Nassau’s Mangano Proposes Sewer Sale to Close County Deficit

Nassau County Executive Edward Mangano proposed selling the Long Island county’s sewer system for $1.3 billion and said he may have to cut 800 jobs if department heads don’t reduce expenses.

Nassau, which has the highest median household income among New York’s 62 counties, faces a $310 million deficit in its 2012 budget, Mangano, a Republican, wrote in a letter to employees yesterday. The county of about 1.35 million residents is projecting increases in pension and health-care costs and lower revenue from sales taxes and traffic fines, he said.

“Further workforce reductions will be necessary,” Mangano wrote. “The degree of shared sacrifice rests on whether the administration and labor come together with a concession plan that maintains the strength of our workforce.”

New York state seized control of Nassau’s finances in January after local officials failed to convince an oversight board that the county’s $2.6 billion budget was balanced. The county, whose median property tax of $8,206 is the second- highest among U.S. counties, according to the Tax Foundation in Washington, has faced rising costs for employee benefits and property-tax rebates.

Last week, the Nassau County Interim Finance Authority, the state oversight board, rejected the county’s updated 2012 financial plan, saying it had a $225 million deficit.

Spending Cuts

In his letter, Mangano asked department heads to reduce spending by as much as 15 percent for 2012 to help close the budget gap. Failure to achieve those savings may result in cuts of as much as 10 percent of the workforce, he wrote. Nassau, which has about 8,000 employees, has fired 128 workers and frozen wages this year.

A “public-private partnership” for the operation of Nassau’s sewer system would generate $1 billion to bridge long- term budget gaps and give the county time to bring revenue and expenses into balance, Mangano said. The transaction would also allow the county to retire $300 million in debt, he said.

Even though it’s not mentioned specifically in the letter, Mangano’s plan calls for the county to sell the system, said Brian Nevin, a spokesman, in an e-mail.

Nassau has hired Morgan Stanley (MS) to advise on the sale, and has set a Sept. 28 deadline for gathering information from potential bidders, Nevin said. Employees working for the sewer system wouldn’t lose their jobs after a sale, though they would be placed in other departments, he said.

Nassau’s Sewer and Storm Water Finance Authority had $116 million in sewer revenue in 2010, according to an authority financial statement. The authority has $162 million of its own debt outstanding and is responsible for $305 million of sewer debt issued by the county before 2004.

To contact the reporter on this story: Martin Z. Braun in New York at mbraun6@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.

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