Nassau County legislators on Monday gave the Nassau Interim Finance Authority formal authority to refinance existing county debt, overcoming a key sticking point that had prevented the control board from signing-off on Nassau's $3.3 billion budget.
Minutes earlier, as part of a deal that allowed for the request to give NIFA that authority, lawmakers had unanimously approved a bill establishing a "special revenue fund" for sales tax receipts in excess of the projected 2021 budget. The fund can accept "other uses" for "various good government purposes," said presiding officer Richard Nicolello (R-New Hyde Park).
Money in that fund will help to pay off hundreds of millions of dollars in tax refunds owed to businesses. Nassau's backlog, for years, has been in the hundreds of millions of dollars.
NIFA has held off on approving Nassau County Executive Laura Curran's $3.3 billion budget, which relies on having NIFA refinance $473 million in existing county debt over 15 years, as well as its NIFA's own debt. Approval is due by year's end and the board has a meeting scheduled for Thursday.
Adam Barsky, NIFA Chairman, said Monday night: "NIFA stands ready to assist the County in this unprecedented time of need that has been created by the COVID pandemic."
County spokesman Mike Fricchione said: "This deal is a testament to bipartisan cooperation and the recognition that this crisis can only be weathered by working together. The declaration of need now paves the way for both the County and NIFA to responsibly refinance debt at historically low interest rates so that the County Executive has the resources to lead us out of this pandemic."
A refinancing is crucial, county and NIFA chairman Adam Barsky have argued, to secure a total of $435 million in savings from 2020 through 2022.
Nassau has suffered steep revenue losses as a result of the coronavirus pandemic. According to an October budget report, Nassau is projected to be down $261.7 million in sales tax collections, which make up 40% of the annual budget.
Republican lawmakers proposed the fund after questioning whether the county's budget was "overly pessimistic" with its sales tax projection for 2021, Nicolello said Monday.
Nicolello said the fund would serve as a "safety valve" to "assist in paying off the county's existing" backlog of tax challenges. Nassau officials have said they plan to seek legislative and NIFA authority for borrowing $200 million for the backlog, but in 2023, according to the Nassau comptroller's midyear financial report.
For the past six months, county officials were split on asking NIFA to refinance county debt. Involving NIFA in a multi-decade refinancing could prolong the life of the control board, which approves county spending. NIFA was borne out of state legislation, passed in 2000, created to provide oversight for the fiscally troubled municipality.
Twenty years later, Nassau is in a "control period," and NIFA has overwhelming authority over county spending. NIFA officials said the Republicans' point was moot. Earlier this year NIFA secured a legal opinion that argues the agency can exist as long as it believes that's fiscally prudent.
Republicans supported the idea of having the county refinance its own debt. NIFA, which is funded by sales tax receipts, has better bond ratings than Nassau and access to better interest rates.
In April, the State Legislature empowered NIFA to borrow on behalf of the county and to refinance and extend its own debt to 2051.
The original borrowing proposal backed by NIFA and Curran has come down from 25 years, to 15.