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Editorial: Nassau's new contracts are too expensive

NIFA Chairman Jon Kaiman, center, during a meeting

NIFA Chairman Jon Kaiman, center, during a meeting of the NIFA board in Uniondale on Dec. 30, 2013. Photo Credit: Newsday / Thomas A. Ferrara

Friday the state control board overseeing Nassau's finances could consider a deal to remove the county's wage freeze. The plan is massively underfunded and, if approved, would likely take the county's financial situation from bad to disastrous.

In April, Nassau County Comptroller George Maragos made a surprising announcement: Sales tax revenue, rather than increasing by 2 percent as predicted, fell 15 percent over the first three months of the year. To meet the budget, Maragos said sales tax revenues would now have to average 6.5 percent higher than last year over the rest of 2014. His advice to the county: Prepare for a $70-million shortfall by reducing spending or increasing revenue.

This week, Maragos revealed that future pension obligations have been understated by more than $84 million, thanks to errors by the county and its auditors. That means from 2008-13, spending outstripped revenue by just under $800 million.

Moody's Investor Service expressed concern on Monday in response to the sales tax news and the possibility that the Nassau Interim Finance Authority could end a wage freeze on county workers as early as Friday. That's the kind of anxiety that leads to downgrades, which lead to higher borrowing costs, which lead to even bigger deficits.

Increases in mortgage recording fees -- another income source the county hopes will help it pay for the unfrozen wages -- won't show up anytime soon. Home sales in Nassau are dropping.

In this context, it would seem NIFA's board members -- who bear a fiduciary responsibility -- cannot approve new contracts for 7,000 county workers, including police officers, and lift the freeze.

No one knows how much the new contracts would cost: Estimates range from $120 million to $292 million over four years. No one knows how much revenue school-zone speed cameras will generate. Estimates range from $32 million to $120 million over four years. And this revenue will decline as driver habits change. Meanwhile, it will take time to install the 56 cameras, but thousands of employees would get raises almost immediately if the freeze is lifted.

And slapdash solutions that have cropped up before and are rumored to be getting new consideration -- such as more borrowing under a fancier name, or a tricky financial deal or fire sale related to the county's sewer system -- shouldn't be allowed.

The freeze needs to be lifted as soon as it's possible to do so responsibly. It's not fair for county employees to be denied promised pay or for County Executive Edward Mangano to be perpetually shielded from tough decisions because Nassau is under the authority of a state control board. The only way to lift the freeze responsibly is with a legitimate plan to fund the costs, and all the county's other expenses, too. That means not borrowing to pay operating expenses. It means not refusing to pay at least $300 million in property tax refunds, a liability not even acknowledged on the county's balance sheet.

The proposal is being rushed so the county can hire police officers from a civil service list ready to expire. That isn't a sound reason. This revenue plan doesn't offer a way to do all that, or even come close. Approving it would be an abdication of NIFA's responsibility.