Nassau County, New York, is tasked with formulating a contingency plan for confronting future deficits as a requirement for its new $3.3 billion budget approved by the Nassau Interim Finance Authority.
The state fiscal control board required Nassau to develop by March 31 a plan to address sales tax revenue losses in 2021 and future budget shortfalls. NIFA has controlled finances of the large suburban New York City county since 2011.
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NIFA Chairman Adam Barsky said that while a
“It is meant to be a bridge back to a road for toward fiscal balance,” Barsky said. “This is an opportunity for them to do the hard work needed to become a smaller and smarter government.”
The press office for Nassau County Executive Laura Curran did not immediately respond for comment on the contingency plan NIFA has requested. Curran has projected a 20% decline in sales tax collections in 2021 due to the COVID-19 pandemic. Sales tax revenue comprises around 40% of the county’s total budget.
Nassau’s 2021 budget relies largely on triple-A-rated NIFA refinancing $473 million of existing county debt over 15 years and also restructuring its own bonds. Curran previously sought a 30-year restructuring proposal that was
NIFA hired Goldman Sachs this past June to lead a potential restructuring effort. Barsky said he hopes to hit the bond market with a refinancing no later than early February.
“This is a restructuring of existing NIFA and county debt in a way that doesn’t increase overall borrowing, but provides the relief needed in the budget to address the impact of the pandemic,” Barsky said. “It is structured in a way that can provide a significant net present value savings.”
NIFA, which was formed in 2000, has $411 million of outstanding county debt scheduled to be paid off in 2025.
Nassau’s general obligation bonds are rated A-plus by S&P, A2 by Moody’s Investors Service and A by Fitch Ratings. The county's credit outlook is negative by Fitch and stable from S&P and Moody's.
The approved NIFA budget includes $69.5 million of savings from eliminating 329 vacant positions and other cost-cutting measures. It also established a “special revenue fund” for sales tax receipts that are in excess of 2021 estimates, which would be dedicated toward paying back tax refunds owed to businesses and avoid excess borrowing.