NIFA Chairman Jon Kaiman looks on during the Nassau Interim...

NIFA Chairman Jon Kaiman looks on during the Nassau Interim Finance Authority meeting at the Long Island Marriott in Uniondale on Friday, May 2, 2014. Credit: Barry Sloan

Weeks of behind-the-scenes tussling in Nassau ended abruptly Monday after a state financial control board told GOP lawmakers that it would -- in an unprecedented move -- freeze the county budget unless a tax increase went through.

Had that happened, Nassau's elected officials would have had to resubmit portions of the budget -- piece by piece -- to the Nassau Interim Finance Authority for spending approval.

And even then, NIFA was prepared to approve only safety and health items. Which meant that nonessential county services, from parks to youth services, could have been frozen come Jan. 1.

"We would have lost almost all control and that was not good," said Presiding Officer Norma Gonsalves (R-East Meadow). "I had to consider what Nassau would gain with an override and I didn't think we would gain much. I only saw us losing."

Since September, county lawmakers, Republican and Democrat, had been threatening to remove County Executive Edward Mangano's proposed 3.4 percent property tax increase from next year's budget.

Two weeks ago, they made good on the threat by stripping out the increase, using borrowing and other revenue sources to replace the $31 million the tax hike would have generated.

NIFA, along with County Comptroller George Maragos, deemed the alternative revenue flawed. And in a letter to lawmakers, NIFA said the amended budget would not be approved. Then Mangano, exercising his first veto in nearly five years, restored the tax increase.

NIFA chairman Jon Kaiman said he sat down with Gonsalves and detailed the consequences that a legislative override would bring. It was a power allowed under NIFA's enabling legislation -- and reaffirmed earlier this year when the board lifted a wage freeze on union employees.

"There was no way we are prepared to go, line by line, through a budget and take things out," Kaiman said Wednesday. "But we could cut expenses by freezing the budget and then approving only essential safety and health services."

He said the board, over a series of conference calls, had agreed to that course of action, which would have marked a first since NIFA was created in 2000.

There were other pressures. Nassau is slated to go to market for cash-flow borrowing. But officials worried that Wall Street bond-rating agencies could reduce the county's bond rating because a new, guaranteed revenue source -- the tax increase -- was no longer in the budget.

"I am convinced that we would have seen a ratings decrease," Kaiman said Wednesday.

Politically, the tax fight exposed a rare split among Nassau Republicans, with Mangano pulling one way and the 11-member legislative majority pulling in the other.

The last time that happened was in 1999, when then GOP County Executive Thomas Gulotta -- in his first veto -- restored $9.2 million in cuts made by GOP majority lawmakers.

Despite Gonsalves' stance, Kevan Abrahams (D-Freeport), the minority leader, still says the tax increase must go. But that position is more political than practical since Democrats don't have votes enough to stop it.

But no matter. Next year, when every Nassau lawmaker is up for re-election, the tax increase will be an issue. Democrats will blame Republicans, who will blame NIFA.

Mangano, like Gonsalves, said he didn't want a tax increase either. "Sometimes ego has to be put aside, politics has to be put aside and governing has to matter," Gonsalves said. "You hope the public understands."

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