Wall Street anxious about Nassau

The bond market is worried about Nassau County. It's not because a state control board has declared a takeover - that actually makes buyers breathe easier. What's shaking them is County Executive Edward Mangano's unwise decision to file a constitutional challenge to the legitimacy of the board.

Since the Nassau Interim Finance Authority took control of county finances and Mangano responded with this lawsuit, one rating agency, Moody's, has warned Nassau that it could further downgrade its rating for short-term borrowing and for the $1.4-billion long-term variable rate debt already in the marketplace.

The county plans to sell $390 million in short-term notes in June and December. At best, a ratings reduction would make issuing debt prohibitively expensive, tossing the county into an even deeper hole because of higher interest rates. If there were no buyers at all for its bonds, then Nassau couldn't do the routine borrowing that lets it pay bills and make payrolls.

Any county debt downgrade would hurt Nassau Regional Off-Track Betting, the sewer authority and possibly NuHealth, the public hospital.

Mangano is risking a lot of damage for a lawsuit with little merit. Some Republican leaders with an outlook beyond the fall's local legislative election say he should work with NIFA. The Moody's decision will come in a few weeks, time enough for Mangano to make a better choice.