Moody's Investors Service has raised concerns amid signs of increased spending and reduced revenues in Nassau County, N.Y.
Nassau's sales tax collections were down 14.8% in the first three months of the year compared to the first three months of 2013. The county's fiscal year overlaps with the calendar year.
"The county budgeted for a 2% increase over last year, which included post-Sandy related bumps in the first three quarters," said Rob Weber, a Moody's assistant vice president. "With this first quarter 2014 drop, the county will need to see a 6% total increase for the next three quarters to meet the 2% budgeted increase."
On the spending side, County Executive Edward Mangano, a Democrat, proposed lifting the county's wage freeze for much of its workforce. In early April the county's Republican legislature approved ending the freeze.
The Nassau Interim Finance Authority expects to vote on lifting the freeze in early May.
The failure of sales taxes to grow may be a problem for the county's proposed wage increases, Weber said.
"The county has cited increased sales tax revenues as a source for paying for the increases, as well as additional sources including the installation of red light and speed cameras to increase fine revenue," he said. "However, some of these additional sources will require New York State approval, and it is not clear if this will ultimately be granted."
