While the head of Nassau’s financial control board calls the county’s decision not to borrow to pay property tax refunds this year a “major milestone,” it has happened before.
In 2006 and 2007, under pressure from the Nassau Interim Finance Authority, the county also did not borrow to pay the tax refunds, which had cost about $100 million annually for more than a decade.
Instead, the refunds were paid from operating expenses. In 2008, the county began some borrowing again, which they said was to pay down the backlog of refund liability. Then, faced with plummeting sales tax revenue and a cratering economy, Nassau increased borrowing again in 2009. By 2010, when County Executive Edward Mangano took office, the county was back to full borrowing.
So what’s to stop the county from backsliding again on tax refunds?
NIFA chairman Adam Barsky replied Thursday, “It won’t happen so long as they are under a control period. NIFA will no longer approve [borrowing] to pay tax [refund] claims.”
NIFA served as an oversight board from 2000 until 2011, when it took control of the county’s finances because Nassau’s deficit was more than 1 percent of its budget.
Mangano has said that multimillion-dollar tax refunds will not be a problem in the future because of a new law that requires commercial property owners to pay into an escrow fund, which will be used to finance refunds for erroneous property assessments. However, commercial tax attorneys are expected to challenge that law in court, which likely will tie up the plan for years.
Meanwhile, outside auditors have estimated the county’s backlog of tax refund claims at more than $300 million. Nobody except freshman State Sen. John Brooks (D-Seaford) is talking about that. Brooks has proposed a change in the county’s assessment policies that would clear the backlog, but his plan has yet to be submitted to the State Legislature.