Speed camera repeal to trigger tougher revenue choices in Nassau

Monday's expected repeal of Nassau's school-zone speed-camera program may turn out to be among the most popular votes county lawmakers have ever taken -- the result of months of intense public pressure.

But giving the people what they want creates a new fiscal headache for a county already facing many others.

The program, meant to catch speeders in school zones and approved unanimously by legislators in June, was projected to bring in $30 million in annual revenue, helping to balance a county budget hurt by sharply declining sales tax receipts.

From September through November, the cameras blew past official projections, generating more than 400,000 tickets that would net the county $24 million if all violations were paid.

Nassau County Executive Edward Mangano is telling the legislature that without the revenue, it must make "painful" decisions to cut expenses or generate new income. Last week, he gave members a dozen options, including significant cuts to youth programs and to hospital and NICE Bus subsidies, and selling ads at county facilities.

"While cutting $30 million out of the budget sounds easy, I want to assure you it isn't," Mangano wrote to lawmakers.

The county's financial control board, the Nassau Interim Finance Authority, and the Wall Street ratings agencies are watching. This spring, the county had sought to allay some of their concerns about new labor deals that lifted a wage freeze by citing expected new revenue from the speed cameras. NIFA has said the 2015 budget deficit could be more than $200 million.

Rating agencies said last week that credit downgrades were possible if Nassau officials don't quickly balance the budget with real savings or revenue. A credit downgrade could make it more expensive for the county to issue bonds.

"It's typical Nassau," Fitch Ratings analyst Karen Wagner said. "They take one step forward and two steps back."

Last month, Fitch maintained Nassau's "A" credit rating and revised its outlook on the county's long-term debt from "negative" to "stable." The agency specifically cited the speed-camera revenue as helping to offset a projected $70 million dip in 2014 sales tax revenue.

David Jacobson, a spokesman for Moody's Investors Service, said it's "too early to tell" if the expected end to the camera program will hurt the county's credit rating or outlook.

Moody's issued a report last month maintaining its A2 rating on Nassau's long-term general-obligation debt. It called speed cameras a "volatile" revenue source, saying revenues could dip as drivers changed their habits to avoid fines.

Standard & Poor's, which in May maintained its stable outlook for Nassau, said it would analyze the effect of a speed camera repeal, "including any solutions that officials identify to close the revenue gap."

Suffolk County killed its camera program last week before it had begun, with County Executive Steve Bellone citing the outcry by motorists in Nassau.

Suffolk budgeted just $2.5 million in revenue in 2015 from speed cameras, and $6.8 million annually after that. As a result, the administration said new cuts won't be necessary.

"This doesn't change anything for us," said Jon Schneider, a Suffolk deputy county executive. "Speed cameras were never a budget-critical item for the county."

Mangano, in his letter last week, told lawmakers that options for balancing the budget were limited, even before a speed camera repeal surfaced.

The county already has enacted a property tax hike, but it took a fight. In September, Mangano proposed a 3.4 percent increase -- his first since taking office in 2010 -- to raise $31 million to offset sales tax losses.

The legislature initially stripped the increase from the $2.98 billion county budget for 2015. But NIFA said legislative proposals to replace the $31 million relied on speculative revenues and tactics it prohibited. Mangano vetoed the changes.

Presiding Officer Norma Gonsalves (R-East Meadow) and Minority Leader Kevan Abrahams (D-Freeport) said they'll discuss Mangano's options to replace the speed camera program revenue but so far have declined to endorse any administration suggestion.

Abrahams has said that canceling at least $5 million in county contracts for which no money has yet been spent and dipping into the county's $120 million rainy-day fund are options.

NIFA board member Chris Wright said even if all projected speed camera revenue was to materialize, Nassau faces a shortfall of at least $150 million next year because of its continued reliance on borrowing for operating expenses.

Wright said while the money is important, "it's only a fraction of an overall budget shortfall, which continues to be substantial regardless of the outcome" of the repeal efforts.

County Comptroller George Maragos said the $30 million from the speed camera program represented less than 1 percent of the county's budget. "Replacing the cameras, by themselves, should be quite manageable," he said. "It should not be very hard."

Maragos said he's examining possible savings from consolidating separate accounting departments, as well as boosting revenue collection. He's also exploring ways to reduce Nassau police overtime, in part through new technology. Maragos projects that department will spend $67.4 million on OT in 2014 -- an all-time high.

With David M. Schwartz