Sandy rips new hole in finances of NY's Nassau County
(Reuters) - New York's Nassau County, in the western part of Long Island, was already facing a projected $25 million budget deficit before superstorm Sandy ripped across the East Coast last week and tore into the county's economy.
Now that deficit could more than double because Nassau, one of the wealthiest counties in the United States, is set to lose $30 million in sales tax revenue in the two weeks after the storm, Nassau County Comptroller George Maragos said on Monday.
Sandy came at a critical time for some cities and counties on Long Island. They, like others across the United States, are struggling to right themselves from lowered revenues during the 2007-09 recession, as well as growing public pension obligations and health care costs.
Moody's Investors Services said it was zeroing in on certain East Coast municipalities hit by Sandy to determine if their finances can withstand the strain of lost revenue and infrastructure damage.
The credit rating agency said it was reviewing whether local governments will be able to make key payments on their debt that are due in November and early December.
Sandy came ashore in New Jersey on October 29, crippling some East Coast transportation and power systems and killing more than 100 in the U.S.
The storm hit large parts of Nassau and neighboring Suffolk County hard. The counties together make up most of Long Island, which juts into the Atlantic Ocean east of New York City.
The counties are home to white, sandy beaches that have been badly damages by the storm.
Six days before the storm hit, Moody's downgraded Nassau's credit rating to A2 from A1, affecting about $1.4 billion of outstanding debt.
Moody's was concerned that Nassau, which has a median household income of $93,613, nearly double the nation, has continuing budget gaps and relies too much on nonrecurring revenue.
The county's finances are overseen by a state control board as it struggles to recover from a fiscal meltdown that began in 2000.
NASSAU FACING DOUBLE-SIZED DEFICIT
The total economic impact of the storm on Nassau will be about $750 million by the end of this week, the county's Comptroller Maragos said.
"All our towns and villages have been affected and have had to incur significant expenditures," he said. "We're working with them to ensure they don't run into cash flow problems."
Nassau's projected $25 million budget deficit, which is less than 1 percent of its nearly $3 billion adopted 2012 budget, "would have been manageable," Maragos said. "Now we have to manage twice that amount."
"It's certainly going to hurt, and it's going to be a strain on our finances," he said. Without the expected revenue, the county will likely have to cut spending, he said.
The county has already thinned its workforce by a fifth and made over $290 million in spending cuts since County Executive Edward Mangano took office in January 2010.
Nassau, like other municipalities walloped by Sandy, expects the federal and state governments to quickly reimburse most or all storm-related costs. The region is also expecting a longer-term rebound once federal aid and insurance money gets reconstruction projects flowing.
Suffolk, home to the elite Hamptons beach communities, was also facing a three-year shortfall of more than $500 million brought on by years of financial mismanagement.
Two rounds of layoffs in 2012 cut more than 300 public employees from the payroll.
After declaring a fiscal emergency, County Executive Steve Bellone, a Democrat elected in 2011, proposed in September a budget for the fiscal year that starts January 1 that has no additional layoffs.
Bellone and the county's comptroller did not reply to requests for comment.
(Reporting By Hilary Russ; Additional reporting by Karen Pierog; Editing by M.D. Golan)
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