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NY state seizes Nassau county finances. One of the nation’s wealthiest and most heavily taxed counties can’t balance it’s damn budget!

January 27, 2011

January 27, 2011

NY state seizes Nassau county finances

Rick Moran

It’s one of the richest counties in the country with one of the highest tax rates for residents and they still can’t find enough money to make one and one add up to two.

New York Times:

A state oversight board on Wednesday seized control of Nassau County’s finances, saying the county, one of the nation’s wealthiest and most heavily taxed, had nonetheless failed to balance its $2.7 billion budget.

Many hard-hit local governments have flirted with insolvency because of revenue shortfalls caused by the recession, but the financial problems of Nassau, on Long Island, owed more to a failure by county officials to face up to tough economic reality responsibly and quickly enough, according to the state board.“The county’s 2011 budget is built on a foundation of sand,” a board member, George J. Marlin, said.

The move, which came after months of steadily more ominous threats and a downgrade of Nassau’s debt by a credit-rating agency in November, turns the oversight board into a control board, with vast power to rewrite the county’s budget and veto labor contracts, borrowings and other important financial commitments.

The county executive, a Republican, had been saying the budget was balanced and that all is well for months. The oversight board made him out to be a liar in record time:

Mr. Mangano had repeatedly said the budget was balanced, and then insisted there were ample contingencies to cover any shortfalls. But the authority said that many of his assertions were unfounded or unsupportable.Should the county choose to work closely with the authority, it could seek to reopen talks with labor unions, emboldened and newly empowered by that alliance. But the response from the county on Wednesday was adversarial in tone.

“Who elected them?” asked the county attorney, John Ciampoli, referring to the authority.

Mr. Mangano, speaking to reporters after the board’s decision, said he was considering a lawsuit to block the takeover, accused the authority of wanting to raise property taxes and urged taxpayers to question its “motivation.” He has accused the board members of having partisan Democratic sympathies.

Republican, Democratic, it doesn’t matter. Politicians who can’t face up to their responsibilities – especially in the 10th richest county in American – deserve to be treated as children and supervised to make sure they behave.

Expect a lot more of this kind of thing nationwide.

Update from the NY Post:

A state oversight board seized fiscal control of the financially beleaguered — yet extraordinarily wealthy county — yesterday after deeming local officials incapable of balancing their own budget.

The jarring move by the Nassau Interim Finance Authority effectively strips Nassau County Executive Edward Mangano of budgetary power while giving the board the authority to freeze wages of 8,000 unionized public employees and halt out-of-control borrowing.

This is not the first time Nassau has been in trouble. NIFA, as the board is known, has been watching over the county’s shoulder since 2000, when it required a $100 million state bailout to remain solvent.

In the 6-0 vote in Uniondale, LI, yesterday, NIFA also empowered itself to veto budgets, labor contracts and borrowing requests. To justify the takeover after months of wrangling with the county, the panel cited a massive, $176 million projected deficit in the $2.6 billion 2011 budget.

Among the shortfalls are an anticipated $100 million in borrowing to pay off property-tax refunds — a major source of the 2000 meltdown and the county’s $1.65 billion debt — and an anticipated deficit of $76 million in other revenue, including red-light camera fees, ambulance fees and labor concessions, according to agency documents.

The deficit triggered a state law that allows NIFA to take over if the county’s government is expected to be just 1 percent in the red. Board chairman Ronald Stack, a Wells Fargo managing director, ordered Nassau — the wealthiest county in the state and 11th richest in the nation — to overhaul its budget to erase the shortfall by Feb. 15.

All borrowing — both short-term and long-term — was halted, but because NIFA did not yet rule that a more serious “fiscal crisis” was in effect, no wage freeze was imposed. NIFA, however, remained silent on the sensitive subject of property-tax increases — already among the highest in the nation at an annual average $11,500.

Mangano, a Republican elected in 2009 as a “tax revolt” candidate, claimed the budget is actually balanced. “Today’s action is unfounded and premature,” he said, warning that property taxes could increase and vowing to appeal the ruling in court. But state Comptroller Tom DiNapoli urged Mangano to play ball. “Protracted litigation will only delay the inevitable hard choices that must be made to put Nassau back on solid fiscal ground,” said DiNapoli, a Democrat who hails from Nassau and ran unsuccessfully for county executive in 2001.

For the past month, Mangano, had said his budget would be balanced based on labor savings plans and real-estate deals — neither of which was guaranteed to bring in enough money. Mangano said he had inherited a $133 million deficit and is further saddled by contracts guaranteeing lucrative salaries and benefits for county employees — the average police salary is nearly $100,000, and 400 retired cops have pensions above six figures.

Lucrative union contracts were routinely approved by his predecessor, Thomas Suozzi and the County Legislature, adding to the budget mess. However, NIFA was skeptical of the $60 million he projected for labor concessions and $20 million in anticipated state aid, ordering him back to the drawing board. This week, Mangano secured $70 million in concessions from the county’s largest union, but it wasn’t enough — just a fraction of that would come in 2011.

Takeovers of county governments, while rare, are not uncommon. Erie County, in Western New York, was overseen by a similar authority between 2007 and 2009, when its finances were out of order.


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