Financial experts weighed in on the current and future state of local governments in Nassau County due to the coronavirus pandemic and offered potential solutions during a panel discussion hosted by Blank Slate Media last week.
The panel consisted of Christopher Wright, a board member for the Nassau Interim Finance Authority, Michael Imber, a managing director at Conway MacKenzie and a leader in the government, municipal and education practice, and Adam Haber, a former director for the finance authority and former deputy chief of staff of economic development and government efficiency for the Town of Hempstead who is a principal of SKB Real Estate.
Blank Slate Media Editor and Publisher Steven Blank facilitated the event on Thursday evening and posed questions for the panelists.
Nassau County is facing a 2020 midyear deficit of $385 million as a result of the coronavirus pandemic, according to officials. Before the pandemic, Wright said, the county’s financial state was “balanced with room to spare,” referring to the more than $50 million in surplus funds.
“Because the county is as dependent as it is on sales tax … the county finds itself quite a bit short as sales tax revenue growth is negative,” Wright said.
The county’s newly proposed $3.3 billion budget calls for the Nassau Interim Finance Authority, which has overseen the county’s finances for the past two decades, to restructure $360 million in debt from the county and the finance authority, according to a county news release.
Of the debt, $240 million comes from finance authority bonds while the remaining $120 million comes from county bonds. The county, according to the news release, will save $285 million in 2021 and $150 million in 2022 by refinancing the debt.
Nassau County Executive Laura Curran said the uncertainty that has lingered throughout the year due to the pandemic was the reason for the proposed restructuring of debt.
“Restructuring bonds would not be necessary or justifiable in an ordinary year. Extraordinary times as these, however, call for this extraordinary, yet targeted and appropriate, measures,” Curran said.
Haber bluntly said that the county is “screwed” due to the pandemic, but more hyperlocal governments such as the Town of Hempstead and villages throughout Nassau could be in better shape since their revenue is more focused around property taxes.
“[The county] can only raise revenue outside of taxes, but they have to cut expenses,” Haber said. “The [Town of Hempstead] was given a lifeline because of a quirk in the tax law … They didn’t deserve it; they are in no more need than North Hempstead or any other of the 10 towns on the island.”
Due to the population threshold of 500,000 to apply to the federal aid program, Hempstead was the only town in Nassau County to receive funding, obtaining $133 million from the federal government in May. The county received $103 million in federal aid.
Haber said each school district in the county may differ from others due to the dependency on property taxes. If state aid was not provided to districts as a result of the virus, Haber said, traditional class sizes and programs would be at risk.
“A school [district] like Roslyn gets 5 or 6 percent of their funding from the state. The rest is pretty much from homes and real estate so they’re not in horrible shape,” Haber said. “But districts like Hempstead, Roosevelt, Westbury, a large chunk of their funding comes from state revenue and they can’t plan for this.”
Imber said consolidating the school districts would “absolutely” save money in the long run, but the difficulty of getting all of the hyperlocal municipalities, villages, hamlets and towns to find common ground may impede them from doing so.
“It’s not that hard to fathom considering we have the Los Angeles Unified School District. If they can have one school district, why can’t Nassau County,” Imber said. “I know that’s heretical to say, but that is the level of trouble we’re looking at right now.”
While the finance authority has no jurisdiction over what services may be cut by the county until county officials fail to balance the budget on three occasions, Wright said, consolidating some services and utilizing bulk purchases for materials are some of the immediate ways the county can cut spending.
“[The county] is required to deliver police, social services, health and welfare … in many cases some of the transportation improvements can be federally funded as well,” Wright said.
Wright also said the county could consider halting the mailings it sends to most residents receive on a weekly basis.
In terms of raising sales tax revenue, an area that the county’s financial state thrives on, Imber suggested utilizing “raw land.”
“Governments hold onto raw tracts of land that probably can’t really be developed,” Imber said. “One of the ideas I’ve been kicking around for a couple of years is creating a solar farm. Through a public-private partnership, take this fallow land and give a long-term lease to a utility company that will install solar cells.”
Imber also mentioned another untapped market for a potential revenue is air rights above buildings to install 5G technology and relinquishing property that may prove obsolete down the road.
“There is going to be a whole wave of installation related to the support of 5G technology and they’re going to need air above the buildings,” Imber said. “The automobile is going to be less of a personal item in 15-20 years … it’s kind of far out in the future, but if there was ever a time to sell government-owned parking garages, it might be right now.”
Haber suggested the county look into a wide array of “creative” solutions to create a revenue stream ranging from smart meters for parking to utilizing county landmarks and scenery for filming purposes.
“The Village of Valley Stream spends about $600,000 a year on people to collect meters, and they generate about $600,000 on meters,” Haber said. “You charge people to shop in your stores, but you don’t make money. If they switch to smart meters, they’ll not only raise more money but they’ll save money from having to have the employees there and deploy them to other parts of the government when people retire.”
Wright stressed that now is the time for politicians to find common ground when it comes to potential solutions to dig the county and local governments on the island out of any holes they may be in.
“If not now, for elected officials to find the political will to do something difficult, when,” Wright said. “They have political cover to do things that are difficult. You have a number of elected officials who have railed against the existence of NIFA but done nothing including easy things to make it go away by simply balancing their budget.”
All three panelists agreed that one of the most important tasks for elected officials throughout the county is to think of long-term, substantial revenue streams for Nassau.