It was 1999, and Nassau County - America's fourth wealthiest - was perilously close to financial collapse.
Its bond ratings were just above junk status. It faced a $300 million deficit, and had run up close to $3 billion in debt. After a long spree of overspending and no tax hikes or recurring revenue to pay for it, talk of bankruptcy was in the air.
"I think Nassau County could have rolled off a cliff" if the state didn't intervene, recalled Richard Kessel, who was a member of the Nassau County Interim Finance Authority, an oversight agency then-Gov. George Pataki created in 2000 to resolve the crisis and guard against recurrence.
Frank Zarb, the former Nasdaq chairman whom Pataki named to head NIFA, recalled that the situation "looked horrible. It was a legitimate, real crisis - the notion of bankruptcy was a real possibility."
A decade later, some politicians and analysts again are issuing stark warnings about Nassau's fiscal condition.
In commenting in September about Nassau County Executive Edward Mangano's multiyear financial plan, NIFA cited "extraordinary levels of unacceptable borrowing" to pay operating expenses and union concessions that hadn't been secured. A national rating agency has downgraded Nassau's credit for the first time in a decade, and state and federal cuts in aid are likely.
"We are back in 2001 but worse off because of the worsened economy at the state and national level," said Stanley Klein, a political scientist at the CW Post campus of Long Island University and a Suffolk Republican committeeman. "I see real problems and it's going to take a very strong hand to do what has to be done."
Nassau Legis. Judy Jacobs (D-Woodbury), who was serving at the time of the crisis, said, "I am watching this very disturbed and very concerned that we might be going down paths that are going to take us into no-man's-land again."
'The edge of a fiscal abyss here'
Tuesday, , NIFA is scheduled to hold its first public meeting since September, when board member George Marlin declared "there is no doubt Nassau County is on the edge of a fiscal abyss here."
Nassau officials dismiss the warnings as overheated and say the county is on relatively solid financial footing - as long as there are no major economic surprises.
The critics "are completely off base," said county Comptroller George Maragos, a Republican. "They've just completely ignored all the numbers and the financials and have gone on rumor and speculation."
For instance, Maragos said it looks like Nassau will end this year with a small surplus. He says Mangano, a Republican who took office in January, is taking steps such as cutting spending to make sure no major troubles arise in the next several years. Mangano did not respond to a request for comment.
"The county is very determined to do whatever it takes to remain financially stable and weather the economic storms," Maragos said.
Still, some analysts say Nassau's fiscal woes today and a decade ago have similar roots - too much spending without enough revenue to pay for it.
In the case of Thomas Gulotta, county executive throughout the 1990s, the problem led to his political downfall and that of Nassau's famous Republican machine - which had controlled the county for decades. In 2001, the unpopular Gulotta declined to run for a fourth full term. Democrat Thomas Suozzi won the race in a major political upheaval.
In late 1991, Gulotta had proposed raising general property taxes by 25 percent. The proposal nearly cost him re-election in 1992, and for most of the rest of his time in office he never raised taxes. Gulotta did not return calls for comment.
But by 1999, a financial crisis in the county was growing, and the following year Pataki created NIFA.
For the 2002 budget, county officials agreed to a 9.1 percent tax hike. Suozzi then in his first budget implemented a tax hike of almost 20 percent and a later 3.9 percent increase in his final budget, in order to stabilize the county's financial ship.
Situation more difficult this time
Some analysts believe Mangano, is in a more difficult situation today for some simple reasons - the economy is struggling, cuts in state and federal aid are coming and, politically, he can't raise taxes both because he ran on a promise not to and because the financially stressed-out public would balk.
"They can't do that now, because they don't want to put their heads on a chopping block," Klein said. "It's political suicide in today's political environment to come out and say I have to raise taxes."
Kessel added that unlike 2000, the possibility of the state coming up with a financial bailout for Nassau is remote.
"I think Nassau is certainly in a very precarious situation," he said. "I don't think there is anyone who thinks the budget is 100 percent solid."