ALBANY -- A bid by Suffolk and Nassau counties to gain state permission to borrow hundreds of millions of dollars to cover lingering debts is dead, a key lawmaker said Tuesday.
The proposal drew significant political opposition and state lawmakers said they could not reach an agreement on the initiative -- which would have allowed each county to issue bonds to borrow a maximum of $500 million total. With three days left in the 2013 legislative session, the proposal has hit a dead end.
"Suffolk is no longer requesting it," said Assemb. Robert Sweeney (D-Lindenhurst), dean of the Suffolk Assembly delegation.
A spokeswoman for Suffolk County Executive Steve Bellone declined to comment. Suffolk and Nassau leaders contended they needed financial flexibility to help speed recovery from superstorm Sandy.
Separately, Gov. Andrew M. Cuomo announced a deal with lawmakers to create a new binding arbitration process for some municipalities that qualify as fiscally stressed.
Under the agreement, a municipality's "ability to pay" would become a factor in arbitration awards to local police and fire departments during contract disputes. Officials said this would effectively reduce arbitration awards for some local governments.
Suffolk County would qualify for the new binding arbitration process; Nassau wouldn't, Cuomo officials said.
The agreement also establishes a new Financial Restructuring Board for Local Governments to offer assistance for eligible localities. Participants could receive grants to make local government more efficient -- but would be bound by the board's proposals.
The 2013 legislative session is slated to conclude this week.
On Monday, Nassau Democrats assailed the plan to allow Nassau and Suffolk to borrow to cover debts. They said the plan would allow Nassau County Executive Edward Mangano's administration to sidestep the Nassau Interim Finance Authority, a state panel that controls county finances.
Suffolk and Nassau officials have said Suffolk originated the proposal.
The two counties are still looking for other assistance from the state legislature before it adjourns for the year. Suffolk wants permission to sell the Dennison Building and lease it back, giving the county a cash influx. It also needs to renew the county sales tax.
Nassau is looking to renew its sales tax and its hotel-motel tax. Both counties want local off-track betting corporations to be able to offer video slot machines.