Nassau County recently announced that it finished 2020 with a surplus of $75 million (subject to some adjustment, but it’s a reasonable number to work with). Sounds like good news, right? Not so fast. Let’s look behind this news.
The surplus came about because $99 million of a $103 million federal grant to the county was used for salaries instead of increased Covid-19 testing, aid to schools affected and other such pandemic-related expenses, for which the money was intended. How many people might have been saved had that been done?
The county administration recently forced, with the help of the Nassau Interim Finance Authority, a refinancing of Nassau’s debt, claiming, against evidence, that the county would soon be insolvent without such action, with a projected year-end deficit of $385 million. The administration and NIFA insisted as late as last November that the refinancing and additional borrowing were critical, because sales taxes were projected to decline 20 percent for the year.
I pointed out at the time that such a decline was virtually impossible, given that, up until then, we had experienced a decline of about 8 percent, the economy was improving, and a virtual collapse of the entire economy would be required for us to drop 20 percent.
I was right, and even conservative. The final number was about 5 percent. Besides the $75 million 2020 surplus, 2019 finished with a $112 million unrestricted/available surplus. However, NIFA said that unless the Legislature agreed to a refinance, it would reject our budget and initiate draconian service cuts.
But wait, there’s more! The resulting refinance provides about $435 million in cash for the county. Understand that this isn’t a savings, but rather represents new borrowing and deferment of some payments into the future. In fact, in a record-low-interest environment, we actually borrowed at a higher rate than the original borrowed-money portion of the financing. That was irresponsible on the part of the administration, not to mention on the part of NIFA, which, ironically, was created to force financial responsibility on the county.
Finally, the federal government recently passed a new coronavirus pandemic relief bill, scheduled to provide Nassau County with an additional $397 million. I, and others in the Legislature’s Republican majority, pointed to the likelihood of this relief to NIFA at the time, but NIFA officials refused to account for this possibility, insisting on the refinance.
The bottom line of all of this is that the county will soon, at least in the short term, be virtually swimming in new money available to spend — more than $1 billion, by my calculations. I will insist that this spending be done responsibly, and not simply be used to support the administration’s re-election campaign this fall. But what would “responsibly” look like?
I don’t have to point out to anyone living or working in Nassau County that real estate taxes are out of control, and in fact are the highest in the country for equivalently valued properties. The recent reassessment conducted by the administration has resulted in tax increases for about 65 percent of homeowners, which will keep growing over the next few years as they are phased in. Finally, Nassau County has a huge overhang of refund payments due to homeowners and business property owners — full disclosure, this includes me and other family members, along with many thousands of others — going back many years, resulting from previous overassessments. These cannot be put off indefinitely. They are obligations of the county, bear much higher interest than county bonds and must eventually be paid, with interest.
I propose that we use a major portion of the newly available money to finally clear the decks, to the extent possible, of refunds to property owners. This would have several tremendous benefits. First, during a period of depressed business and lower earnings because of Covid-19, it would provide a welcome source of funds for many people and small businesses that desperately need it. At the same time, it would use the newly borrowed, relatively cheap, funds to clear up other high-interest-bearing obligations of the county, and improve its finances going forward. That would result in lower costs in the future and, we would hope, help to slow or stop the growth of real estate taxes that are increasingly a burden that many cannot afford.
Howard J. Kopel, a Republican from Lawrence who represents Nassau County’s 7th Legislative District, is deputy presiding officer of the Legislature.