For months, there has been heated debate over whether Nassau County can afford to lift its wage freeze and extend contracts with its labor unions. Now the question could very well be, how can Nassau pay its bills even with the wage freeze in place? The idea that there's money to pay workers more has become, in the past few weeks, impossible to believe.The freeze does need to be lifted. The county needs to return to paying workers what they were promised. But truly balanced spending and revenue, not wishes and pipe dreams, are what it will take to lift the freeze responsibly.
The proposed deals with about 7,000 union workers would increase payroll dramatically over the next four years, but save on health care and pensions in the long run. The plan to pay the short-term costs, which analysts have said could range from $120 million to $292 million, hinges on three revenue streams bringing in new money. One of those hasn't yet materialized, and the other two are quickly shrinking.
Nassau Interim Finance Authority Chairman Jon Kaiman, county officials and union leaders have all pointed to increasing sales tax revenue as a way to pay higher salaries. Last week, though, it was reported that county sales tax revenue plummeted 15 percent in the first quarter of 2014. Comptroller George Maragos warned that the county may have an unexpected $70-million shortfall even without the new contracts.
The decline, which came mostly from a decrease of more than 30 percent in February, is so large that it's hard to say what it means. Did bad weather depress shopping? Such a comparison to a year ago doesn't tell us all that much, because February 2013 might have included a lot of post-Sandy repair and replacement spending. Or is the county really seeing declining sales tax revenue? There's no way, though, to read it as good news for the coffers.
Increased revenue from the county's mortgage recording tax is the second leg of the fiscal stool that proponents of lifting the freeze have pointed to. Home sales had been rising in the past year, making such a hope reasonable. But in January, sales in Nassau fell 2.4 percent compared with last year, and in February they declined 12 percent.
County Executive Edward Mangano has argued that most of the money would come from speed cameras near schools. The State Legislature did not approve those cameras in the budget process and would have had to do so by June for them to be installed this year. And the county's estimates of how much money the cameras would bring in appear wildly optimistic to analysts from the county legislature and NIFA.
The continued support of the deal by Mangano and Kaiman -- especially in his conflicting roles as both lead negotiator and as a final judge -- appear more and more reckless. The purpose of NIFA was to restore the county to good fiscal health, and that meant restoring structural balance to its budgets. By that measure, the county would need enough recurring revenue to pay for its contracts and stop borrowing for operating expenses and tax refunds. Now, the county, with NIFA's preliminary backing, has crafted deals with the unions that Nassau cannot afford, and that would move it away from achieving balanced budgets.
Nassau County does not have the money to pay its current bills. It hasn't for years. Increasing those bills by hundreds of millions of dollars while revenues fall would be disastrous.