By Joan Gralla
(Reuters) - Under the threat of having $80 million of its bank accounts frozen by the courts, New York's Nassau County next Monday will seek the approval of its legislature for $41 million in spending cuts.
The money, needed to pay tax refunds to homeowners, cannot be raised in financial markets because Democrats, who are in the minority in the legislature, oppose a $71 million borrowing plan, county officials said on Tuesday.
If neither the debt, whose approval needs a super majority backed by at least three Democrats, or the cuts, which can be passed by a simple majority, are approved, the courts could freeze around $80 million in bank accounts, double the amount owed to homeowners, said Cristina Brennan, the spokeswoman for the Republican majority in the legislature.
While Republicans and Democrats have been wrestling for months over Nassau County's tattered finances, a legal freeze of its bank accounts would affect the county's daily operations, potentially hitting services and payroll.
The county, located on the western half of Long Island and home to 1.33 million people, is one of many around the United States struggling to balance its budgets.
Nassau County's recent fiscal problems are at odds with the wealth of its taxpayers, who have a median household income of $93,613, well above the national average.
The county has a long history of mismanaging its finances. It was put under state control after New York gave it $100 million of aid in 2000 to ward off a possible bankruptcy.
"BRUTAL" BUDGET CUTS
County Executive Edward Mangano, a Republican, proposed the $71 million borrowing plan to repay not only the $41 million immediately needed but also additional property tax refunds, said Brian Nevin, a Mangano spokesman.
"We're opposed to the borrowing - it's excessive because they haven't managed the budget in the proper way," said Mike Florio, a spokesman for the Democratic county legislators.
The Office of Legislative Budget Review on Friday estimated that Nassau County's 2012 budget faced a nearly $127 million shortfall in paying salaries for its workers, Florio noted. The county's budget totals about $2.6 billion.
Mangano rejected the Democrats' suggestion to draw down reserves. "Tapping reserves could result in a bond downgrade that impacts taxpayers," Nevin said.
Both Republicans and Democrats complain about the proposed cuts, which include worker furloughs, ending some social services, and closing some county offices one day per week.
Those budget cuts are "brutal," Brennan said. They would eliminate the so-called Youth Board, which provides daycare for working parents, and abolish the Department of Mental Health, Chemical Dependency and Developmental Disability Services, she added.
Florio said: "They basically are going after the poor and neediest." The bill would also give Mangano the authority to open contracts with public workers' unions, he said, to win concessions.
(Reporting By Joan Gralla; Editing by Paul Simao)