Nassau must do "dramatic" restructuring to avoid layoffs, tax hikes, finance board says

Nassau County may have to resort to "draconian" measures, including laying off up to 2,900 employees and hiking county property taxes by 60%, unless there is a "dramatic reimagining" of how county services are provided, a state control board said in a report Tuesday.

The Nassau Interim Finance Authority, which controls county finances, appealed for urgent, bipartisan cooperation among county elected leaders, who have been sparring over how to curb a massive budget deficit stemming from the coronavirus pandemic.

"We urge the County to use this economic catastrophe as an opportunity to go beyond pre-existing geographic and political disagreements and examine all options, including those that might have been disregarded in more 'normal' times," said the report, released Tuesday and discussed at the regular NIFA board meeting Tuesday night.

NIFA chairman Adam Barsky said restructuring plans for 2021 must be approved this year.

"They face these huge gaps, if they're not going to do the restructuring. What's the alternate plan?" Barsky said in an interview. "The county has to start thinking about ways about being smaller, smarter, and doing more with less."

Nassau, with a $3.55 billion annual budget, is on track to run a $334.2 million deficit in 2020, according to NIFA's report.  

NIFA said the deficit could expected to widen in future years without drastic cost-saving measures to $481.4 million next year, $423.9 million in 2022 and $436.3 million in 2023.

NIFA said forecasts by the administration of Nassau County Executive Laura were too low. The administration has projected deficits of $364.1 million in 2021, $409.6 million in 2022 and $377.6 million in 2023.

NIFA noted that the county had been making progress before the pandemic struck this spring. The county had a $76.8 million surplus in 2019, compared with a deficit of $61.2 million in 2018.

County spokeswoman Christine Geed said NIFA had “has released a very detailed plan and we look forward to reviewing it. However, our strategy remains the same.  We are still seeking federal aid through the COVID-19 relief package currently pending in Washington, D.C. If we do not receive the much-needed funding, then we will seek support for NIFA debt restructuring."

Geed said Curran, a Democrat, was "not considering tax increases, nor massive employee layoffs.”

The NIFA report blamed a steep decline in sales tax receipts for the preponderance of the projected deficits. Receipts are expected to fall below budget projections by $237.8 million this year, according to NIFA, while year-to-date sales tax receipts are down by 13.4% compared with the first half of 2019. 

Revenues for fines and forfeitures are expected to be $41.2 million below projections. The tally includes $14.5 million less in fees from red light cameras, according to NIFA.

However, the county has found $39.9 million in salary savings by leaving many positions vacant. For instance, there are 185 vacancies in the police department, and 125 in the county's correctional center, according to the report.

The Curran administration and Republican county legislators have been at odds over Curran's plan to have NIFA restructure debt held by the county and the control board, which can borrow at lower rates than Nassau.

But facing Republican opposition, the administration announced it was putting the bulk of the plan on hold. For now, county officials support asking NIFA to defer to 2021 a $75 million bond payment it was planning to pay in the fall. That would allow NIFA to provide Nassau with $75 million to Nassau in 2020. 

By Scott Eidler

scott.eidler@newsday.com@ScottEidler

Scott Eidler covers Nassau County government and politics for Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.