Watchdog panel chief: Nassau's finances in bad shape

The head of a state watchdog board said Wednesday that Nassau's finances are "probably the worst" he's seen since the agency was created a decade ago.

Ronald Stack, chairman of the Nassau Interim Finance Authority, said, "The county is probably in the worst shape I have seen since I have been on this board.

"The deficit has grown to as much as $280 million. We're looking at a very, very difficult budget year," in 2011, said Stack, a member of NIFA since it was created. "We will have to see how the budget will be packaged."

County Executive Edward Mangano is scheduled to present his 2011 budget by Sept. 15. He said Wednesday in a statement: "NIFA is correct. Caused by years of increased spending and little reform, [former Democratic County Executive] Tom Suozzi left taxpayers with a $248 million deficit - nearly $100 million worse than he inherited in 2001. I look forward to working with NIFA to reduce the deficit without balancing the budget on the backs of homeowners."

The $248 million refers to Mangano's estimate of the structural deficit - the difference between recurring revenues and recurring expenses. Structural deficits are relatively common, and Suozzi included enough new revenue so that the 2010 budget will end balanced.

Stack said NIFA has little power now to help. When the agency was created to address Nassau's 1999 financial crisis, the state funneled $105 million in aid to Nassau through NIFA. The watchdog board also had the power to refinance the county's debt. Now NIFA's only hammer is to take control of the county's finances if it runs an operating deficit of one percent or more, Stack said. Next year's projected $286 million structural deficit would exceed that one percent if no steps are taken to close it.

At a public meeting Wednesday, Stack criticized Nassau's idea of selling some $113 million in rental income over the next 30 years for an upfront payment estimated at $20 million. He said no proposal had come to NIFA, so it is not taking an official position as yet. But he said, "NIFA's position in the past is they can call it selling, they can call it securitization. It's borrowing. It's taking 30 years of revenue and getting it today."

Suozzi's top budget adviser, Thomas Stokes, is now a NIFA board member. Wednesday he declined to comment on Mangano's criticism of Suozzi, pointing instead to a recent rating agency report that said the structural gap is likely to increase because the Mangano administration "decreased recurring revenue sources."