NIFA confirms: it can live forever.
Nassau Republicans and Democrats have been hoping for years to rid themselves of the 20-year-old state oversight board that took control of Nassau's finances in 2011 after monitoring the county's books for the prior 11 years.
NIFA was created in 2000 by the state legislature at a time when the county was facing a severe budget deficit while owing millions of dollars in property tax refunds. After 20 years of NIFA oversight, the county finds itself facing a severe budget deficit while owing millions of dollars in property tax refunds.
And that's after NIFA helped itself to tens of millions of county sales tax dollars to finance itself.
Former County Executive Thomas Suozzi tried to get rid of NIFA. Current County Executive Laura Curran campaigned on ending NIFA.
That's the major reason why county lawmakers have balked at the idea of having NIFA refinance Nassaus' debt along with debt NIFA issued on the county's behalf. Refinancing debt for another 30 years would extend NIFA's life for another generation.
County officials always thought NIFA expired when its existing bonds were paid off in 2025.
They were wrong, according to NIFA.
NIFA just confirmed its everlasting life in a report earlier this month.
"Should the County emerge from the Control Period and all NIFA’s bonds be paid
off, NIFA would continue in its role of providing fiscal oversight for as long as it
determines to be necessary, it has any other outstanding liabilities, or until it is dissolved, " NIFA said.
"During that period, should the County’s financial condition deteriorate sufficiently, or if
the County is in violation of certain other provisions in the NIFA Act, a new Control Period
will be imposed and NIFA’s suspended powers will be reinstated."
That means NIFA could stay around as long as it deems necessary, living off Nassau tax dollars, just like a vampire squid.
(Again, credit Rolling Stone writer Matt Taibbi for coming up with the term during the 2008 financial crisis for the rapacious investment bank Goldman Sachs.)
And apparently NIFA wants to stay around for another 30 years.
In the same report, NIFA is pushing for it to restructure all of the county's debt and debt issued on behalf of the county by NIFA.
The report proposes that NIFA "restructure outstanding NIFA and County debt to achieve upfront budget relief in the amount of $210 million in FY 2021 on top of the $75 million in budget relief sought in FY 2020."
No matter that county's financial consultant, PFM, and the legislature's independent budget review office say that while the restructuring would give Nassau an upfront infusion of cash, it would cost the county millions more dollars in the long run.
NIFA's report goes on to say, "Although NIFA always has the authority to refund its own debt, the county portion of this proposed transaction requires a Legislatively approved Declaration of Need (as defined in the NIFA Act) before NIFA can consider whether to proceed with the financing."
The report concludes that NIFA expects to meet with county leaders to discuss the "fiscal consequences" if federal aid or "credible alternative actions cannot be developed."
The meeting will likely take place in the very near future.
A side note:
One of the main reasons the state legislature created NIFA 20 years ago was to help Nassau solve its perennial problem of owing millions of dollars in commercial tax refunds (called tax certiorari) because of the so-called county guaranty, a state law that requires Nassau to make good on tax overpayments to all municipalities and school districts because of erroneous assessments. The districts that got the money don't have to pay it back; only the county pays..
There appears to be some disagreement on the total amount of tax refund liability but neither estimate is insignificant.
The Nassau comptroller reported his comprehensive annual financial report a "significant total tax certiorari liability" of "$588.5 million at fiscal year-end 2019."
The NIFA report says, "The long-term liability for tax certiorari payments is reported by the Comptroller to be $474.3 million, including almost $242.9 million for LIPA-related claims at December 31, 2019."
NIFA was created in 2000 by the state legislature at a time when the county was facing a severe budget deficit while owing millions of dollars in property tax refunds. After 20 years of NIFA oversight, the county finds itself facing a severe budget deficit while owing millions of dollars in property tax refunds.
And that's after NIFA helped itself to tens of millions of county sales tax dollars to finance itself.
Former County Executive Thomas Suozzi tried to get rid of NIFA. Current County Executive Laura Curran campaigned on ending NIFA.
That's the major reason why county lawmakers have balked at the idea of having NIFA refinance Nassaus' debt along with debt NIFA issued on the county's behalf. Refinancing debt for another 30 years would extend NIFA's life for another generation.
County officials always thought NIFA expired when its existing bonds were paid off in 2025.
They were wrong, according to NIFA.
NIFA just confirmed its everlasting life in a report earlier this month.
"Should the County emerge from the Control Period and all NIFA’s bonds be paid
off, NIFA would continue in its role of providing fiscal oversight for as long as it
determines to be necessary, it has any other outstanding liabilities, or until it is dissolved, " NIFA said.
"During that period, should the County’s financial condition deteriorate sufficiently, or if
the County is in violation of certain other provisions in the NIFA Act, a new Control Period
will be imposed and NIFA’s suspended powers will be reinstated."
That means NIFA could stay around as long as it deems necessary, living off Nassau tax dollars, just like a vampire squid.
(Again, credit Rolling Stone writer Matt Taibbi for coming up with the term during the 2008 financial crisis for the rapacious investment bank Goldman Sachs.)
And apparently NIFA wants to stay around for another 30 years.
In the same report, NIFA is pushing for it to restructure all of the county's debt and debt issued on behalf of the county by NIFA.
The report proposes that NIFA "restructure outstanding NIFA and County debt to achieve upfront budget relief in the amount of $210 million in FY 2021 on top of the $75 million in budget relief sought in FY 2020."
No matter that county's financial consultant, PFM, and the legislature's independent budget review office say that while the restructuring would give Nassau an upfront infusion of cash, it would cost the county millions more dollars in the long run.
NIFA's report goes on to say, "Although NIFA always has the authority to refund its own debt, the county portion of this proposed transaction requires a Legislatively approved Declaration of Need (as defined in the NIFA Act) before NIFA can consider whether to proceed with the financing."
The report concludes that NIFA expects to meet with county leaders to discuss the "fiscal consequences" if federal aid or "credible alternative actions cannot be developed."
The meeting will likely take place in the very near future.
A side note:
One of the main reasons the state legislature created NIFA 20 years ago was to help Nassau solve its perennial problem of owing millions of dollars in commercial tax refunds (called tax certiorari) because of the so-called county guaranty, a state law that requires Nassau to make good on tax overpayments to all municipalities and school districts because of erroneous assessments. The districts that got the money don't have to pay it back; only the county pays..
There appears to be some disagreement on the total amount of tax refund liability but neither estimate is insignificant.
The Nassau comptroller reported his comprehensive annual financial report a "significant total tax certiorari liability" of "$588.5 million at fiscal year-end 2019."
The NIFA report says, "The long-term liability for tax certiorari payments is reported by the Comptroller to be $474.3 million, including almost $242.9 million for LIPA-related claims at December 31, 2019."
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