A New York State judge on Friday temporarily blocked a key provision of a control board’s takeover of Nassau County’s finances.
Supreme Court Judge Arthur Diamond issued a stay from his Mineola courtroom that the county submit a revised financial plan to the Nassau County Interim Finance Authority by Feb. 22 while he considers a legal challenge to the board’s actions.
NIFA ordered the county to produce a revised financial plan after determining last month that its $2.6 billion budget had a deficit greater than the 1% that mandated a takeover. The control board said that the county has a $176 million deficit under generally accepted accounting principles.
Nassau officials filed a motion for an injunction to block the authority’s actions on Jan. 31. NIFA responded in court filings that it had acted within its authority under statute, had not acted arbitrarily or capriciously, and that the county had not demonstrated that the authority’s actions would cause irreparable harm.
The control board also argued that the challenge could harm New York because oversight boards are an essential tool of the state.
Brian Nevin, spokesman for County Executive Ed Mangano, said that the judge said he would issue an opinion or preliminary injunction before April 1, when certain raises for county employees would go into effect unless the authority stops them.
“Even though NIFA already said they’re not going to freeze wages, he wouldn’t allow it to go past April 1 just in case they changed their mind and actually help tax payers,” Nevin said.
If the preliminary injunction is granted, further arguments would be heard until a decision is rendered.
“If it goes against us, then I’m sure we’ll have to produce a multi-year plan and a revised budget, but our lawyers are 100% confident that this is all a good sign for us,” Nevin said.
NIFA chairman Ronald Stack said he could not comment on the matter because it was under litigation.
Mangano said in a statement that the judge’s actions “further indicate the level of concern that both the court and residents should have over NIFA’s unfounded action to issue a control period over county finances.
“We already pay the second highest property taxes in the nation and NIFA’s actions have simply created a distraction from the real work that needs to get done,” Mangano said.
The suit, filed earlier this month, prompted Moody’s Investors Service to put the county’s $1.4 billion of outstanding debt on review for possible downgrade. Moody’s downgraded the county to A1 from Aa3 in November and said last month that a protracted legal challenge by Mangano to change NIFA’s role could lead to a period of greater financial stress.
Standard & Poor’s and Fitch Ratings have not taken rating action in response to NIFA’s actions, maintaining an A-plus and a AA-minus, respectively, both with stable outlooks.
Nassau is an affluent county east of New York City.
