Suffolk approves $90M in emergency borrowing

For the first time in 20 years, Suffolk County will borrow against expected state and federal aid to avoid running out of cash.

Lawmakers last night unanimously approved an emergency resolution that authorizes up to $90 million in revenue-anticipation notes. Officials said they expect to borrow about $70 million of that amount, allowing them to make payroll through April.

"It doesn't in any way address the issues we've been hearing about," said Legis. Lou D'Amaro (D-North Babylon), referring to projections of a $530 million county deficit by 2013. "But it bides us time until we can find a fix."

The nearly unprecedented action comes a day after Moody's Investor Service dropped its rating on Suffolk's long-term debt by two notches. Also Tuesday, Standard & Poor's joined Fitch Ratings in putting the county on notice for another potential downgrade.

The placement "reflects Standard & Poor's view of new information provided by the county that indicates a deteriorating liquidity position and a worse-than-expected financial position going into 2012," the agency said in a statement.

County Executive Steve Bellone last week declared a fiscal emergency in the wake of his independent task force saying that Suffolk ended 2011 with a $33 million deficit, and may have budget holes of $148 million this year and $349 in 2013.

Budget analysts with Bellone's office and the legislature will soon meet to share potential solutions to the deficit projections. Bellone has said all options, including layoffs beyond the 462 slated for July 1, are on the table.

"We're being watched," said Robert Lipp of the legislature's Budget Review Office, noting that rating agencies will consider the county's mitigation plan before assigning further downgrades.

Revenue-anticipation notes, which Suffolk last used in 1992, are viewed as riskier than borrowing from future tax proceeds since state and federal social service aid levels are subject to sudden reductions, while the county can seize property to recoup taxes.

And because of the recent rating downgrades, budget analysts say interest payments for the borrowing approved last night could reach $1.75 million next year.

Also Tuesday:

Lawmakers approved an emergency resolution applying to the state to create a land bank corporation. If Suffolk becomes one of the first five New York counties to gain land bank status, it can transfer blighted properties in which it holds tax liens to the corporation, allowing the liens to be sold below value.

Officials explained that this would give the sites -- including contaminated brownfields -- a better chance of being redeveloped and returning to the tax rolls. They estimate that Suffolk has 124 vacant properties, dating back as far as 1988, in which it is owed more than $20 million in back taxes.

"It's really an out-of-the box way to deal with one of the most vexing problems we have here in Suffolk County," said Legis. Tom Cilmi (R-Bay Shore), one of the land bank's biggest proponents.