Nassau's financial control board on Tuesday rejected the county's request to borrow $23 million to pay two men who were wrongfully imprisoned and warned Nassau to "act quickly" to address $81 million in budget risks with spending cuts or new revenue.
Directors of the Nassau Interim Finance Authority voted 6-1 against the borrowing, which Nassau County legislators approved February in a 13-6 bipartisan vote. The bonding was to cover half of a roughly $45 million legal judgment against the county, after the U.S. Supreme Court declined to hear Nassau's appeal of it.
The settlement went to Dennis Halstead and John Restivo, who were exonerated after wrongfully serving 18 years in prison for the 1984 rape and murder of 16-year-old Theresa Fusco of Lynbrook.
County officials already paid the entire settlement out of 2018 operating funds.
NIFA counsel Jeremy Wise said that since the county had paid the judgment, officials were seeking to ultimately apply the $23 million to cover a backlog of payments for tax challenge settlements. County officials owe an estimated $360 million for past claims.
"We want to get a full picture of what the county's borrowing needs are going to be," NIFA Chairman Adam Barsky said at the meeting. He added, "The judgment has been paid, and the county has provided a plan as to how they could handle it within this budget, and we accept that. So, the need for this at this time does not seem to be glaring."
Howard Weitzman, the lone member to vote for the borrowing, acknowledged that the administration of County Executive Laura Curran should have sought NIFA's approval sooner. "This is an exceptional situation," he said, adding that the amount "is larger than any municipality in New York, I believe, could handle."
Christopher Wright, another NIFA director, noted that the panel has historically opposed county requests to borrow for tax refunds and claims.
NIFA board members at the meeting in Uniondale Tuesday night also detailed $81 million in projected risks for the current year's budget.
County officials had projected a $9.2 million surplus for 2018 in a multiyear financial plan submitted to NIFA in early July.
"Predictably, our analysis of the update is not as optimistic as the county's," NIFA officials wrote in a report.
The $81 million risk projection includes $40 million in underbudgeted refunds for tax settlement challenges, the cost of the legal settlement, and $12.8 million in revenue from video lottery terminals with the Nassau Regional Off-Track Betting Corp.
"The county needs to act quickly to address these growing risks through the implementation of additional, recurring revenue-generating and expenditure-reducing initiatives," the report said.
"Failure to present a plan for FY 2019 - FY 2022 that addresses the deficiencies that we have identified ... may force NIFA to impose significant cuts that could negatively affect taxpayers and/or employees of Nassau County," the NIFA report said.
Mark Page, Nassau's deputy county executive for finance, disputed NIFA's risk calculation.
"I disagree with its pessimistic tone about the financial conditions about the county," Page said of the NIFA report.
Michael Martino, a spokesman for Curran, said in a statement after the meeting that he also disagreed with NIFA's "pessimistic" view of Curran's budget.
However, he said the report once again highlights the need for the county's "mountain" of tax refund liabilities to be addressed.
In March, Curran proposed traffic and parks-related fees, but Republican lawmakers in the majority did not support them.
NIFA Chairman Adam Barsky said in an interview Tuesday that Nassau's plan "depends on somebody else having to cooperate with them ... We would hope there would be greater cooperation by the legislature to the county’s proposals.”
Page said Nassau has enough funds to cover the judgment and tax challenge settlements and that the county would not "be put in a position to pay more cert payments in 2018 than we have resources."
"We have gap-closing measures already in place that we’ve been working under since we came into office, " Page said. "We think they are adequate.”