The Nassau Interim Finance Authority on Thursday approved Nassau County's request to sell up to $230 million in short-term notes to help cover expenses, as the county copes with the financial impact of the coronavirus pandemic.
The pandemic and economic shutdown have meant the loss to Nassau of hundreds of millions of dollars in sales tax revenues.
The county also extended the deadline for making second-half school property tax payments without penalty or interest until July 1 to help property owners and residents who needed extra time to pay.
Short-term borrowing is common when municipalities must cover expenses but are waiting for tax revenues to arrive.
But the county's borrowing request to NIFA was significantly higher than in recent years, because of the severity of county revenue losses during the pandemic. Nassau is responsible for massive payments to cover payroll and pay vendors for critical services.
Raymond Orlando, Nassau deputy county executive for finance, on Thursday cited a "mismatch" this year between the arrival of tax revenues and when expenses are due.
The last sales of short-term revenue anticipation notes, known as RANs, were in December 2019, for $79.5 million; December 2018, for $78.725 million; and in June 2016, for $119.915 million.
"Because of the COVID pandemic and its devastating impact on the county's sales tax collections this spring, we need to do an additional RAN," Orlando said.
NIFA chairman Adam Barsky said revenues "are coming in at a later period of time than normally would have been the case because of the [school property tax] extension, the delays, and other things that have happened."
Barsky cautioned that the short-term borrowing will have little effect on the county's fiscal picture. Nassau is bracing for a $749 budget deficit over the next 18 months.
"This isn’t going to solve their problem. This is not going to help balance the 2020 budget, and in no way is going to provide budget relief," Barsky said. "It’s purely just to have money available to meet cash needs until the revenue that they will receive — which is going to be lower than expected — comes in."
NIFA counsel Jeremy Wise said that "regrettably," the action was "needed in order to meet the county’s current obligations.”
Nassau County Executive Laura Curran, a Democrat, also wants NIFA to refinance its own debt, along with county debt, over a 30-year term. The move would produce $285 million in savings in 2020 and 2021, Curran administration officials estimate.
NIFA, a state financial monitoring board, can borrow on behalf of Nassau and also can refinance debt incurred by the county.
Majority Republicans in the Nassau County Legislature so far have balked at the refinancing proposal, saying it would result in extension of the control board's life by 30 years.
The revenue anticipation notes approved Thursday by NIFA would be sold late this month or in early August, and mature in December 2020 and March 2021.