Running on Empty

In Columns by Hal Peterson0 Comments

I was recently asked to address why Nassau County, on Long Island in New York, one of the richest in the country, is today, and has been for years, one of the most politically and fiscally troubled municipality, by any standard of measurement.

How bad?  Approximately two years ago, Newsday published an article finding many operational woes including wrongdoing, stupidity and incompetence attributed to a “bipartisan corps of cowards that, over many years’ sold out the County by mortgaging the future to avoid cutting costs, borrowing long-term to repay property owners for perennial property-tax overcharges, borrowing long-term to pay short-term expenses, and compromising results” while placating just about every vested interest group, regardless of the needs evident. That’s quite an indictment.

The paper also published in August a column titled “Act to stop a Nassau fiscal meltdown” based on reports issued by Nassau County Comptroller George Maragos, and the Nassau County Interim Finance Authority (NIFA). The meltdown cited addresses a $61.9 million County deficit with revenues falling short of expenses by $219 million. Both reports also cite many dire concerns identified in the second paragraph. To quote an old Laurel and Hardy movie, “Here’s another fine mess you’ve gotten me into, said Ollie.”

Not by any means the end of the story. NIFA was established in the year 2000, when the Nassau County Interim Finance Authority Act was signed into law by former Governor George Pataki granting a “control board” almost complete authority to manage a wide range of fiscal affairs, including issuance of bonds and notes, the restructuring of outstanding debt, and financial/budget related planning.  Mr. Ronald Stack, was selected its second Chairman, a banker and expert on municipal finance.

Not exactly what County Executive Edward Mangano envisioned. He threatened to sue lord knows who, and considered NIFA’s intervention “a power grab intended to discredit and embarrass the administration, and the Republican Party.” He further commented he has fixed the fiscal damage left behind by the prior administrations. He considered the budget (at that time) not only balanced but, the best Nassau has seen in years. Really?

Not exactly what Nassau County Comptroller George Maragos, wanted. Why? In my opinion, the legal aspects upon which this relationship was established were quite ambiguous and realistically unattainable from day one. In his mid-year review, Maragos now claims “the county’s fundamentals have gotten worse under their (not his) control. Obviously, no one in power wants to be a hero, no one wants to share the pain. NIFA, for all intent and purpose has been muted and its future value is questionable. We are witnessing a case book example of the inmates running the asylum at taxpayer expens

In my next column I’ll explain why NIFA was brought to its knees, and the consequences of their unsuccessful intervention.

 

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