Nassau County's critical 2012 budget vote

Nassau County may not fall off the cliff . . . just yet.

The curtain is ready to come down on the first act of a 10-month fiscal drama that involved a state oversight board demanding draconian cuts, a county executive in denial of a cavernous budget gap and union leaders who said they were willing to come back to the bargaining table if they knew where to find it.

In the last two weeks, the plot has settled into a clearer narrative about the 2012 budget, which the legislature is scheduled to vote on by Sunday, the legal deadline. In the action so far, the Nassau Interim Finance Authority has retreated from its absolute refusal to allow any borrowing to pay for tax refunds. And County Executive Edward Mangano has dropped outlandishly speculative revenue estimates and amateurish bargaining tactics to extract concessions from unions.

These changes have cleared the way for NIFA and the administration to present a united front to the unions and to demand $150 million in givebacks, embedding enforcement of concessions in next year's $2.63-billion budget. To ensure that a weak-kneed legislature up for re-election on Nov. 8 doesn't undermine this scenario, the plan requires layoffs or furloughs if $75 million in cost reductions are not achieved by Dec. 15, and then cuts of another $75 million by Feb. 1.

The turnabout became possible when the NIFA board, led by Ronald Stack, dropped its refusal to let the county borrow for tax refunds -- a regrettable practice that started the county's financial decline. The hole created by that borrowing led to the creation of NIFA in 2000 along with a $100-million state bailout. Unfortunately, more than a decade later, NIFA's presence is still necessary, and the unwise borrowing continues. But the decision by Stack reflects the current reality; Mangano doesn't have the wherewithal to fashion a budget without either raising taxes or borrowing for refunds. If NIFA were to have rejected the 2012 budget because of the borrowing, currently labeled "transitional financing," the county would have been barred from going to lenders for its routine cash-flow notes. And without that, it might not have been able to make its December payroll. The county would have gone off the cliff.

Even more problematic, a rejection of the budget would have required NIFA to impose the necessary personnel and spending cuts. That unpalatable outcome is best avoided. Those are the responsibility of elected officials. In return for allowing borrowing, NIFA is requiring that the amount decline in each year of a multiyear plan and be eliminated by 2015. Nassau has agreed to stay under NIFA controls for the next four years, keep wages frozen, and to submit all contracts over $50,000 and requests to borrow to the oversight board.

NIFA's flexibility on continued borrowing was both practical and politically adept. Mangano now has a credible budget for next year, along with the tools he needs to plow through his problems. The unions -- which wanted clarity on the county's demands as well as NIFA at the bargaining table -- now have both. It's a compromise designed to prevent a collapse of Nassau's finances.

The next act features Mangano executing the 2012 plan. The drama will continue.