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State, County Enter Sudden Death Overtime

NIFA Gives Mangano 20 Days to Avoid Takeover

Approaching New Year’s Eve, many people might have feared starting 2011 with a hangover, but for County Executive Edward P. Mangano, it was the prospect of a takeover, of the county’s finances by New York State agency Nassau Interim Finance Authority (NIFA) on Jan. 1, that became very real.

The NIFA Board of Directors held its last meeting of the year on Dec. 30, at which time, many believed the authority would vote to enter what is called a “Control Period,” which enables the group to step in and take a leading role in Nassau County’s financial affairs. This is one of the functions of the watchdog agency that was created by New York State in 2000 due to the county’s poor fiscal situation. The group has served first, to restructure the county’s debt, and second, to oversee its financial operations, mandated to assume control of them if the county ever misses debt payments or if its major operating funds, the budget upon which it functions, suffers from a deficit of larger than 1 percent.    

Concerned with the latter, even with assurances from County Executive Mangano and his Republican counterparts who have majority control in the Legislature, NIFA directors have questioned that the proposed 2011 budget is sound. They have pointed out holes in the proposal, where they believe certain items counted as available spending money will not actually be there when needed. They therefore predict a larger deficit than the county GOP does. For instance, NIFA directors have said that Mangano’s planning has relied on negotiations with unions that have yet to come to fruition and on a sales tax hike that has not happened.

Having met publicly and announced their concern for several meetings leading up to the close of 2010, the group has made it clear that a Control Period would be likely. But, in a final effort to convince them that his budget is sound, Mangano sent the board one more letter the night before their Dec. 30 meeting and then made a surprise appearance in person, to plead his case.

“Let’s get serious,” he told the board of directors. “We’re ending the year with a balanced budget and a surplus. There is absolutely no need to have rumors of a control period out there at this time… This is not healthy for the county… Each and every budget has risks.”

Mangano said that 2010 was a difficult year, but that he has made managerial decisions to manage the county properly, assuring that he would end 2010 on a strong note, turning “a projected $133 million deficit into a surplus,” by cutting expenses and lowering the work force.

The county executive told the board that it takes time to make the major changes needed to fully restore fiscal health, pointing out items like the assessment system that has caused a multi-billion dollar debt. He said he plans to end the waste there and to cease the borrowing causing that debt within two years. He said he has also fixed a sewer authority deficit.

Mangano added that he is engaged in “serious negotiations” with county unions to rework contracts made by his predecessor, and that all involved understand that these costs cause a “strain” on future finances and need to be changed.

“We ask that we be allowed to continue to govern the people we have been elected to govern,” Mangano continued. “We have made the structural changes to return the county to fiscal stability... all together, we’ve had a successful year.”

After his comments, the NIFA board went into a long executive session to deliberate on the new items Mangano submitted as proof that there would be no need for a takeover in 2011. They emerged from the session and essentially started the clock for overtime, giving 20 days in 2011 for Mangano to provide full evidence that his budget will work.

Chairman Ronald A. Stack said that, in light of the county executive’s letter and comments, which included new contingencies that were not present in the budget before, “NIFA has decided to grant the county, in an abundance of caution, one final opportunity to present its support for the items that the county claims will conclude a balanced budget for 2011 and prevent a 1 percent deficit.” He said NIFA is requesting full descriptions for many budget items by Jan. 20, explaining that the agency will be asking for “very specific items and very specific backup for these items.”

Stack concluded, “The deadline for the county executive and the county of Nassau is Jan. 20… NIFA will hold its next meeting after the county executive reports… at which there will be a decision as to whether or not the county’s final explanation… overcomes the strong sense of the NIFA directors that… there exists a substantial likelihood and imminence” of a larger than allowed deficit. “NIFA is extremely concerned that the 2011 budget is not balanced,” and that a deficit “is a real threat.”

After the meeting, Chairman Stack told Anton Community Newspapers that Jan. 20 is as much time into 2011 as they can allow the county executive. If they determine the likelihood of a deficit of more than 1 percent, “The NIFA statute states that NIFA ‘shall’ call a control period. Thus, waiting is not an option if that determination is reached by the board,” he said.

Stack also offered some explanation as to what a Control Period might look like, suggesting that rather than NIFA just stepping in and taking the reins, “the county would be responsible for presenting a new budget that is balanced. NIFA’s major step in a control period is to require the county to take measures to balance the 2011 budget.”

Responding to Managano’s plea to be allowed to govern, Stack told this paper, “The board will be looking to the county and their elected officials to make the budget decisions necessary to balance the 2011 budget.”

 Finally, as far as the possible impact that could result from a control period, for instance a loss of services to taxpayers or cuts in county jobs, Stack said after the meeting that these would not come from NIFA but, “The impact would be determined by what policy choices the county decides to make.”