NIFA OKs Mangano budget in rare split vote

Nassau's financial control board reluctantly approved County Executive Edward Mangano's 2012 budget and multiyear spending plan Thursday in a rare divided vote.

The Nassau Interim Finance Authority expressed skepticism about the $2.6 billion budget, which assumes $150 million in labor savings from voluntary concessions or layoffs. The four-year financial plan also relies on $450 million in borrowing to pay for tax refunds, employee termination expenses and court judgments.

Five members voted in favor of the budget, saying they feared rejection of the plan could lead to a county cash crisis and government shutdown.

"I don't think anyone on this board can say this plan is good," said board member Robert Wild. However, Wild said, "the risk of not approving the plan outweighs the skepticism" of the county's ability to balance its budget.

Leonard Steinman, who joined board member Thomas Stokes in voting no, said county leaders had created a budget deficit by repealing a home heating tax and eliminating planned property tax increases without providing for alternative revenue. "Borrowing is not a proper substitute for taxes," Steinman said.

Stokes said the county had not provided a plan for how it will balance its budget in 2015, when the borrowing ends.

But Mangano said approval of "this budget plan, developed by the county in consultation with NIFA, will put Nassau on the road to recovery."

NIFA, which took control of Nassau's finances in January, had first projected a $283 million deficit next year. Because of the borrowing and other steps taken by Mangano, NIFA now says $181 million in expected savings or revenue in next year's budget are "at risk."

The board also approved, 5-2, Managano's plan to sell 30 years of rental income from Mitchel Field leases -- worth a total of about $114 million -- for a discounted one-time payment this year of $37.5 million.

NIFA chairman Ronald Stack said the county was effectively borrowing back money at a 9.5 percent interest rate at a time of historically low rates. "However, the cash is needed," he said.

Board members George Marlin and Wild voted against the rental sale, with Marlin calling it a "sweetheart deal."

The board voted unanimously to allow the county to sell $250 million in short-term notes so it can meet its payroll this month.

NIFA's approval of the county's budget and spending plan does not include approval of any of the $450 million in long-term borrowing. Member Chris Wright said the board could not vote on the borrowing until it was approved by the county legislature.

But incoming Democratic legislative leader Kevan Abrahams of Hempstead said lawmakers need more specifics before they would vote on the borrowing, which requires 13 votes on the 19-member legislature. "This plan continues to kick the can down the road," he said.