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A brief history of state bailouts of Nassau County

The latest request for state help revolves around reassessment, including a proposal to give tax credits to homeowners who see property tax hikes.

The State Capitol building in Albany on Jan.

The State Capitol building in Albany on Jan. 15. Photo Credit: AP/Hans Pennink

ALBANY — Nassau County is again looking to New York state government for help in dealing with its finances and straightening out a troubled property-assessment system.

This year, Nassau is asking for legislation to allow it to phase in the impact of a countywide reassessment program over five years. In addition, a block of Democratic senators from Nassau have proposed spending $200 million or more in state money to give tax credits to homeowners who will see property tax hikes.

The latest request doesn’t rank in gravity compared to the massive bailout the state gave Nassau in 2000 to prevent the county from falling into bankruptcy; or the authority to borrow $65 million in 1993 to pay day-to-day county government expenses.

Nor can it be compared to the uniqueness of allowing the county in 2016 to sell its rights to operate video slot machines to Aqueduct Racetrack for $43 million.

Nor is it as stealthy as the attempts to win permission in 2012 and 2013 to borrow hundreds of millions of dollars while skirting Nassau’s financial control board and to double the borrowing authority of that board last year.

But, taken broadly, it is the most recent instance of Nassau, one of the nation’s wealthiest counties, seeking an Albany care package.

“NIFA was supposed to prevent them from coming back,” Michael Balboni, a former state senator from Mineola, said of the creation of the Nassau Interim Finance Authority, the control board that was a mandatory part of the 2000 bailout.

Balboni was part of Nassau’s delegation to the State Legislature that negotiated terms of the bailout. The county received $100 million in state aid and authority to borrow $400 million but was put under NIFA control.

“Normally, we’d look at county problems and local problems as county problems and local problems,” said Balboni, now a consultant and lobbyist. “But in this case, we had to respond. So we put together a plan to rescue the county.”

He said then-Gov. George E. Pataki “was giving us heat” and wanted to make sure “this isn’t just giving a check” to the county and “that’s how NIFA was birthed.”

NIFA is still in existence. And the fiscal issues continue.  

“These bailouts have to be taken in the context of, last time I checked, Nassau residents were paying $3 billion in excess to New York State of what they get in return,” said Howard Weitzman, who, as a former county comptroller and current member of the Nassau Interim Finance Authority, has studied local finances. “So I never saw these as bailouts, but a return of taxpayers’ money to Nassau.”

Weitzman said the county’s continuing fundamental issue is an “imbalance” of revenues coming in versus expenses going out, teamed with a troubled property-assessment system that has Nassau obligated to pay $70 million or more annually in refunds.

And, in the big picture, he added: “There’s no real constituency supporting the county” politically, “as opposed to school districts and villages.”

“Think about it,” he said. “School budgets all get passed. Town budgets get passed. Village budgets get passed. But the county always has a problem.”

It wasn’t a bailout, but the doozy of a favor Albany gave Nassau in 2016 would be hard to match for creativity.

Just hours before voting was to begin on a state budget package, then-Sen. Jack Martins succeeded in inserting a provision that allowed Nassau to “transfer” its rights to operate a video-slot-machine parlor to Aqueduct Racetrack for $43 million over three years.

The State Legislature had granted Nassau and Suffolk counties video slots as part of wide-ranging expansion of gambling in 2013. But Nassau Off-Track Betting Corp. ran into trouble finding a suitable location, with more than one site effectively shot down by neighbors. Facing the prospect of an unending search, Martins and the rest of Nassau’s Senate delegation helped OTB (and the county) bail out of the problem by selling slots rights to operators of the Queens horse track.

"It's a deal that works for all sides,” Martins said at the time. “Nassau County gets the benefit of the revenue stream without having the facility in Nassau ... Obviously, no place in Nassau County was willing to take the VLTs, so at some point, we had to realize that and, frankly, this was a great opportunity."

Nassau’s lingering debts for property-tax refunds have often been the cause for its leaders turning to Albany. Former County Executive Edward Mangano, a Republican, tried to get legislation in 2012 and 2013 to allow him to bypass NIFA to borrow money to pay debts. Current County Executive Laura Curran, a Democrat, asked state lawmakers last year to double NIFA’s borrowing authority (to $800 million) to help pay tax refunds. All those attempts failed in part because, detractors said, the county tried to sneak them through during last-minute legislative negotiations.

Now, Curran has begun a countywide reassessment that she says will make property values fairer for homeowners and has asked for the authority to phase in over five years the tax hikes that some residents will see. The phase-in aspect has won support from Gov. Andrew M. Cuomo, the State Senate and Assembly and could be part of a state budget adopted soon.

A Curran spokeswoman said state legislation is being sought to “lessen the pain of the reassessment.”

“Now that we’re leveling the playing field, we want to make the pain of all this lessen by gradually introducing the tax levy to the property owners,” Curran spokeswoman Christine Geed said.

In a related move, Sen. Anna Kaplan (D-North Hempstead) and the Nassau Senate delegation has proposed spending $200 million or more in state tax credits to spread out those hikes over eight years. This idea hasn’t caught traction in state budget talks.

There is no comparing help with reassessment to the "dire emergency" that spawned NIFA 19 years ago, said Assemb. Charles Lavine (D-Glen Cove), who is dean of Nassau's Democratic delegation in a Democrat-dominated State Legislature. 

"It's not even apples and oranges. It's a rhinoceros and Apollo 11," he said, referring to the space flight that landed the first two humans on the moon. "NIFA was an emergency action. The county was bankrupt and without the state coming to the rescue, Nassau County government simply would have failed."

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