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Economists: Nassau must do more to cut costs

Nassau County seal

Nassau County seal Credit: Handout

Grappling with a two-year $95 million budget gap, Nassau County has laid off close to 400 employees, outsourced the county's bus system and is shuttering half of its police precincts -- but local and state economists say the county must still do more to rein in labor costs, including rethinking how it delivers services.

Limited in new revenue sources -- red light camera funds are down, sales tax returns have fluctuated and County Executive Edward Mangano has vowed not to increase property taxes -- Nassau has little recourse other than to continue slashing spending, experts say.

"They're going to have to cut services," said former Lt. Gov. Richard Ravitch, a Democrat who played a key role in restoring New York City's troubled finances during the 1970s. "That is not in my judgment a good formula, but there is no magic bullet. There is only a question of how you allocate pain."

Mangano is to announce further staff cuts Monday in a plan to trim $45 million from the budget.

Ravitch and former Federal Reserve chairman Paul Volcker organized the State Budget Crisis Task Force last year to study the recession's impact on state and local governments. They recently issued a report noting that as states have struggled to meet the growing costs of pension obligations and expanding Medicaid rolls, local governments are feeling the pinch of reduced state aid.

Nassau, once a major recipient of state aid, including a $100 million bailout in 2000, is unlikely to get new assistance because lawmakers are hard pressed to "help one of the richest counties in America that's in a financial crisis largely of its own doing," said Lawrence Levy, executive director of the National Center for Suburban Studies at Hofstra University.

Levy said Nassau should consider "raising taxes in a sensible way," to offset some cuts.

Donald Boyd, executive director of the State Budget Crisis Task Force and senior research fellow at the University of Albany's Rockefeller Institute for Government said Nassau's problems are "staggering in their enormity," compared with other U.S. counties and cities.

Boyd said Nassau's financial woes require more "long-term planning than across-the-board cuts or a nick here and a nick there," and suggested the county bring down labor costs by negotiating contracts that require public employees to contribute to health care plans.

NIFA, Nassau's financial control board, has already called on the county to cut $150 million in recurring labor costs. Mangano's office said $90 million in savings has been reached through layoffs and retirement incentives for higher paid senior police officers.

Mangano recently asked department heads to trim labor costs by 3.5 percent. His spokesman, Brian Nevin, wrote in an email that the administration has "put forth a plan . . . to put Nassau on road to fiscal health."

But E.J. McMahon, a senior fellow at the conservative Manhattan Institute for Policy Research said the administration's efforts are still falling short. He said Mangano needs to push labor unions harder to contribute toward health care coverage.

"The administration spends an enormous amount of energy trying to announce what they've cut, what they've done," McMahon said. "It's not enough. Stop asking for credit and keep working on solutions."

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