Editorial: A budget collapse is lurking in Nassau County
Nassau County Executive Edward Mangano is calling on the U.S. military to take over the "managerial structure" of LIPA during the restoration. (May 3, 2012) Credit: Howard Schnapp
The Nassau County budget isn't going to collapse in a smoldering heap next year, and to be fair, that's good news. But that heap will eventually materialize if some serious, and seriously difficult, changes aren't made. So it might not be next year, or 2014, but absent a huge shift in the trajectory of the county's finances, it won't take much longer than that.
County Executive Edward Mangano has crafted a $2.8-billion budget for 2013 that the state board overseeing Nassau's finances is willing to sign off on. It contains some iffy revenue projections and some optimistically low expense numbers, but nothing so egregious that it forces the Nassau Interim Finance Authority to cry foul.
But a deeper look at the county's multiyear plan shows Mangano and his staff project deficits of $275 million between 2014 and 2016. NIFA thinks even that ghastly number could be low, by as much as $240 million, for those out years. And none of this takes into account money the county owes for tax certoriaris it hasn't fully paid the past two years or ones it's likely to generate going forward. That, by the end of 2016, could total another $600 million in obligations.
So Nassau could find itself with a $1.1-billion shortfall, created over just a few years, to add to the more than $3 billion the county already owes.
Mangano is counting on a lawsuit to end what is called the "county guarantee," a state law just for Nassau County that forces it to pay all of the property tax refunds required by successful assessment appeals -- even though 83 percent of the original payments went to the school districts and municipalities that Nassau collects for. If the suit is successful, the county's outlook would improve significantly. But it may well lose.
If the county guarantee isn't abolished, that will leave fixing Nassau's disastrous assessment system as the only way to alleviate the financial burden of tax refunds. Fixing the system needs to be done regardless, but it won't be easy or quick. And it won't do anything to address the about $300 million Nassau already owes property owners for refunds, the repayment for which does not appear in the 2013 or multiyear budgets. Nor will it prevent the hundreds of millions of dollars of projected debt that will spring from normal operations and a lack of revenue.
Mangano put a huge hit on revenue when he foolishly got rid of the $45-million per-year energy tax in 2010. He's also refused to increase property taxes, levies his predecessor had built into the projected budgets. To compensate, Mangano has cut staff and services. And he has had to contend with sales tax revenue that tanked the year before he took office and has never fully recovered.
Everything is getting harder. The cuts are harder to make, the efficiencies are harder to find and the line on taxes is harder to hold.
NIFA just agreed to let the county borrow $192 million to deal with the fallout from superstorm Sandy, and it's too early to say how much of that Washington will pick up. The county's costs, for workers and pensions and health care, are escalating. Revenue remains stuck.
Either taxes are going to go up, or more services must be cut, or both. These decisions need to be laid out honestly. And the fact that Nassau isn't going to go belly up in the next 12 months doesn't change that.
