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Long IslandColumnistsJoye Brown

State comptroller's report serves as an early warning for Long Island communities facing 'fiscal stress'

New York State Comptroller Thomas DiNapoli at the

New York State Comptroller Thomas DiNapoli at the New York State Financial Control Board Meeting in Manhattan on Tuesday, July 29, 2014. Credit: Bryan Smith

Long Island residents can benefit from the clarity of distance provided by the state comptroller's second annual report on fiscally distressed communities.

The report is meant to serve as a canary in a coal mine -- an early warning -- that municipalities could be drifting in the wrong direction. And that's no small thing when, increasingly it seems, some local municipalities present their budgets more as political documents than financial ones.

Municipal financing is boring, but it's the lifeblood of every public service and an apt measure of how well governments use property owners' taxes -- in one of the highest-taxed regions in the nation.

And although, as the report from Comptroller Thomas DiNapoli's office points out, two years is too little to fashion a trend, even a year-over-year comparison can be valuable.

Both Long Island counties -- no surprise -- made the inaugural list. Suffolk, which, compared with Nassau, is new to fiscal hardship, came in as having "significant fiscal stress" -- while Nassau's was tagged as "moderate."

One year later, only Suffolk remains -- but only because Nassau had a delay in providing fiscal data to the state. And Suffolk, by beginning to shore up weaknesses in cash flow, the stress on its rainy-day fund and the size of a projected deficit, moved to the "moderate" category.

Glen Cove City, Islandia Village and Oyster Bay Town also made the comptroller's list a second time. A change for the worse in short-term debt kept Glen Cove in the "moderate" category. And while there were slight changes for the better in operating deficits and cash flow, Islandia remained on the "significant" list.

Changes for the better in cash flow and handling deficits helped Oyster Bay make the biggest local year-over-year leap -- from "moderate" to "susceptible" to stress.

Meanwhile, Hempstead, the most populous town in the nation, was edging over the other way, with changes in fund balance and cash flow moving it to the list for the first time -- into "moderate" territory.

And although a town official last week attempted to counter DiNapoli's designation with the assertion that Hempstead's Wall Street bond rating remains high, the designation remains valuable.

The comptroller's report last year was based on 2012 financial data; this year, the office relied on 2013 to compile the list.

When it comes to being knowledgeable about municipalities in distress, DiNapoli of Great Neck Estates is no slouch. As an assemblyman, DiNapoli, a Democrat, along with state Sen. Dean Skelos, a Republican from Rockville Centre, authored legislation that created the Nassau Interim Finance Authority, a state financial control board overseeing county finances.

Last week, officials in Islandia, like the official in Hempstead, took issue with the state's designation, perhaps because DiNapoli's Fiscal Stress Monitoring System reports are only two years old.

But history shows that ignoring early warnings can have consequences. In the 1990s, for example, another state comptroller, H. Carl McCall, blew the whistle early on about Nassau's deteriorating finances.

No one paid much attention until years later, when the proud county's bond rating fell -- to one level above junk.

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