StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Nassau County's Budget Sickness Takes a Turn for the Worse

27 Jan 2011
Posted by Stan Collender

An update to the story I posted about twice (here and here) in late December: As David Halbfinger reported in the New York Times yesterday, Nassau County, NY -- the wealthy county next to Queens on Long Island-- has had its finances taken over by a state oversight board because of it's inability or unwillingness to deal with its budget deficit.

The takeover was supposed to be considered in late December but the decision was delayed when the county's executive, Republican Edward Mangano, asked for and received three additional weeks to come up with a budget the oversight board considered to be serious and balanced.  After cutting county taxes a year or so ago but not cutting spending to offset the impact, Mangano apparently continued to rely on proposals the oversight board thought were nothing but gimmicks.  The vote was 6 to 0 to take over the finances and was supported by Democrats, a Republican, a Conservative, and an independent.

What did Mangano do in response to the takeover vote?   He criticized the board for not taking over the county's finances in a way that would allow it to immediately freeze the salaries of county workers.

Let me see if I have this right.  First, Mangano refuses in his budget to freeze county employee salaries.  Second, he complains that the oversight board didn't freeze those same salaries.  In other words, Mangano refused to propose doing something and then criticized others for also not doing it.

It's hard not to get the sense that, in spite of his very public protests, Mangano wanted the county's finances to be taken over by the state so that it would be the one that froze salaries and changed other contracts.  Then...with the budget under control and others blamed for the heavy lifting...he thinks he'll go back to making the spending and revenue decisions for the county.

This is why I said a month ago that a take over by the state should include a requirement that the county executive immediately be removed from office and banned from running for reelection for the same position.  (Note: I also was in favor of CEOs and boards of directors having to resign if they requested a federal bailout or received TARP funds.)  Elected officials should feel political pain from a situation like this rather than pssibly benefit from it.

 

I agree 100%. This asshole

I agree 100%. This asshole wanted someone else to do what he perceived as his politically unpalatable, but fiscally necessary, dirty work. However, I fail to see why one of the wealthiest counties in the entire nation refuses to raise taxes a modest amount to preserve their common fisc. Why is it the richest counties that get taken over or go bankrupt (this one, and Orange County, CA)? Is it because the greedy rich assholes that live in them and dominate their politics know that there will be few consequences for them personally if the county governments fail, and only for the less wealthy with the misfortune of living in their electoral shadows?


Greedy rich assholes dominate

Greedy rich assholes dominate the politics of most counties, so I don't think that this explains it.


You're too generous, as usual

"This is why I said a month ago that a take over by the state should include a requirement that the county executive immediately be removed from office and banned from running for reelection for the same position."

Fine. So he doesn't run in two years, but rather in four,when there is starting to be a ray of hope.

Public stockade for the lesser of sixty days or the duration of the term (whichever is less) followed by a permanent disenfranchisement and ban from elected office or appointment to a public sector position.

Or that as a starting ("centrist") position, with Pete Davis to define his preference or explain why we're being too mean to his buddies.


Nassau

Please also note that Nassau is one of the most highly taxed counties in the nation -- that this county should still go bankrupt is a matter of mis-management and lack of political will to make tough decisions, and not a simple "raise the taxes" fix.


The real story

Politicians always work to have someone else take the pain. This is different in Washington from Nassau how? There's a $1.5 trillion deficit there, and who's the politician taking the pain of assuming the responsibility for closing it?

Mangano's behavior is about 2% of this story. The other 98% is that Nassau police earn an average $126,000 a year not counting comparably generous benefits (400 have pensions exceeding $100,000) and one-third of all county employees earn over $100,000. So Nassau, being among the most heavily taxed communities in the nation, can't keep up.

This story is even better illustrated by events in neighboring Suffolk county. In the 1990s when the Shoreham nuclear plant was being built the local school district assessed enough taxes against it to spend more than $30,000 per k-12 student (today's money) and have the most luxurious public schools in the country. Then the environmentalists succeeded in keeping the plant from ever going into operation and the courts ruled that the school district not only had to kill the tax but repay hundreds of millions of dollars. Fiscal disaster! But only because the local govt was addicted to spending $30+k per public school student.

These are two object lessons of Milton Friedman's famous dictum: "Politicians always spend all the revenue they can raise plus as much more as they can get away with." Note well that this is a totally non-partisan reality. (Mangano is a Repub but the Nassau govt that created this situation over the past decade was Democratic.)

It is exactly the same process as is going on in Washington today, which is why we have a $1.5 trillion deficit *and* unfunded entitlement obligations of about $100 trillion(!) at present value.

"the state should include a requirement that the county executive immediately be removed from office and banned from running for reelection for the same position"

I entirely agree. I'm just wondering, using the same logic, who is going to remove the POTUS from office circa 2030.




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