Editorial: Nassau County is on the road to Gulottaville
Barring a course correction in the finances of Nassau County, residents could soon find themselves wasting away again in Gulottaville.
Republican Thomas Gulotta was Nassau executive from 1987 to 2001. His optimistic budgeting and unwillingness to raise taxes were disastrous. By the time he left office, the Nassau Interim Finance Authority had been created as a fiscal watchdog and the state had to throw in a $100-million bailout. Borrowing was rampant and Gulotta's successor, Democrat Thomas Suozzi, had to hike property taxes 19 percent to control the damage.
Now County Executive Edward Mangano is headed down the same path: rosy revenue projections, a refusal to raise taxes and a failure to cut spending enough to balance the books. And NIFA has gone from watchdog to lap dog.
The situation is already a recipe for disaster, and now there's a new, poisonous ingredient. Through June, Nassau had a 9 percent decline in sales tax revenue. That leaves the county $48 million short thus far in 2014. That's another huge hole in a $2.7-billion budget already facing an $80-million deficit.
Worse, County Comptroller George Maragos said this lower level of sales tax revenue may be the new norm because post-Sandy home repairs are mostly done and Internet shopping is siphoning off local retail. That means Nassau's projections for future sales tax revenues could fall short through 2017.
Sales tax isn't the only problem. Practically every revenue increase that Mangano and NIFA chairman Jon Kaiman need to pay the potential $300-million cost of lifting the authority's wage freeze this past spring is iffy or evaporating:
Increased mortgage recording fees have been touted to bring in more money, but home sales are falling.
The county is hoping for revenue of $30 million per year from 56 cameras that will issue tickets for speeding in school zones. The Nassau County Office of Legislative Budget Review says $12 million a year is likelier.
Nassau is counting on $15 million in annual revenue from a parlor with video lottery terminals run by the Nassau Off-Track Betting Corp. starting in 2015. But 2014 is more than half gone and the OTB has no site or plan.
A bill passed by the State Senate and Assembly to get Nassau out of paying commercial property tax refunds on overpayments to school districts and municipalities could save the county $80 million per year. It would have commercial property owners pay into an escrow account to fund their own refunds. But the bill hasn't been signed by Gov. Andrew M. Cuomo, it could be challenged in court, and the plan would not help the budget until 2017.
Mangano has cut payroll, but the cuts haven't always saved money. The county attorney's office reduced its staff from 108 to 73 between 2009 and 2013, saving $3 million per year. But spending on outside law firms, including ones with strong ties to Mangano and county Republican leader Joseph Mondello, increased $4 million per year.
And part-time and seasonal workers, many of them politically connected, are being paid as much as $50 per hour, and $75,000 per year, for jobs like golf course attendant.
Nassau will have to keep borrowing, and the cost of that borrowing could surge. Ratings agencies are worried about the sales tax shortfall and already have downgraded Nassau's debt several times since Mangano took office. The county already has about $4 billion in debt, including unpaid property tax refunds.
Don't hold your breath waiting for Mangano to balance the budget. That leaves NIFA, which can block borrowing and contracts, and freeze wages, but hasn't been rigorous enough.
It also has the power -- never before used -- to modify the budget and cut spending. It may have to now.
Nassau is headed toward insolvency. Its multiyear plan is wishful thinking. NIFA must supply some bite to go with its bark. Otherwise the next stop for the county is Gulottaville, an easier place to get to than to leave.