New York’s Nassau County, one of the most affluent municipalities in the United States, is on the verge of bankruptcy, thanks to its Tea Partying County Executive who cut county taxes without cutting public benefits or services.
The fiscal acuity of Edward Mangano, the Republican who upset Democrat Thomas Suozzi in 2009, is being questioned by the media and the County’s residents as Nassau teeters on the brink of ruin. After facing a sizable, but seemingly manageable budget deficit when he took office a year ago, Mangano slashed taxes as promised, but continued to spend money like he was on a Fifth Avenue shopping spree. Instead of cutting back services, Nassau County continued to subsidize many of its already wealthy school districts, fund the County Police’s expensive and unnecessary mounted police division, and not impose hiring freezes or layoffs. The County continued to spend like there was no tommorow. Meanwhile, tax revenue plummeted as a result of the economic downturn and Mangano’s tax cuts, the latter which added $40 million to Nassau’s deficit.
According to Meredith Whitney, the prominent financial analyst who predicted the major debt fallout of Citigroup in 2007, the fiscal instability of our municipalities is the greatest issue facing the United States next to the housing crisis and is a substantial threat to our economy.
“There’s not a doubt on my mind that you will see a spate of municipal bond defaults,” she recently told 60 Minutes. “You can see fifty to a hundred sizeable defaults…more…this will amount to hundreds of billions of dollars’ worth of defaults.”
While Nassau County is not alone (Rockland County faces a similar budget crisis), it is among the more high-profile municipalities on the brink of financial Apocalypse. And Nassau has seemingly fallen into the same trap it did in 1999, when mounting debt and unchecked spending was met by filling holes in the County budget with one time fixes, such as the sale of County land. This is not too unlike what Rockland County Executive C. Scott Vanderhoef is currently proposing with the sale of the Summit Park nursing facility.
[This] led to a $200 million deficit and a credit rating just above junk. It triggered a Democratic takeover of what had long been a Republican bastion. And it ended with a $100 million state bailout in 2000 and the creation of a watchdog agency, the Nassau Interim Finance Authority, to oversee the county’s fiscal practices.
This crisis eventually lead to then Republican County Executive Thomas Gulotta’s downfall. Shattered by his managerial failure, Gulotta did not seek reelection in 2001, and Nassau’s GOP political machine came to a grinding halt. The Times continues:
Under pressure from [the Nassau Interim Finance Authority], Mr. Mangano’s Democratic predecessor, Thomas R. Suozzi, raised property taxes, shrank the county work force and reduced the county’s reliance on borrowing to pay for operating costs.
But as the economy began to stumble in 2007, Suozzi opted for a 2.5 percent home heating tax instead of a property tax raise for revenue. It turned out to be a big mistake, Magnano now had the ammunition he needed to start a Tea Party-style assault against Suozzi. Magnano had rising taxes as an issue to rail against, but he didn’t offer any solutions to the County’s revenue problems. And like the rest of this new breed of Republicans now entering politics, he came into office with a populist axe, but with no plan for fixing revenue and spending problems. The Nassau heating tax was gone, but Magnano didn’t have a real-world solution to fill the gap it left behind.
Magnano came into office in the first anti-incumbency wave in 2009, but as a l4-year County Legislator, he was far from being the outsider that he portrayed himself to be. And here is where the Tea Party and the “taxed enough already” crowd was fooled by him. Magnano had already developed long, meaningful ties with unions, contractors, and patronage job appointees. They were, and still are, his strongest political allies. And as Nassau County suffers, not many of those close to Magnano are sharing in its pain. Even the early retirement plan appears to be a giveaway:
When [Magnano] offered an early retirement incentive plan that took more than 100 police officers and 400 others off the payroll, he drew criticism for allowing highly paid employees to take advantage of the buyouts; some walked away with as much as $600,000.
So now Magnano now finds himself in a political Catch-22. He was elected Executive because he promised to cut taxes. He came through on that promise, but State and Federal aid is drying up and Nassau has to find a way to support itself. Issuing more debt is entirely out of the question, given the alarm sounded by Wall Street analysts like Whitney. Magnano will either have to go back on his pledge, and take his lumps from the right, or dither while the County implodes, which won’t win him fans on any part of the political spectrum.
This unfolding tragedy is almost a Shakespearean in its mordancy. And the bitter truth should be a lesson to the Tea Party: It’s not enough to be against something, you’ve got to provide sensible, tangible solutions to governing.
It should also be a lesson to Rockland County residents: The way out of a financial crisis is not to sell off assets, or make hasty, patchworks solutions like Scott Vanderhoef often proposes. The fiscally responsible way to municipal prosperity is to reach a consensus on the services we need, accepting those costs, and finding stable, consistent sources of revenue to pay for them. I understand that the Summit Park facility is the County’s last sizable asset, and that it even operated in the black last year. And selling it may fill a large gap in the Rockland County budget this year. But when another financial crisis comes along, and there’s no Summit Park to fill that hole, what does the County do then?
How the GOP is bankrupting Nassau County, and how they may do it to Rockland
This article was first posted at Left of the Hudson: Progressive News and Views for Rockland County by Cliff Weathers.
New York’s Nassau County, one of the most affluent municipalities in the United States, is on the verge of bankruptcy, thanks to its Tea Partying County Executive who cut county taxes without cutting public benefits or services.
The fiscal acuity of Edward Mangano, the Republican who upset Democrat Thomas Suozzi in 2009, is being questioned by the media and the County’s residents as Nassau teeters on the brink of ruin. After facing a sizable, but seemingly manageable budget deficit when he took office a year ago, Mangano slashed taxes as promised, but continued to spend money like he was on a Fifth Avenue shopping spree. Instead of cutting back services, Nassau County continued to subsidize many of its already wealthy school districts, fund the County Police’s expensive and unnecessary mounted police division, and not impose hiring freezes or layoffs. The County continued to spend like there was no tommorow. Meanwhile, tax revenue plummeted as a result of the economic downturn and Mangano’s tax cuts, the latter which added $40 million to Nassau’s deficit.
According to Meredith Whitney, the prominent financial analyst who predicted the major debt fallout of Citigroup in 2007, the fiscal instability of our municipalities is the greatest issue facing the United States next to the housing crisis and is a substantial threat to our economy.
“There’s not a doubt on my mind that you will see a spate of municipal bond defaults,” she recently told 60 Minutes. “You can see fifty to a hundred sizeable defaults…more…this will amount to hundreds of billions of dollars’ worth of defaults.”
While Nassau County is not alone (Rockland County faces a similar budget crisis), it is among the more high-profile municipalities on the brink of financial Apocalypse. And Nassau has seemingly fallen into the same trap it did in 1999, when mounting debt and unchecked spending was met by filling holes in the County budget with one time fixes, such as the sale of County land. This is not too unlike what Rockland County Executive C. Scott Vanderhoef is currently proposing with the sale of the Summit Park nursing facility.
The New York Times picks up the story:
This crisis eventually lead to then Republican County Executive Thomas Gulotta’s downfall. Shattered by his managerial failure, Gulotta did not seek reelection in 2001, and Nassau’s GOP political machine came to a grinding halt. The Times continues:
But as the economy began to stumble in 2007, Suozzi opted for a 2.5 percent home heating tax instead of a property tax raise for revenue. It turned out to be a big mistake, Magnano now had the ammunition he needed to start a Tea Party-style assault against Suozzi. Magnano had rising taxes as an issue to rail against, but he didn’t offer any solutions to the County’s revenue problems. And like the rest of this new breed of Republicans now entering politics, he came into office with a populist axe, but with no plan for fixing revenue and spending problems. The Nassau heating tax was gone, but Magnano didn’t have a real-world solution to fill the gap it left behind.
Magnano came into office in the first anti-incumbency wave in 2009, but as a l4-year County Legislator, he was far from being the outsider that he portrayed himself to be. And here is where the Tea Party and the “taxed enough already” crowd was fooled by him. Magnano had already developed long, meaningful ties with unions, contractors, and patronage job appointees. They were, and still are, his strongest political allies. And as Nassau County suffers, not many of those close to Magnano are sharing in its pain. Even the early retirement plan appears to be a giveaway:
So now Magnano now finds himself in a political Catch-22. He was elected Executive because he promised to cut taxes. He came through on that promise, but State and Federal aid is drying up and Nassau has to find a way to support itself. Issuing more debt is entirely out of the question, given the alarm sounded by Wall Street analysts like Whitney. Magnano will either have to go back on his pledge, and take his lumps from the right, or dither while the County implodes, which won’t win him fans on any part of the political spectrum.
This unfolding tragedy is almost a Shakespearean in its mordancy. And the bitter truth should be a lesson to the Tea Party: It’s not enough to be against something, you’ve got to provide sensible, tangible solutions to governing.
It should also be a lesson to Rockland County residents: The way out of a financial crisis is not to sell off assets, or make hasty, patchworks solutions like Scott Vanderhoef often proposes. The fiscally responsible way to municipal prosperity is to reach a consensus on the services we need, accepting those costs, and finding stable, consistent sources of revenue to pay for them. I understand that the Summit Park facility is the County’s last sizable asset, and that it even operated in the black last year. And selling it may fill a large gap in the Rockland County budget this year. But when another financial crisis comes along, and there’s no Summit Park to fill that hole, what does the County do then?
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