The basic equation behind funding a municipal government like Nassau County never changes much.
What goes out must come in.
But now, thanks to a pandemic that’s crippling both commerce and municipal coffers, the numbers to be fed into that merciless equation are frightening. County Executive Laura Curran projects a $749 million deficit over the next 18 months, and although the financial morass that raged for two decades had improved considerably over the past two years, now it is worse than ever.
And the coronavirus is far from the only reason.
Curran was making a lot of progress toward solving the budget equation before the coronavirus hit. Annual deficits that had been as much as $150 million less than a decade ago ended, and the county finished 2019 with a surplus.
But Nassau’s finances are again a disaster, thanks to sales tax revenue that could plummet by $400 million a year and reduced income from fees like red-light violations and mortgage and tax map recording. And the disappearance of those fees may not be a temporary decline, because two recent court decisions have called into question the legality of the $100 Nassau collects from every red-light ticket and the surcharges it levies on real-estate transactions.
It won’t be clear how bad the situation is until Congress, on vacation until July 20, decides how much help it will grant stricken communities to replace lost revenue. Republicans in the Senate and White House have thus far balked at providing additional help. So far, Nassau has received just $103 million, a drop in this leaking bucket.
The county can only spend what it brings in, and almost all the revenue comes via taxes and fees. The fees are theoretically limited to covering the services they fund, so taxes are meant to carry the real load.
But there is an eternal struggle to balance the taxes residents are willing to pay with the services they want, provided at salary and benefit levels county employees will work for. The equation is further muddied by a history of waste and politics that have historically combined to cost taxpayers money and erode their trust.
Borrowing is mostly supposed to be limited to capital projects like roads, but those borrowing rules are going to be ignored in the current crisis as municipalities like Nassau borrow for operating expenses just to stay afloat. That has to happen, but the county already owes more than $3.5 billion and the loans, old and new, must be repaid.
There is fresh help available when it comes to borrowing and refinancing, thanks to a new state law that says the Nassau Interim Finance Authority can borrow an unlimited amount for the county through 2051. That would let the county refinance to stretch out repayments and pay much lower rates than it would borrowing for itself. Curran’s plan to do just that will free up $285 million. The Republican-controlled county legislature is going to have to let go of its politics-tinged reluctance and support the moves, and do so by the fall.
But that borrowing solution won’t change the basic, unrelenting equation.
For most of the past 20 years, Nassau has refused to raise property taxes at all, instead relying on red-light camera revenue, big fees and borrowing. Even so, some homeowners are going to feel they are enduring large tax increases for the next five years as the county’s new assessment roll raises their taxes, which had been undercharged thanks to the county’s willingness to approve tax grievances. Curran’s unfreezing of the roll and attempt to create a working assessment system, while entirely necessary, further reduce the likelihood of property tax increases.
And now the new assessment system itself is a casualty of the pandemic, with court closures extending property-tax appeal deadlines past the point when the county sets the final tax rolls. That means property owners who win reductions will be owed refunds but the county can’t claw back the overpayments it will have already made to school districts and municipalities.
The political and economic reality is that the county will now find it nearly impossible to balance the books by increasing revenue.
On the expense side, Nassau has done little to rein in the extraordinary resources devoted to law enforcement even as the debt piled up and other county services were slashed. Generous pay and benefit plans are in place, but far worse are overstaffing levels even in low-crime areas and a fortune wasted on a system of ambulances being driven by police that pointlessly diverts the time of two sworn officers.
The expense of law enforcement in the county, more than $800 million a year, could be cut by $150 million to $200 million a year without harming public safety, current and former county officials say. Only the county’s detectives have inked a labor deal; all its other unions are working without a contract. And a federal appeals court recently unanimously ruled NIFA did have the right to freeze county salaries to safeguard the county’s finances.
The wallets of many Nassau taxpayers are as empty as the county’s own purse, thanks to the economic devastation of the coronavirus. The only reasonable way forward is through controlling costs.
Nassau County can’t kick the can any further. It’s reaching the end of the road.
-- The editorial board