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Curran administration defends deficit reduction plan

The administration of Nassau County Executive Laura Curran on Monday defended a new financial strategy that avoids asking a state control board to refinance county debt in 2020 to help close a $384 million budget shortfall caused by the coronavirus pandemic.

But Raymond Orlando, deputy county executive for finance, said asking the Nassau Interim Finance Authority to restructure county debt remains a possibility in future years.

Majority Republicans in the Nassau Legislature had opposed refinancing proposals from Curran, a Democrat, and NIFA, saying a restructuring of county debt could extend the life of the state control board for decades. 

The county executive needs Republican support to ask NIFA to refinance Nassau's debt. NIFA, created by the State Legislature in 2000, has access to better interest rates than the county.

County lawmakers grilled county budget officials on Monday during legislative hearing on ways to deal with the pandemic budget. 

Orlando, county Budget Director Andrew Persich and a representative of county financial consultant PFM Financial Advisors LLC, spoke.

Republican lawmakers had issued a subpoena on Aug. 3, seeking production of financial documents related to debt restructuring and financial officials' testimony.

 Last week, Nassau officials said they would ask NIFA to defer a $75 million bond payment by one year, from Nov. 15 2020, until 2021. Waiting a year allows NIFA to provide an additional $75 million year to Nassau, in the form of sales tax revenues, rather than to its lender..

A memo from PFM notes, however, that the plan would result in a "large increase in debt service" in 2021.

Earlier this summer, county officials expressed support for a plan that involved asking NIFA to refinance county debt and its own debt. County officials projected that the plan would save Nassau $285 million in 2020 and 2021.

Republican lawmakers did not present their own plan to cope with the pandemic. Later Monday, Curran issued statement calling for meetings among members of her administration, legislative leaders, and NIFA officials to work collaboratively on a plan to solve the county's fiscal woes in 2021. 

Legislature Presiding Officer Richard Nicolello (R-New Hyde Park) said lawmakers "understand that the county's going to have to consider a variety of options to deal with the crisis, and some of these options should be avoided if at all possible."

"The information that we're being given is so sparse that it makes it difficult for us to make a difficult decision when the county comes to us," he said.

"We share your goal of effectively managing the county's budget using NIFA in such a way, if possible, to not go beyond its existing existence currently," Orlando testified.

"We believe as you do that we should return the ultimate financial decision-making back to the county's elected officials, the County Executive and this legislature," he said.

"Our thinking has evolved as we've considered scenarios that do in fact accomplish the goal of saving the county $75 million in 2020, without extending the life of NIFA," Orlando said. 

Legis. John Ferretti Jr. (R-Levittown) asked Orlando if the administration had intended originally to ask NIFA to refinance its own debt, and extend NIFA's life by 25 years.

"That was the plan, right?  I'm not imagining this?" Ferretti asked.

Orlando replied, "We were always looking for a way to move this payment to a future period."

Orlando on Monday expressed concern about the costs of NIFA's continued involvement.

"NIFA borrowing for 30 years would, we believe, extend the life of NIFA, including the expenditures associated with NIFA's administrative costs, as well," he said. "Those costs ... seemed to outweigh the savings that come from the difference in the interest rates that we could get at the Triple A level that NIFA can borrow at, versus what we can borrow at." 

But looking to future years, Orlando said the "flexibility that NIFA provides to the county makes the ability to use NIFA to refinance the county's debt, we believe remains an option for us as we think about how we're going to keep the county open financially during this very difficult time."

Orlando continued, "Looking at the totality of what NIFA can do for the county, we would not want to eliminate as an option today the potential for NIFA to borrow long-term. Obviously, as I mentioned earlier, all of us would prefer that federal aid come to our rescue as we require in this very difficult time."

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