Nassau Interim Finance Authority


The Nassau Interim Finance Authority is a New York State public-benefit corporation which was created to assist Nassau County, a suburban county adjacent to the city of New York on Long Island, emerge from a financial and debt crisis that began in the late 1990s. As of the start of 2020, NIFA, as it is known, was still in place and still supervising Nassau's finances under a control period that resumed in 2011 after a three-year hiatus.

Organization

NIFA is guided by a seven-member board appointed by the Governor of New York, with one member recommended by the Senate Majority Leader, one by the Assembly Speaker, and one by the State Comptroller. Its management team is headed by Evan Cohen, who serves as Executive Director. In 2017, it had operating expenses of $1.84 million, an outstanding debt of $653.98 million, and a staffing level of 5 people.

History

Though the U.S. federal government was in surplus at the end of the Clinton administration, the Republican Party-led Nassau County government faced possible insolvency by 2000. The signs of the crisis began in 1999 and led that year to the Democratic Party taking control of the county legislature, in a previously solid Republican county. Among the many reasons cited for the situation the county found itself in were excessive union contracts to attract county government worker support for the Republican Party; a refusal by the Republican county executive Thomas Gulotta to raise taxes; and an increase in borrowing to close the gap, particularly for the purpose of paying an increasing number of property assessment appeals coming out of an assessment system that relied on outdated data.

NIFA and Gulotta

Gulotta, a Republican, had proposed a tax increase in the early 1990s, and was almost defeated by North Hempstead Supervisor Benjamin Zwirn in 1993. Gulotta resisted further tax increases for the rest of his time in office, and was re-elected in 1997. Two years later, the county's finances began to implode. The first chairman of NIFA, Frank Zarb, said in a retrospective that bankruptcy was a "real possibility." In June 2000, Republican Governor George Pataki signed the legislation creating NIFA. As part of the introduction of NIFA, the state made payments to Nassau County of $105 million over five years.

NIFA and Suozzi

Gulotta did not stand for re-election in 2001. When Nassau County's Conservative Party endorsed money market specialist Bruce Bent as its candidate, the Republicans endorsed Bent as well. Bent was defeated by then Glen Cove Mayor Thomas Suozzi. The county's financial situation had led the outgoing Gulotta administration to implement a 9.1% property tax increase in the 2002 budget, and Suozzi's first budget had a property tax increase of almost 20%. His final budget before he was defeated for re-election in 2009, by County Legislator Ed Mangano, had a 3.9% increase. There were no other county property tax increases in Suozzi's two terms though the total increased taxes levied by Suozzi during his tenure became a campaign issue during his successful run for Congress in 2016. Suozzi dealt with a NIFA control board for much of his eight years in office, though the control period ended in 2008. But NIFA remained in existence even after the end of the control period and continued to monitor county finances.

NIFA and Mangano

After Mangano was sworn in as county executive in 2010 following his victory over Suozzi, he and the county legislature eliminated a home energy tax. That act reduced tax to the revenues county budget, and about a year after Mangano was sworn in, NIFA re-instituted a control period. A lawsuit by Nassau County contesting the legitimacy of the control board was unsuccessful, and NIFA articulated the limits of its duties and the budgetary reasons for a control board, in a statement. Prior to that court decision, the Republican leader in the county legislature, Peter Schmitt, appeared to liken the bipartisan members of NIFA to a Mafia family.
The Mangano-NIFA relationship, with a control board in place, was marked by almost annual disputes over the budgets that Mangano submitted and the county legislature approved. A 2013 agreement between the police officers’ union and the county was criticized by NIFA. A multi-year plan submitted by the Mangano administration in 2015 was rejected by NIFA. NIFA implemented a wage freeze in 2011, though it was lifted over several years. NIFA rejected the county's 2016 budget, and implemented a quarterly review. In December 2017, NIFA ordered specific spending cuts after finding additional flaws in Mangano's budget.
Jon Kaiman, who at the time was supervisor of the town of North Hempstead, was appointed by Governor Andrew Cuomo to be chairman of NIFA in 2013. Kaiman resigned in 2016 to run an unsuccessful effort to become the Democratic nominee for an open House seat. He was succeeded by banker Adam Barsky.

NIFA and the Curran administration

As 2018 began, Mangano was out of office, having chosen not to seek-re-election to a third term in 2017 following his indictment on 2016 on federal corruption charges. The two contenders for his position, Republican Jack Martins, a former State Senator and unsuccessful U.S. House of Representatives candidate a year earlier against Suozzi, and Democrat Laura Curran, a former newspaper reporter for the New York Daily News and a county legislator, both said during the campaign that steps must be taken to bring Nassau out from NIFA oversight. Curran won the election, and NIFA issued a deadline to offer any significant changes to the Mangano 2018 budget, the one with the NIFA-ordered cuts. Her selection of Mark Page as her chief budget officer was praised by NIFA chairman Adam Barsky, and Page had worked as a consultant to NIFA so was expected to understand its workings.
In April 2018, Curran presented her first budget to NIFA and made a rare public appearance before the members. At that meeting, the "conundrum" that Curran faced, with a Republican legislative majority rejecting her plan to hike fees to help close the budget gap, was discussed.
In one of the first significant actions under the Curran administration, NIFA in July 2018 overwhelmingly rejected a Curran administration request to borrow funds to pay for an earlier court judgement that went against the county for the wrongful conviction of two men. At the meeting where the vote was held, a report was discussed that talked about the country's "growing risks" in its budget.
In October 2018, NIFA warned that Nassau County's deficit for 2019 could be $59 million, though that was the lowest estimate since 2014. In a pointed critique, NIFA also noted the continuing situation where almost 20 years after NIFA was created, Nassau had still not taken the steps to end its oversight. "“Other municipalities with fewer resources, such as Buffalo, Washington, D.C., and Detroit, have moved beyond the tight control of their oversight monitors and it seems incongruous that Nassau County, one of the wealthiest counties in the Country, is unable to do the same,” NIFA wrote in its report on the deficit estimate.
In November 2018, NIFA approved the first budget of the Curran administration. The approval was unanimous. The budget did include $100 million in borrowing solely to pay back tax grievances. However, NIFA chairman Adam Barsky said "We always have concerns, but I think the concern over this budget is less severe, less concerning than prior budgets."
The sometimes-uncomfortable position that NIFA could find itself in relative to the county was evident in December 2018 when NIFA hired an outside attorney to sit in on county negotiations with its labor unions. NIFA hired the same individual that the county legislature had rejected just a few months earlier, raising questions about whether its "seat at the table" was proper or an unauthorized expansion of its role in day-to-day operations. Critics called the move an "end-run" around the legislature's rejection, which had been proposed by Curran.
NIFA's chairman Barsky got additional powers in March 2019 when he was granted "pre-approval" authority to sign off on labor agreements the county reaches, though the full NIFA board must ultimately accept the contract.
In early April, local newspaper Newsday wrote a story questioning whether NIFA was treating Curran with a softer approach than Mangano. Republicans charged NIFA had been tougher on Mangano, and cited Curran's tardiness in filing various reports with NIFA—which Mangano filed on time—and the muted response from NIFA. Barsky denied the allegations. Soon after that, NIFA rejected half of the county's borrowing requests that needed to go through NIFA because adequate notice had not been given to the full NIFA board.
In February 2020, NIFA took control of the finances of the Nassau University Medical Center, saying its perilous finances posed a "material threat" to Nassau County, given the county's backing of the financially troubled hospital.
In June 2020, NIFA approved the use of Goldman Sachs as the financial advisor on any new borrowing the county might need to undertake as a result of the pandemic.
The prospect of NIFA staying with oversight over Nassau until 2051 was raised by Newsday in July 2020, given the huge deficit created by the pandemic and NIFA's ability to borrow money on a longer-term basis and at a lower interest rate.
Also in July 2020, NIFA approved the sale of $230 million in short-term funding as Nassau County looked to fill a revenue hole created by the pandemic.