After weeks of speculation, the board that monitors Nassau County, N.Y.'s fiscal condition did not take over its finances last week. Instead, the Nassau County Interim Finance Authority asked for additional budget information by Jan. 20 before it would take any action.
"Clearly, the Legislature and I adopted a balanced, no-property-tax-increase budget and have the contingencies needed to protect taxpayers from any deficit," County Executive Edward Mangano said in a statement following a NIFA meeting Thursday. "I will continue to cooperate with NIFA by providing them the information needed to verify the budget is balanced for next year."
Mangano had spoken to the board earlier in the day and asked it to allow the county to manage its own finances.
NIFA said in a September report that Mangano's proposed $2.6 billion 2011 budget was not balanced. The authority identified $234.4 million of risks in the proposed spending plan. The county Legislature subsequently enacted the budget, which counts in part on union concessions that are under negotiation and the sale of bonds to pay for tax certiorari liabilities, a practice NIFA has long criticized.
New York created NIFA in 2000 to issue bonds and oversee county finances at a time of fiscal crisis. It has never implemented a control period and no longer has the authority to issue new-money bonds.
The authority retained former New York Court of Appeals Chief Judge Judith Kaye, who is now of counsel at Skadden, Arps, Slate, Meagher & Flom LLP, to review NIFA's statutory authority, which includes implementing a control period to take over the county's finances. Such a takeover requires certain conditions to be met, such as a default on debt-service payments, incurring a 1% operating deficit, and violating the statute that created NIFA in a way that would impair the marketability of the county's bonds or notes.
Moody's Investors Service in November downgraded the suburban Long Island county's general obligation debt to A1 from Aa3. Moody's retained a negative outlook on the credit, citing weak liquidity and increased dependence on non-recurring revenue.
