Governor Andrew Cuomo has approved a $96 million deficit bonding bailout for Rockland County — with no strings attached, other than once-a-year review of the county executive’s budget proposal by the state comptroller. The bill sets a terrible precedent, signaling distressed municipalities across New York that they, too, might be able to buy time with borrowed money.  And, like Rockland — but unlike New York City, Buffalo, Yonkers, Troy, Erie and Nassau counties–they might do it without having to deal with a temporary state control board takeover of their finances.

The governor’s office did not issue an approval message providing any reasoning for his approval of a measure that, to all appearances, was held up in the Senate a year ago because Cuomo had signaled he wouldn’t sign it.

This is a big deal, and a bad one.  As explained in my recent testimony before the Senate Committee on Local Governments:

In the case of Rockland County, which already has the second highest per-capita debt of any county, the authorized deficit financing of $80 million would equate to roughly 80% [note: it’s actually closer to 90%] of that county’s property tax levy – the equivalent of allowing New York City, for example, to issue $16 billion in 10-year notes to close a budget gap.  [A similar bill authorizing] deficit borrowing for Long Beach is the equivalent of $12 billion in deficit borrowing by the State of New York.  The only string attached to the Rockland County deficit bonding is a requirement that the state comptroller review the county executive’s budget proposal and pass along recommendations to the [county] Legislature.  The Long Beach deficit borrowing is completely unconditional.

Both these bills represent a dilution of the already watered down approach taken in the Newburgh Fiscal Recovery Act, Chapter 223 of the Laws of 2010, which gave that troubled city the ability to issue up to $15 million in deficit bonds without the involvement of a control board.

But Newburgh, at least, was subject to more conditions – not just a comptroller’s review, but a quarterly financial plan reports and update, a long-term financial plan, among other things.

The original Newburgh bill was over seven pages long.  The Rockland County bill is less than two pages long.  And the Long Beach fits on a single page.  This is not progress.   In fact, if signed by the governor, the Rockland and Long Beach legislation will create an enormous moral hazard for officials of these local governments, and send the wrong kind of signal in general to their counterparts in other fiscally troubled locales. Rockland County and Long Beach will get to buy time — with borrowed money — without any assurance that they have taken firm steps to identify and address their problems.