There has been much publicity about the failure of the U.S. Senate to agree on a new aid package for the states. The costs of dealing with the impact of the coronavirus have hit every government hard, but especially the northeastern states. Largely left out of the discussion, however, is the serious headache that Nassau County and New York’s 61 other counties face.
Whether you are distant Cayuga County or Nassau, the story is the same. Sales tax revenues are down 20 percent in most areas, and state aid has been cut by 15 percent. Property tax collections have been delayed to help people with fixed or no income. In short, sometimes government closest to you suffers the most. As a former chair of the State Assembly’s Ways and Means Committee, I was curious, and took a deep look at Nassau’s finances and the impact of Covid-19, which mirror many other counties.
County Executive Laura Curran has done a great job of managing the county’s finances. When she was elected in 2017, she was saddled with a massive budget deficit and faced the possibility of a state takeover of the county’s finances. Her predecessor, Ed Mangano, had proposed a series of budgets with so-called one-shot revenues and lots of Band-Aids that were destined to fall apart.
Most Nassau residents don’t know that it is one of only a few jurisdictions in the state that has a control board watching its every financial move. The Nassau Interim Finance Authority was established in 2000, and has a full-time staff. It was dormant until 2011, when the county was in desperate need of an outside monitor. The bond rating agencies advised county officials that they needed a series of modest tax increases to fill their budget hole. But political fear prevented it.
Writing about something that’s not very sexy can be a challenge, but readers should understand how their government functions. Nassau County taxpayers wake up every morning expecting the police to control the streets, the highway workers to fill the potholes and the parks to be open for their enjoyment. All of these activities rely on there being enough money in the county treasury to pay for its workers and its facilities.
The county currently faces a drop in revenue of $438 million, the result of all of the factors mentioned above. In simple terms, no business can survive for too long with losses of 25 percent or more. On Aug. 10, Curran announced a prudent plan to close this yawning budget gap.
She proposed a series of budget cuts that would save $54 million. To offset the total of $438 million, she used all of her surplus funds, which included $103 million that local governments got in the CARES Act. Her proposal would produce $385 million in savings, which would erase the deficit. But there is one catch to this plan: The county owes NIFA a $75 million payment that is due in November. The County Legislature must approve the deferral of this payment, which would help avoid any serious tax increases.
While the Legislature is controlled by the Republican Party, and Curran is a Democrat, I am convinced the Legislature will do the right thing and allow the payment to NIFA to be deferred for a year. If the county can’t balance its budget for the coming year, all taxpayers may suffer, and the NIFA board could impose drastic cuts in county services.
The tale of Nassau’s finances is being repeated in community after community. Since March, our television screens have been filled with story after story about all the human hardship the virus has caused. The scenes of emergency workers treating suffering people have left us with images that we will never forget. The services that save lives have to be paid for, and in the end, the buck stops with local government officials.
Sadly, the people who can help pay for the coronavirus fallout — members of the Senate — went home for and returned from a summer recess, and still they have taken no action. There will apparently be no additional unemployment benefits and no small-business relief. Assistance for local governments won’t happen. Senate Majority Leader Mitch McConnell reminds me of Nero, who fiddled while Rome burned.
Jerry Kremer was a state assemblyman for 23 years, and chaired the Assembly’s Ways and Means Committee for 12 years. He now heads Empire Government Strategies, a business development and legislative strategy firm. Comments about this column? JKremer@liherald.com.