Adviser warns Suffolk on use of $50M 'rainy day' fund

Suffolk's top financial adviser said Tuesday there's a "good likelihood" that presiding officer William Lindsay's plan to use $50 million in "rainy day" funds could trigger a bond downgrade, costing $1 million in higher interest.

But adviser Richard Tortora conceded the downgrading concerns of the Wall Street bond raters were first raised over County Executive Steve Levy's proposal to use $30 million from the same fund.

Tortora's disclosures came during intense questioning at the county legislature's budget committee meeting where Lindsay's proposal got its first airing. No action was taken pending a public hearing next Tuesday, but a committee majority expressed their support.

Lindsay's proposal calls for moving $50 million - $20 million more than Levy's budget - from the county's nearly $89-million "rainy day" funding to a pension reserve fund. Although the pension fund is supposed to help pay the $69.7 million pension spike, Levy says lawmakers intend to use the money as a "one shot" to help keep the county nursing home open avoiding 250 layoffs.

Tortora testified a one-step downgrade would be about $750,000 for short-term borrowing and $250,000 for long-term bonds next year. A two-step downgrade would cost $2 million to $2.5 million, though he said that would not occur quickly or without warnings. Lindsay later said his estimates are high.

Some supporters of Lindsay plan appear to suggest that extra $20 million might go to pay off pension costs upfront without borrowing from the state which would add an extra cost of $5-million.

Despite prodding from Levy aides, Lindsay declined to detail how the money will be used until the budget committee decides how to amend Levy's budget. "Moving $20 million to the reserve fund gives us options," Lindsay said. "If we don't, the only one who can access the money is him [Levy]."