State Supreme Court Justice Arthur M. Diamond stayed the Nassau Interim Finance Authority’s control period of Nassau County’s finances until no later than March 31, while he sorts out issues raised by the county, such as new accounting practices for Republican Nassau County Executive Ed Mangano that were not in place when former County Executive Tom Suozzi, a Democrat, was in office.
   
Brian Nevin of Merrick, a key advisor to Mr. Mangano, told Bellmore Life that among critical arguments in the county’s lawsuit against NIFA is that the advisory board suddenly changed accounting practices to count roughly $100 million as costs in borrowing to pay for tax grievances. During the Suozzi administration, NIFA considered the $100 million in borrowing as income revenue, he said.
   
“NIFA changed accounting practices midstream,” Mr. Nevin remarked. He suggested the Mangano Administration applied the same principals the Suozzi Administration applied to develop its budgets and now they are not accepted, because NIFA changed the rules.
   
But in NIFA’s Resolution 11 spelling out reasons for a control period, it noted on September 28 that the county planned to forgo the accepted use of operating expenses to fund its tax refund obligations and instead proposed bonding (borrowing) an additional $364 million over the next two years, including $100 million in 2011.
   
NIFA never advised, Nevin said
Another key issue in the lawsuit cited NIFA as being founded as an advisory board only. Its mission statement, Mr. Nevin said, was to provide advice to the county executive on what to do to allay any risks that may be occurring in the budget. “It failed to advise us of what we should do” or be doing to reduce the deficit.
   
Instead, he said of NIFA’s actions that “It perceived there would be a deficit and took action.” Mr. Nevin asked how  NIFA could perceive a deficit occurring when the county will record a surplus for 2010. 
   
NIFA’s mission statement warns that it “shall” impose a control period “upon its determination at any time...that there exists a substantial likelihood and imminence of....a major operating funds deficit of 1% or more in the aggregate in the results of operations during its fiscal year – assuming all revenues and expenditures are reported in accordance with generally accepted accounting principles.”
   
According to Mr. Nevin, no deficit of 1% or more has actually occurred yet in the 2011 budget, nor has NIFA advised the county about how to resolve the perceived deficit. However, the mission statement says “likelihood and imminence of...” and NIFA had cautioned the county in September that its 2011 budget was struggling for balance.
   
Another critical avenue that Mr. Nevin and the county assert concerning NIFA is that it wants to raise property taxes to offset any perceived budget deficit.
   
When asked for proof, Mr. Nevin said that at every meeting with NIFA it has cited the need for higher revenues – above the $65.2 million in new revenues from new taxes and fees the minority Democratic caucus claims reside in Mr. Mangano’s No-Tax Increase budget for 2011, for example (see Bellmore Life letters, December 22, page 5).
   
Regarding the need to find new revenue streams, NIFA directors declared in a document of determination for a control period which followed the resolution, that “viable one-shot revenue sources of significant size were not readily available, elected officials of both parties were unwilling to propose (much less enact) a property tax or other tax increase, and...existing collective bargaining agreements were in place until 2015, with labor agreements prohibiting layoffs through the end of 2011.”
   
New taxes, fees
According to the Democratic caucus, new taxes include a new sewer tax to school districts that will cost the Bellmore-Merrick Central High School District an additional $100,000 a year ($38 million countywide), and steep increases in fees for recreational facilities ($2.5 million), home alarm permits ($1.7 million), ambulance fees ($8 million), traffic and parking violations ($7 million) and county clerk fees ($8 million). 
   
The caucus also said elimination of the county guarantee to pay an estimated $80-$100 million annually in tax refunds (saving the county $80-$100 million) will be passed along instead to fire districts, school districts and towns to collect from residents to make up for lost revenue from the county.
   
However, schools could conceivably use reserve funds to make up for any loss of county income, without having to raise taxes. (See BL CHSD story, February 23, page 1.) Fire districts may have to raise taxes to match rising costs – or hold the line with less.
   
Mr. Nevin stressed a difference between fees and taxes, saying fees were discretionary, and taxes were compulsory. But, for example, if parents found the cost of their children’s teams too expensive to join because of new recreational fees, and did not renew, revenues could be less than the estimated $8 million.
   
Still, NIFA wanted more than the $65.2 million in new fees and taxes, said Mr. Nevin.
   
Regarding buyouts many police officials took recently, Mr. Nevin noted the buyouts would still save the county $155 million overall, because they  were part of staff reductions leading to 610 fewer employees now working in the county than just over a year ago, under Mr. Suozzi. 
   
Win – or lose?
Attorney Christopher J. Gunther of Skadden, Arps, Slate, Meagher and Flom LLP, legal counsel for NIFA, told Bellmore Life of the judge’s decision only that “We were pleased that the judge will rule promptly,” because Nassau County employees are due a raise by April 1, and NIFA would need to be in a position to rule on those raises. “We look forward to his decision,” he said.
   
A spokesperson for NIFA Chairman Ron Stack said he would not comment because of litigation.  
   
Meanwhile, Mr. Nevin said that if NIFA were to lose the lawsuit and the state were to step in – the way it did to announce a special prosecutor for the Nassau County Police Department’s crime lab investigation –  it would likely see the same special interests in each of the NIFA members that county officials perceived.

By Doug Finlay

Doug Finlay is the assistant editor for Bellmore Life newspaper. He is also an award-winning writer for L&M Publications.