Nassau Judge Upholds NIFA Takeover

Nassau Supreme Court Judge Arthur Diamond denied Nassau County an injunction Monday morning that would have completely blocked a takeover of its finances.

In its lawsuit, Nassau County had argued that the law enabling the Nassau Interim Finance Authority (NIFA) to impose a control period impairs powers given to it by the villages and local governments must be reenacted in the next state legislative session, which it was not.

Diamond disagreed, writing that the law establishing NIFA was enacted due to the county’s request, and not subject to that section of the New York State Constitution. He also ruled against the county’s argument in that the time in which the six-member fiscal watchdog had to act had expired.

“In this court’s view, a balancing of the equities tips decidedly in favor of NIFA,” Diamond’s 30-page decision read. “Under the circumstances, injunctive relief would cast a shadow over the power of state agencies in general.”

Nassau County Executive Ed Mangano called the decision “disturbing news for taxpayers” in a statement issued this afternoon, adding that he is “particularly concerned” with the ruling’s impact which may “derail” reforms he had put into place.

“The $100 million generated by the county’s wasteful assessment system will now fall entirely on our residents’ shoulders annually,” Mangano said. “NIFA has not provided and fiscal alternative to end this practice.”

NIFA insists that the county is facing a projected $176 million deficit, despite claims from Nassau officials that the 2011 budget is balanced. Mangano’s statement references the county budget office, which he says estimates that using NIFA’s accounting rules “will still result” in a $166 million deficit.

“The democratic caucus insists that Mr. Mangano roll up his sleeves and work cooperatively with the entire legislature, including the Democratic caucus and the NIFA trustees to resolve our financial crisis,” Legislative Minority Leader Diane Yatauro, D-Glen Cove, said in a statement.

In a statement issued Monday, NIFA board members said they were “pleased that the Court denied the County’s request” and anticipating a revised budget from the county “within five business days.” The board had originally requested the revised budget by Feb. 15 but agreed to extend the deadline until after the court ruling and which a stop order issued by Diamond had delayed.

However, even though it might be constitutional for NIFA to takeover Nassau’s finances, it might not be able to do so at this time.

In his decision, Diamond wrote that Nassau put forth “a valid claim” NIFA’s action was “arbitrary and capricious” in that there was “a substantial likelihood and imminence” of a deficit of one percent or more occurring in the 2011 fiscal year.

He is asking Nassau to submit arguments specifically on the question by March 29 and for NIFA to do the same by April 18. In their statement, NIFA board members said they were “confident that we will prevail on the remaining issues.”

It is not known how the decision would effect the scheduled contractual increases for county workers, which would take effect on April 1. NIFA could potentially stop those increases – something Mangano has called upon the state board to do – but which representatives only began fully talking about in ernest in court on Feb. 18.

In his statement, Mangano has asked for NIFA and county labor leaders to convene a summit next week to talk about voluntary contractual concessions.

No details were forthcoming as to if the county intends to appeal the decision.