NIFA threatens county budget takeover

Noah Manskar

The Nassau Interim Finance Authority has warned the county Legislature’s leaders that it will make major cuts to the county’s spending if lawmakers do not reduce expenses and raise revenue in the proposed 2016 county budget

In an Oct. 16 letter, the head of state agency charged with overseeing Nassau’s finances expressed skepticism that the Legislature would be able to amend County Executive Edward Mangano’s proposed budget to avoid a large deficit, which NIFA estimates will hit $191 million if the budget goes unaltered.

In that case, NIFA Board Chair Jon Kaiman wrote, the agency would reject the budget, impose a hiring freeze and make “drastic cuts in all departments, programs and agencies that receive discretionary dollars from the county.”

“When your budget projections are coming up short between $100 million and $200 million each year, then something has gone terribly wrong,” Kaiman told the legislators.

The line items Kaiman found most risky are $20 million from a proposed video casino and $12 million from Mangano’s proposed 1.2-percent property tax increase.

Kaiman called Mangano’s tax hike “nominal,” but all 19 legislators have publicly opposed it.

The casino, which would be run by Nassau’s Off-Track Betting Corporation, does not yet have a set location, and the Democratic legislators have said they would vote against it.

If the Legislature cannot find alternative revenue sources, Kaiman said, NIFA will impose the cuts and hiring freeze, and also subject county contracts to added scrutiny to get rid of “nondiscretionary” contract spending.

“The bottom line is that we are looking to the Legislature to enhance revenue and cut expenditure and not the other way around,” Kaiman said.

Brian Nevin, Mangano’s spokesman, said the county executive’s administration has worked with NIFA to “implement structural reforms” that have saved hundreds of millions of dollars.

Kaiman praised the county executive’s job cuts and other spending reductions, as well as other revenue sources, such as several administrative fee increases, included in his budget proposal.

But, he said, the proposed revenue would fail to cover operating expenses and would create a $50 million deficit.

Presiding Officer Norma L. Gonsalves (R-East Meadow) said the Legislature’s Republican majority would continue efforts to cut spending while keeping property taxes steady in the budget process.

Minority Leader Kevan Abrahams (D-Hempstead) said Democrats still oppose Mangano’s proposed property tax hike and casino because they are, respectively, “bad for working families” and “a true attack on the quality of life our residents deserve.”

He added that it should be Mangano’s responsibility to come up with a solution to the budget problems that NIFA has raised.

Neither Republicans nor Democrats have yet proposed specific spending cuts or revenue sources as amendments to the county executive’s budget.

Kaiman’s letter came a week after county Comptroller George Maragos raised similar concerns about Mangano’s budget in an Oct. 8 presentation to the Legislature, saying it risks a deficit between $49.1 million and $185.1 million.

In addition to the casino and property tax increase, Maragos found risky $60 million in loans for property tax refunds and another $32.8 million for county employee severance.

Kaiman said NIFA would not allow the latter borrowing, but would approve the former since the Legislature passed a measure to stop paying out refunds from its operating budget starting in 2017.

Maragos said he thinks NIFA threatening to take action on the budget is a step in the right direction.

“I think they have to come to grips with the reality of the budget and its fiscal implications,” he said. “They cannot continue to kick the can down the road.”

But the comptroller questioned whether the proposed spending cuts and hiring freeze would be enough to fix the county’s finances in the long run, adding that his office advocates a “fundamental restructuring” of the government to get them onto more solid fiscal ground.

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