The finance board that monitors Nassau County plans to meet this week after last week’s executive session.

The New York Times citing an unnamed source reported that the Nassau County Interim Finance Authority plans to impose a formal control period on the county at Thursday’s meeting.

For weeks speculation has swirled that NIFA might take over the county’s finances, which by statute it can do under certain conditions. Some of those include defaulting 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.

“NIFA remains very concerned about the 2011 budget for Nassau County,” authority chairman Ronald Stack said in an e-mail.

Nassau County officials have said their budget is in balance, and earlier this month County Executive Ed Mangano ordered $23 million of spending cuts.

Earlier in December, Nassau sold $125 million of general obligation bonds as tax-exempts and taxable Build America bonds. The bonds were sold but spreads to Treasuries and Municipal Market Data’s triple-A benchmark rate widened compared to its previous new-money deal a few months earlier.

The authority has 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.

Moody’s Investors Service last month downgraded the Long Island suburban county’s GO debt to A1 from Aa3. Moody’s retained a negative outlook on the credit, citing weak liquidity and increased dependence on non-recurring revenue.

NIFA said in a September report that Mangano’s proposed $2.6 billion 2011 budget wasn’t 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.

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