said. “NIFA gave the administration three separate warnings that the budget is in serious jeopardy. …NIFA gave Mangano ‘one final opportunity’ to convince them... The NIFA accountants studied his answers and provided an analysis leading to the unanimous takeover vote on Jan. 26.”

Also disagreeing with the county’s response to NIFA was one deputy county executive, Patrick Foye. Foye submitted his resignation after the lawsuit was filed and condemned Schmitt’s remarks about NIFA members at the same time.

Foye said, “I have the highest regard for Ed Mangano, who inherited a fiscal mess. In the turmoil of recent weeks, his major accomplishments since taking office have been overlooked, though much remains to be done and the challenges facing the county are immense. The advice he has received to sue the state - the same state to which the county now looks for legislative and other support - and for others to smear duly appointed members of a state board created to help elected county officials fix Nassau is irresponsible and wrong. …Such advice will only end up hurting the County Ed Mangano loves and was elected to lead.”

Yatauro urged that all groups work together toward financial stability, as did New York State Comptroller Thomas P. DiNapoli. The comptroller said, “NIFA was created to help the county. Oversight boards are intended to provide fiscal discipline that is a step removed from the political pressures. 
It’s important that interested parties not focus on the takeover itself, but on the steps necessary to restore fiscal stability to Nassau County.”

As far as being “removed from political pressures,” county Republicans do not believe this to be the case, and thus the fighting. For instance, DiNapoli said, “… it has been disappointing to see that after more than 10 years, it has been reported the county has not been able to reduce their borrowing for tax certioraris, which is one of the main issues NIFA was designed to assist with.” Mangano has maintained and repeated that the borrowing to pay tax refunds that the comptroller mentioned went on before he took office, under a Democratic executive and Legislature, with NIFA watching.

Along these lines, Managno’s plight for months has been to convince voters that he inherited the fiscal problems facing this county and now, as he works to fight them, Democrats blame him for troubles they created and NIFA is tying one hand behind his back. His actions have included a proposal to end cert borrowing. And this control period also comes on the heels of an announcement that he and the Civil Service Employees Association (CSEA), Nassau’s largest union, signed an historic agreement that he says will save $2 million this year and $70 million through 2017. CSEA represents 5,600 full-time employees and close to 7,000 when including part-time and seasonal employees.

Mangano introduced this news saying, “Under NIFA’s watch, the former county executive entered into labor contracts that would clearly require property tax hikes at a time when residents can least afford to pay.”

Some key points in the deal include, $61 million saved through the restructuring of salary scales, reducing the average compensation by 11.4 percent in the first seven years of employment, he said.

Items that may amaze people were also eliminated, like $8.8 million that the county executive claims to save through the elimination of paid days off for donating blood. “CSEA employees can currently earn up to three days off annually by donating blood. This conservative savings estimate is based on savings of only one blood day annually, representing 120,000 hours of service returned to taxpayers,” he stated.

So, as the county is undergoing these kinds of restructuring efforts this year, its leaders are claiming that interference from NIFA without help from NIFA is not useful. Many questions have yet to be answered as this tension plays itself out. Readers will hope to learn if Mangano’s claims are grounded in reality. Is the control period an unlawful political move against him? If so, will a lawsuit help the county? In the meantime, if a budget proposal is not submitted that satisfies NIFA, will the county then enter a “fiscal crisis?”