Nassau County ’s solvency questioned!

In Columns by Hal PetersonLeave a Comment

Last October, the Nassau County legislature approved County Executive Laura Curran’s $3.56 billion operating expense budget, 50% of which covers personnel costs, 12% debt servicing. Not included is a substantial portion of some $2.1 billion in severance allowances accumulated by Long Island public employees for unused vacations, sick, and other paid days. 

Public debt clocks in at $3.5 billion, with again an inordinate amount used to cover personnel costs i.e. salaries, wages, fringe benefits and pensions rather than capital improvements. It will increase substantially during the year to the extent underfunded “tax certiorari” property taxes payments are made with even more borrowed money, and

Last but not least, the budget was approved by the Nassau County Interim Finance Authority “NIFA”, albeit with “significant imbalances between revenues and expenses,”

News you would rather not hear. Digging deeper explains why in random order:   

  • Elected officials try to do too much for too many, saying “yes” without quid pro quo.
  • When the budget is put together, increases are simply tacked on to existing programs and there is no questioning of on-going value.
  • There is a dearth of discussion about growing fiscal concerns.
  • Service costs increase more rapidly than the revenues to support them.
  • Various borrowing and accounting techniques finance the annual budget deficits.
  • Short term borrowing used to finance current operating expenses,
  • Sifted payment dates for payrolls and other expenses forward to future fiscal years.
  • Shifting of many expense items to capital budgets.
  • Refusing to consolidate services to reduce costs, and
  • Tolerating unaffordable, fix forever contracts and excessive   payouts with public serve employees. 

What we are subject to is very reminiscent of what occurred in 1975 when NYC was also insolvent. It took draconian measures to vanquish the crisis and balance the budget. Ref: A Duke Law Journal titled “A State Saves a City: The New York Case.”

Rather than wait for the Doomsday clock to tick down I just released a letter to Adam Barsky who heads up NIFA. I asked him to make use of the Duke study with possible application to Nassau County.

Hopefully he will respond expanding the role of NIFA from “monitoring” and “oversight” to control. PS: NIFA just approved another round of short-term debt to help cover expenses

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