The New York State Assembly is close to passing Suffolk County's bid to close its 1992 accumulated budget gap through deficit notes and a tax increase, a legislative source said yesterday afternoon.
The source said the Assembly is "99% certain" to pass the measure after days of wranging. The deal will mirror the legislation that the county has sought for months, though changes are possible.
In recent days, a coalition of state Assemblymen mounted opposition to the plan, even though the state Senate approved the bill last week.
But the Assembly's backsliding surprised Suffolk County officials because in July 19 both houses of the Legislature agreed to approved a number of measures, including Suffolk's deficit bonding.
The Assembly opposition emerged Tuesday, after Suffolk County Executive Robert Gaffney revised his original plan to issue $36 million in deficit bonds with maturities of up to six years, to a proposal that calls for the issuance of $36 million in deficit notes with a maturity of one year.
The change, initially forced by the Suffolk County legislature, spurred a re-examination by Assembly lawmakers of the deficit bailout plan. That plan is designed to plug a 1992 budget gap of $47 million.
Then on Tuesday, lawmakers, particularly those representing Suffolk County in the state Assembly, voiced their concern about the other half of the bailout proposal - an increase in the county's sales tax to 8.5 cents from 8 cents.
Legislative sources say seven Republican and three Democratic Assemblymen late yesterday were refusing to support any plan that included a tax increase. But it appeared by late afternoon, that the deal was close to being completed, a source said.
Under Mr. Gaffney's plan, the sales tax increase will be used to pay off the county's deficit borrowing. The tax would sunset in 18 months after the debt sale.
However, all 10 lawmakers are running for re-election in November, and view any tax increase as a political liability. Without the borrowing, the county will run out of cash sometimes in the fall.
The state legislative impasse has already had an affect on Suffolk's ability to issue debt. The county yesterday priced a $6.9 million 1-year bond anticipation note deal, underwritten by First American Municipals, at a whopping 3.60% yield. The Bond Buyer's 1-year note index yesterday recorded a yield of 2.99%.
Underwriters attributed the county's poor market showing to problems in Albany, and the potential affect a failure to obtain the legislation will have on Suffolk's credit rating.
If the state legislation fails, county officials have said they would raise property taxes and reduce services that are already pared thin due to the effects of a stiff regional recession.