21 Aug 2014
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Nassau Files Suit Against NIFA to Stop Takeover

Deputy county executive resigns in protest.

Nassau Files Suit Against NIFA to Stop Takeover Nassau Files Suit Against NIFA to Stop Takeover Nassau Files Suit Against NIFA to Stop Takeover Nassau Files Suit Against NIFA to Stop Takeover

Nassau County Executive Ed Mangano made good on his word Monday afternoon, filing a suit in Nassau County Supreme Court against the Nassau Interim Finance Authority (NIFA).

“Although the county comptroller and County Legislature concluded that the 2011 budget was balanced, NIFA took the unprecedented step to impose a control period not even one month into the budget year,” Mangano said in a statement. “Simply put, NIFA’s action is unfounded, unfair and wrong.”

The filing of the suit prompted Patrick Foye, deputy county executive for economic development, to resign in protest.

“The county executive disagrees with (Foye’s) opinion on NIFA’s unwarranted actions,” Mangano spokesman Brian Nevin said, adding Mangano was “appreciative for (his) service and dedication.”

The lawsuit seeks an immediate stay of the control period the six-member state fiscal watchdog unanimously imposed over the county on Jan. 26 after determining that Nassau’s budget will reportedly run a deficit of approximately $176 million in the 2011 fiscal year. The control period will remain in effect until a ruling is issued from the justice assigned to the case.

The oversight board has asked for Mangano to present a revised balanced budget by Feb. 15 that includes details on various contracts. The group has not declared a more severe “fiscal crisis” label, which would have enabled it to freeze annual increases to union employee contracts, which is only expected to save $10 million.

“I don’t know how you don’t do one without the other,” Nassau County attorney John Ciampoli said late Monday evening in a telephone interview, referring to NIFA’s choice not to freeze wages. NIFA Chairman Robert Stack has indicated that taking such a step was not yet required.

“They don’t want to freeze wages because that might help the county maybe even run a surplus in 2011, and quite frankly these guys don’t really want to help the county," Ciampoli said. "They just want to run it."

The statute governing NIFA refers to a deficit after all accounting for a fiscal year is at lease close to completion.

“They’re 340 days short,” Ciampoli said, summing up the argument that a ruling on the 2011 budget should come in 2012, not one month into the current year.

“Since taking office, NIFA has continually expressed the need for our county to increase revenue,” Mangano’s statement read, labeling the phrase as code for increased property taxes, which the current administration and legislative leadership has vowed will not take place.

“There are moneys that have been received by the county that NIFA this year has refused to count those revenues,” Ciampoli said.

He explained that under generally accepted accounting principals, the selling of leases on county-owned property in Mitchel Field would not count as revenue, but “other funding sources.”

“Do you know what the revenue between revenue and other funding sources is?” Ciampoli said. “The effective difference is none. It’s like having $10 in your left pocket or $10 in your right pocket. It’s still $10 and you still have it.”

The county is expected to be joined in the suit by the various county unions, because the statute establishing NIFA has never been tested in court. A number of contracts with outside law firms were recently approved by the legislature over objections from the Democratic caucus, including one with Mangano’s former law firm Rivkin Radler.

As part of the takeover, NIFA has authority to approve all contracts except for those already in place. Should the contract have come before the legislature after NIFA assumed control, it could have possibly denied its approval as well as the county outside counsel in its proposed lawsuit.

NIFA has also been loading up on attorneys, including New York’s former Chief Judge Judith Kaye, now a member of the law firm Skadden, Arps.

“I am confident the court will provide me the opportunity to manage the financial affairs of Nassau County and protect our taxpayers,” Mangano said.

“NIFA has whatever numbers from (accounting firm) Grant Thornton they’re relying on, they’re wrong,” Ciampoli said. “In order to reach the conclusion that there was a budget deficit, NIFA has changed the rules that they applied in past years.”

Deficits also existed under the previous administration of former County Executive Tom Suozzi, some even higher than the amount reported by NIFA.

Questioned if NIFA would still be asking for a revenue increase even if all discretionary spending by the county were slashed to zero and a surplus was generated, Ciampoli said, “If you want my opinion, yes.”

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