The Nassau County Legislature is scheduled to vote on $102 million in borrowing for property tax refunds today, and County Executive Edward Mangano, feeling stymied at every turn, is at a defining point in his tenure. The time for wishful thinking and fuzzy math is past, and the moment for Mangano to outline spending cuts, however painful, and for the legislature to approve them, is now.
If he does that, more borrowing will be justified, and Mangano will be right to vilify the legislature's Democrats if they use that borrowing as a bargaining chip to get new election districts redrawn. But if he doesn't identify cuts, the cash crunch will get so bad that even more reductons will be needed, or county operations will start shutting down.
In October, with the county facing a projected deficit as high as $300 million and similarly large shortfalls in future years, Mangano reached an agreement with the Nassau Interim Finance Authority, the state control board that oversees the county's finances: If he could get half of that $300 million in spending cuts, the panel would approve borrowing of $450 million over four years, to give Mangano's property-tax refund reforms time to bring expenses and revenues into alignment.
Mangano said he would find the cuts by Feb. 1. Now, four months later, estimates from the county legislature's budget office and NIFA members are that he's identified, at most, about $90 million of the needed $150 million. And with every month that goes by without enacting the savings, the deficit deepens.
Mangano's latest magic bullet, his attempt to bring at least $750 million to the county, plus at least $400 million more for capital improvements, through a public-private partnership in the county's sewer system, has hit nothing but snags. NIFA last week rejected a county contract that would give deal adviser Morgan Stanley $200,000 per quarter for six months, then $100,000 per quarter for a maximum nine more months. If Morgan Stanley found an investor, that money would be credited against a 0.75 percent success fee, which, on $750 million, would be $5.6 million.
NIFA was right to reject the contract, not because of the success fee, which Morgan Stanley would certainly deserve if it closed such a tough deal, but for the quarterly payments. The plan might bear fruit, but it's not likely enough to command upfront money. And NIFA members' comments make it clear that they don't like the whole concept of the deal, not just that contract. Democrats in the legislature say they oppose the plan, too.
That doesn't mean the sewer idea is dead -- and if Mangano can find an investor with $1 billion and a way for private sewer giant United Water to repay that money and operate the sewers while guaranteeing no significant sewer-rate increases -- more power to him. But it seems like a long shot when sure bets are needed.
And Mangano's latest proposal, a law that would let him cut $40 million in spending without legislative approval, is just a bad idea, particularly considering his Republicans hold a majority in the chamber. Separation of powers is important, and this maneuver just gives Republican legislators cover by not making them vote for cuts; no way to run a county.
So Mangano has to seize his only real option: He must devise the cuts he promised, and get them through the legislature, to get the borrowing he was promised in return.