NIFA issues new warning despite being wrong for five straight years

                                                                                  

It would be hard to take the Nassau Interim Finance Authority seriously if it didn't control the county's finances.

For five straight years, NIFA -- composed of seven volunteer state-appointed directors of which six are  registered Democrats or Democratic donors -- has been wrong in it's financial projections when reviewing the proposed county executive budget.

It has direly predicted budget deficits for 2019, 2020, 2021, 2022 and 2023, thus justifying its continued control of the county's finances. State law allows NIFA to take control when there is a projected operating deficit of one percent or more.

But, instead of deficits, the county ended the four years from 2019 through 2022 with budget surpluses and even NIFA projects another surplus for this year, 2023, of around $73 million.

This blog has only reviewed the past five years of NIFA budget projections. Perhaps it has been right  some year since it was created by the state in 2000, but nothing stands out in recent memory.

NIFA issued its review of Republican County Executive Bruce Blakeman's proposed 2024 budget this week. Because of NIFA's rules, the county not only proposes the next year budget but also provides a "multi-year plan" that projects spending over five years.

Though NIFA  acknowledges that the county's financial fortunes have improved --certainly since the county's near bankruptcy in 1999 --  it adds, "the projected Out-Year risks in the Proposed Plan are significant and would exceed the one percent threshold that requires NIFA to impose a Control Period if they are not resolved and become deficits."

So here's NIFA's projections: 

 See those muti-million dollar deficits: the numbers in parentheses, for 2024, 2025, 2026 and 2027?

What NIFA doesn't include is its projections of budget surpluses, or deficits, in its review of past county executive budgets. NIFA doesn't mention it projected deficits in all the years that ended in surpluses.

In October 2019, NIFA projected the county would end the year with a $47.5 million deficit, which of course meant the control period would continue.

But the county instead ended 2019 with a $78.6 million surplus, as you can see in the above chart.

In that 2019 report, NIFA projected a $76.3 million deficit in 2021, a $143.9 million deficit in 2022, and a $194.3 million deficit in 2023.

By the October 2020 report, the proposed deficits in 2021, 2022, and 2023 were over $300 million annually: $346.2 million; $306.3 million; $319.7 million.

In 2021, NIFA projected somewhat lower deficits of $148.2 million in 2022 and $219.1 million in 2023.

Last year, NIFA projected a deficit of $12.9 to $39.3 million this year.

Again, you can see by the above chart, NIFA wasn't even close in any of its projections.

Lets' be clear. Though nobody says it out loud, the out-year proposals have always been fictional.  County executives throw in outlandish proposals to balance the budgets. Usually, the county finds a way to manage the risks without taxing fast-food sales, which was a former proposal.

But NIFA is relying on it's own outsized, incorrect out-year projections to continue its control.

As Legis. John Ferretti (R-Levittown) complained at an August budget hearing, "They can be wrong every year and still maintain a control period."

There had been hopes that the new NIFA chairman, Richard Kessel, who replaced Adam Barsky, would be more forgiving. Kessel is an old hand on NIFA, having served when it was first created, when Nassau was in real financial trouble, and even chaired the board on an interim basis for a while.

Kessel, a Democrat, has a history of working with both sides of the political aisle.

So far though, no change.