Now Flush with Federal Cash, Local Governments Can’t Ignore the Need for Fiscal Reform
Nassau and Suffolk Counties are rolling in the dough.
It is indeed a fortuitous time to be an elected official in local government these days, after the federal government has infused millions and millions of so-called “free” dollars to help mask the fiscal precipice on which these counties were hanging prior to the pandemic.
While we shouldn’t turn away the influx of federal dollars to help get us through these precarious financial times, we cannot allow this bailout to let our guard down and pretend that there is no need for fiscal reforms to deal with the structural imbalances that were embedded within the budgets of our Long Island counties.
Suffolk County received an astounding $300 million from the federal government over the course of the pandemic. To put that into perspective, that is one-tenth of its total budget, which now exceeds $3 billion. It’s tempting with all that money to spend it on placating the need of every special interest with a handout.
States also are awash in this so-called “free” federal money (though not so free to our children and grandchildren, who will pay off the debt incurred by this massive borrowing). Liberal states from Illinois to New Jersey to our own New York State have been accumulating enormous debt, primarily by overpromising rich benefits and pensions to the public sector.
There’s an intense need to reform these giveaways by ending the inclusion of overtime into pension calculations and tightening up on crazy work rules that wind up costing New York taxpayers seven times what it cost Europeans to build a mile of subway.
The huge inflow of federal money allowed bond raters to finally give Suffolk County a slight upgrade (to a still very low A-), but only after having levied seven consecutive bond downgrades over the last decade.
Those downgrades were a clarion call for the county to implement needed structural reforms to deal with its imbalances. At some point, the one-shot revenues from the feds will dissipate and the two counties will be left with inadequate revenue to match ever-increasing spending. If they are not addressed now, there is a rude fiscal awakening lying ahead.