Editorial: NIFA now owns pay hike deal

NIFA Chairman Jon Kaiman looks on during the

NIFA Chairman Jon Kaiman looks on during the Nassau Interim Finance Authority meeting at the Long Island Marriott in Uniondale on Friday, May 2, 2014. Photo Credit: Barry Sloan

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Taxpayers will pay more, one way or another, sooner or later. They'll do the heavy lifting now that the Nassau Interim Financing Authority has lifted the three-year wage freeze on Nassau County workers. Whether they pay higher sewer rates or property taxes is only a matter of political optics. And the longer it takes the county to come to terms with and fund what it needs to pay, the higher the tab will be.

That's the end result in the battle over lifting a freeze that saved the county $80 million per year. The new contracts with police and CSEA workers grant pay increases of about 13 percent by the end of 2017. Annual deficits were already running about $100 million.

The deal's proponents -- union leaders and County Executive Edward Mangano -- say the tab will be an additional $120 million over four years, but haven't shared the analysis to support that assertion. NIFA and the Legislative Budget Office concluded the agreements will cost about $290 million, and showed their math.

So where will the money come from in a county that owes more than $3 billion and has received credit-rating downgrades and warnings? NIFA and Jon Kaiman, the chairman picked by Gov. Andrew M. Cuomo to push a deal through, admitted they're not sure. As a condition for approving the deals, Mangano must submit a multiyear budget plan in 60 days. That would force the county to detail the expenses. It should also settle the argument over whether savings from the retirement of highly paid cops and their replacement by cheaper rookies is being double-counted to make the numbers work.

Then there is the revenue side. Cuomo and Nassau's state legislative allies secured 1,000 slot machines for Nassau and 56 speed cameras. Neither will bring in money by the time the bigger paychecks start going out.

The cameras and slots eventually will provide some cash. Hoped-for sales tax and mortgage recording fee increases likely won't, since first-quarter figures for both declined. Mangano has said he will not raise taxes. Last week, as it became clear promised revenue streams weren't enough, the old idea of privatizing operations of the county sewer system popped back up. It quickly became an integral part of the pay-raise plan, along with a promise that no sewer system employees would lose their jobs in a takeover. How does a new sewer operator generate a profit for itself and a new revenue stream for the county without axing employees? Efficiency might cover some of it, but higher rates loom.

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Also worrisome is NIFA's history of making demands the county ignores, then failing to enforce them. NIFA asked for an updated multiyear plan earlier this year; the county never produced it. NIFA demanded recurring expense cuts of $75 million per year in 2010 in return for more borrowing; the county never met that benchmark.

Having approved pay raises the county can't afford, NIFA is now clearly responsible for what follows. The authority says it will force expense cuts if promised revenue does not appear. But if NIFA lacks the political will to make such cuts, which could include firing hundreds of employees, the county's only alternative is to borrow. And if NIFA refuses to allow the borrowing, county paychecks will bounce.

NIFA, during a control period it imposed, allowed county finances to spin out of control. The fault lies with Mangano. But the responsibility lies with a fiscal watchdog that's proving to be all bark and no bite.

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