Upside Down on Long Island
Democrats won a big victory in Nassau County after years of defeat. Now they have to find a way to keep the county from going broke.
At first, Judy Jacobs didn't know what to make of the voting returns. Watching at home on election night last November, the leader of the Nassau County Legislature's tiny Democratic minority found herself winning by a margin that no member of her party would dare anticipate, not in this Long Island county where Republicans treat power as an ancestral birthright. "I mean, I'm in a Democratic district," she says now, "but I never got 80 percent in my life!"
Jacobs decided to head over to a reception thrown by the county's Democratic chairman. There, she found pandemonium. Going into the election, Democrats had been outnumbered in the legislature by 14 to 5. They were hoping to win an additional two slots, giving them enough seats that the GOP majority at least couldn't ignore them, as they had been doing for decades. Instead, something truly unbelievable was unfolding. The voters had created a 10 to 9 Democratic majority, and Jacobs herself would be the new presiding officer.
Looking around the room, she spotted Lisanne Altmann, another veteran Democrat. All around them, people were giddy with shock and joy-- slapping each other on the back, hollering into their cell phones, taking the podium to crow about the miracle that had taken place. Altmann, however, was holding her head in her hands. "She knew," says Jacobs with a cheerful smile, "what we had inherited."
They had inherited one of the most politically treacherous tasks in American local government. Nassau, which sits just east of New York City, ranks by any measure among the wealthiest counties in the United States, but at the moment it is also one of the most fiscally endangered. It is some $2.5 billion in debt, its books are bleeding red ink, its bonds are one level above junk, it hasn't had a property tax reassessment in more than 60 years. The governor has hired an outside expert to brief him on just how bad the situation is. The next step may well be a fiscal control board that strips county leaders of some of their decision-making authority.
Finding the money to solve these problems won't be easy, to say the least. The 1.3 million residents of Nassau are already among the most highly taxed people anywhere in New York. Indeed, one of the beefs that led voters to dump the GOP majority in the legislature last fall was a new real estate transfer tax that Republican legislators had enacted before the election. Afterward, as lame ducks, the Republican majority rescinded the tax, blowing a further $60 million hole in the budget. Put in historical context, the Democratic takeover was remarkable; politically, it couldn't have happened at a worse moment.
To make matters more difficult, in the months since the Democrats took over it hasn't been entirely clear just how much they control. The county executive, who under Nassau's charter holds enormous power, is Thomas A. Gulotta, a Republican (although Gulotta and the Republicans in the legislature don't get along very well). And the Democrats' slim numerical advantage actually vanished in March, when Barbara Johnson, one of their number, died after a long fight against breast cancer. The legislature remains under Democratic control, but it's hard to see the county's new majority mustering the political strength to deal effectively with the crisis. Indeed, at the moment, nobody seems eager to deal with it, an understandable enough situation given the options on the table: unpalatable cuts in services, contentious negotiations with the county's public unions, and further increases in taxes and fees.
The bottom line is that Nassau County, once as politically predictable as a machine ward in Chicago, can make a good claim these days to be the most unsettled jurisdiction in the country. Small wonder that Bruce Nyman, who was Jacobs' predecessor as Democratic leader, says that "the good news is, we've taken over the legislature. The bad news is, we've taken over the legislature."
To get a sense of how unexpected this change in party control was, here's a story: When Democrats were still in the minority, they used to introduce bills in the forlorn hope that they might at least get a hearing for their ideas; instead, the legislation just disappeared. They would joke among themselves about "The Drawer" that their proposals must have been dumped into, but it was all something of a mystery. A legislator would submit a measure, then never hear about it again. After they took over in January, Jacobs and her staff were going through the files in the legislative clerk's office when, sure enough, they found a drawer containing years' worth of Democratic legislation; none of it had even been assigned a bill number.
The fact is, if you were a Democrat in Nassau County, there wasn't any particular reason you would expect to be a player. In the century since the county was chartered, it has been overwhelmingly Republican territory, especially with the rise in the 1930s of the Nassau County Republican machine--an organization that once evoked comparisons with New York City's Tammany Hall--and the county's rapid development as a suburban trend-setter after the opening of Levittown in 1947. Since then, Democrats have held significant power just once, with the election of Eugene Nickerson as county executive in 1961; he served for nine years before stepping down.
Republicans probably would still have a stranglehold on power if finances weren't in such desperate shape. To be sure, Nassau County's demographics are changing in ways that work in the Democrats' favor: The close-in towns are showing the signs of age that older suburbs elsewhere in the country have seen, and roughly 22 percent of the county's residents are African American, Hispanic or Asian, compared with 18 percent in 1990. But population change wasn't the main cause of the shocking 1999 result; economics was. "Have demographics made it more competitive? Sure," says Bruce Blakeman, who was Republican leader in the legislature until his defeat in November. "But two years ago, I won 71 percent in a district cut for a Democrat. This loss was driven by the budget and the downgrading of the bonds. Let's put it this way: I wasn't shocked on election day."
It was unmistakably clear by then that years of fiscal gimmickry and political timidity had taken a toll on Nassau's financial health. In 1992, with the county facing a $200 million deficit and business leaders making noises about defecting to the Democrats, county executive Gulotta proposed a 25 percent hike in property taxes. The man who presided over the board of supervisors--which eventually became the county legislature--was Joseph Mondello, the county's Republican chairman. Mondello killed the proposal, trimming the tax increase to less than 10 percent and leaving Gulotta to figure out how to cut 2,000 jobs from the county payroll. Gulotta took the lesson to heart. "He went back to his office," says one longtime politician, "and said, `I'm doing the right thing and I get screwed by my own guys? I'm never raising taxes again.'" And he didn't.
Instead, the county got along with a series of short-term budgetary tactics that helped it through each fiscal year, but taken together produced a growing structural deficit--as Newsday put it in a headline last year, "It Just Doesn't Add Up." The administration projected revenues from tax sources or sale of county-owned property that were tens of millions of dollars too optimistic; it relied heavily on one- time sources of revenue that did nothing to help the bottom line the following year; and it regularly borrowed to pay ongoing expenses, such as employee pay increases and the roughly $100 million it cost each year to settle property-tax challenges, which stem from the fact that there has been no reassessment since 1938.
All of this led both Standard & Poor's Corp. and Moody's Investors Service to downgrade the county's bonds last year, and then to do so again in February; S&P has since called in Gulotta, Jacobs and Republican leader Peter Schmitt and warned them that if they don't come up with a long-term plan to cut costs and raise revenues by June 30, the county's bonds will drop to junk status.
Until recently, Gulotta contended that the county was not really in bad shape; that his insistence on not raising taxes had, "in fact, contributed to the extremely high property values in Nassau County, which is the main investment of many of our homeowners." In a letter he sent out in mid-March, he trumpeted a $21 million budget surplus at the end of 1999, although his own fiscal consultants were projecting a $117 million deficit, and others believe the figure could climb as high as $200 million. Schmitt called the letter "bizarre," and Jacobs, referring to Gulotta's view of things as a "fairy tale," pointed out that his figures were based on the sale of the county's medical facilities and its share of the tobacco settlement, neither of which will recur.
Pressed by Wall Street, Nassau business leaders and both parties in the legislature, however, the county executive finally shifted course. He hired consultants to lay out a menu of actions that could set the county on firmer financial footing--they came up with a list of some 130 suggestions--and, pushed by Standard & Poor's, signed a letter pledging to raise taxes if other measures did not close the county's financial gap. Still, Gulotta insists that his own policies are not at fault. "I must tell you," he says, "that while we can debate the wisdom of having frozen and cut property taxes, that to me is an issue we can debate forever. As far as I am concerned, we have to look to the future and start from now and coalesce a bipartisan coalition that will resolve this issue."
Coalescing a bipartisan coalition, however, will not be easy. The county executive and the Republicans in the legislature continually fight among themselves. In fact, says Democrat Lisanne Altmann, "it's pretty clear that they really hate each other." Over the years, Gulotta's fellow-Republicans have scaled back his revenue estimates, rejected his tax cuts and reduced his budgets--although frequently he has ignored them and spent what he wanted. Most of the Republican legislators now blame the loss of their majority last year on Gulotta's handling of the county.
Democrats are not without internal differences, but they possess the advantage of having as their leader, in Jacobs, perhaps the best-liked politician in Nassau these days. "She's like a Jewish Donna Reed," says former colleague Bruce Nyman, "one of the most decent, honest, sincere people you'll ever meet." Talking about her discovery of the drawerful of buried Democratic legislation, she exclaims, "We never will do that. We just won't do it! Whoever's in the minority should be treated with more dignity than we ever were afforded."
So far, she's been true to her word. When, at the end of a long day, the legislature inadvertently acted to give the Democrats control over the county's Off-Track Betting board--one of the few potential sources of patronage over which the legislature has some say--Jacobs acceded to Republican objections and overrode the decision, on the grounds that the measure was not supposed to have come up for a vote that night. "I am a person of my word," she said. "I will not allow to stand a vote that I feel was based on something the legislature did not realize was taking place."
In the few months they have been in power, Democrats have taken a number of small steps placing county government on a sounder footing. They've ended the private use of county-owned cars. They helped pressure Gulotta and the county assessor into a property reassessment. They held oversight hearings on the county jail, which not only revealed patterns of inmate abuse but also documented astoundingly high payments for staff overtime. They have pushed for turning county finances over to a state oversight board, a move that the Republican leaders of the state Senate have so far resisted. And they intend, Jacobs says, to use a tool that the legislature gave itself last year: the ability to look at county spending on a quarterly basis and decide whether or not to appropriate the next quarter's funds.
But those remain small steps. Taking the big ones needed to pull Nassau out of its crisis will be many times more complicated, and will involve politically costly decisions that a party still celebrating its unexpected rise to power may find it too painful to make. As one onlooker says, "You need to raise taxes, cut services, take on the police department, sell public land, cut senior services--you have to do everything a politician is not supposed to do." So far, Democrats have shown no more stomach for those big steps than the county executive or the Republican legislators. But delaying the decisions doesn't really seem much of an option, either. "It's like letting your house go for years," says Lisanne Altmann. "By now, everything's broken."
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