Desperation shows in Albany's failed Nassau-Suffolk fix
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A failed effort in Albany to tie $70 million in new revenues for Suffolk to a plan that would allow Nassau to circumvent a state control board and borrow $192 million shows the increasing desperation of both counties.
Suffolk County needs the money to avoid adding to a budget gap estimated to reach $250 million by the end of 2014.
In Nassau County -- which has a significant cumulative budget gap, too -- an ongoing political dispute has stopped efforts to borrow so the county can begin paying back hundreds of millions of dollars in refunds for successful assessment challenges.
Monday, one Wall Street agency lowered Suffolk's bond rating, while another changed the county's fiscal outlook to negative.
Meanwhile, in Nassau, county officials are waiting resolution of a federal lawsuit on freezing county salary rates and a state suit on having towns, villages and school districts pick up a portion of assessment refund costs.
So far, Nassau's come out on the short end on both. If the trial court decisions stand on appeal, Nassau could be liable for hundreds of millions of dollars in wage-freeze refunds alone.
It is hard not to consider the counties' fevered attempts to find fast, temporary and desperately needed revenue without looking back at the tenure of former County Executive Thomas Gulotta.
Gulotta was Nassau's county executive when the lack of fiscal planning hit the fan. That's not to say Gulotta wasn't smart; he is. Or that Gulotta, early in his first term in office, didn't know the kind of measures it would take to help right Nassau's finances; he did.
Early on, Gulotta considered, but never proposed, an increase in the county portion of the property tax. But the notion died on the vine because higher-ups in Gulotta's party, the Nassau GOP, objected.
Thus Gulotta entered a period in which his administration began seeking out new, and creative, forms of revenue.
For a while, Gulotta's administration prided itself on success. The county took in revenue by selling some county property. It securitized millions of dollars of tobacco settlement money, a mechanism that offered some cash upfront in exchange for giving up more cash later.
There were attempts to sell the county hospital and nursing home. Eventually, both were transferred to a public-benefit corporation, although in the deal the county ended up getting millions of dollars to help its finances.
The insanely high expense and damaging fiscal consequences of successful property assessment appeals were issues even back then.
As time passed, revenue sources became scarcer, as payroll, benefits and pension expenses kept growing. At one point, Nassau -- one of the nation's richest counties -- veered close to insolvency.
For Nassau, it was an attempt to get past the Nassau Interim Finance Authority and Democratic county lawmakers. For Suffolk, it was the latest in a series of attempted one-shot solutions, such as selling the John J. Foley Skilled Nursing Facility, gone awry.
Albany leaders say both measures may come up again. And maybe because of superstorm Sandy expenses, both counties should do some short-term borrowing -- although for Nassau it ought to be NIFA-approved.
But there's a lesson from the Gulotta years that leadership in both counties ought to take into account: Short-term fixes alone can amount to no fixes at all.