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Soaring deficit spurs state to take control of Nassau County affairs

One of the nation's wealthiest counties was placed Wednesday under a state fiscal watchdog that determined it was headed for financial trouble, opening the possibility of a wage freeze for thousands of workers.

The unanimous vote by the Nassau Interim Finance Authority came after auditors found Nassau County's 2011 budget gap could be as much as $176 million. The authority is required to take control of the county's finances any time it finds the risk of a 1 percent deficit, or $26 million.

The decision places short-term borrowing for operating expenses on hold and means the authority must approve any county contracts, from purchasing new shovels to agreements with labor unions, before any money is spent.

The duration of the takeover will be determined by how soon the budget gap can be closed, authority Chairman Ronald Stack said. The authority instructed county officials to revise their $2.6 billion budget by Feb. 15.

"These are the real-world consequences of the worst recession in 70 years and the federal and state response to it," said Lawrence Levy, executive dean of the National Center for Suburban Studies at Hofstra University. "Unlike presidents and congressional leaders, mayors and county executives live with the consequences."

Stack said taxpayers in the county just outside New York City -- where last year's average property tax bill was $11,500, nearly the highest in the country -- will not notice any difference in government operations. He said the authority's purpose is to advise county officials, not to make policy decisions.

County Executive Edward Mangano, who lobbied hard to prevent the takeover, decried it as unnecessary and premature. He said county attorneys would review the decision before proceeding with any legal challenges.

Mangano insisted the budget, ratified by the County Legislature and comptroller, is balanced.

"If they wanted to run Nassau County, there is a process -- get elected," Mangano said at a news briefing later Wednesday.

Stack disputed assertions that the vote was politically inspired.

"On this board are three registered Democrats, a registered Conservative, a registered Republican and an independent," Stack said. "And it voted unanimously. It is not partisan, it is not political."

The finance authority overseeing Nassau County is a state watchdog created in 2000 when the county first had fiscal difficulties requiring a $100 million state bailout after years of little or no tax hikes.

The six-member board (there is currently one vacancy) is appointed by the governor, state comptroller and the two leaders of the State Legislature.

Nassau County has had to contend with shortfalls in sales tax revenue, increases in employee health care and social services costs, police overtime and other issues.

But E.J. McMahon, a senior fellow at the Manhattan Institute and expert on New York State issues, also noted that for decades after World War II, as Long Island evolved into quintessential suburbia with a current population of 3 million, county politicians made spending decisions their successors have come to regret. The average police salary approaches six figures, and 400 retired county officers currently receive pensions of more than $100,000, he said.

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