Nassau County’s fiscal control board released a report last week with good and bad financial news for the county.
On the plus side, Nassau County Interim Finance Authority directors said that the county’s general outlook for 2017 had improved since their initial deficit predictions. However, the county was also warned about continuing fiscal practices that could grow deficits to almost $200 million by 2020.
“We acknowledge that, at NIFA’s urging, the county has made notable progress in reducing the size of the deficit since peaking in Fiscal Year 2014,” NIFA’s directors wrote. However, “the county needs to act quickly to address growing risks through the implementation of additional, recurring revenue-generating and expenditure-reducing initiatives.”
NIFA projects that the county will end the year with a roughly $54 million deficit, which is less than the $60 million maximum allowed by the board, but not small enough to end NIFA’s period of control over the county’s finances.
County Comptroller George Maragos, who is running for county executive, projected a slightly higher deficit of $57.6 million by year’s end, using NIFA standards. In a report issued by him on Aug. 3, Maragos noted that the county may be able to reduce the deficit, but will be “hard-pressed” to achieve balance by the end of the year.
The $54 million deficit projected by NIFA is made up of $15.4 million in budgetary risks and $38 million in adjustments made by the county that are not allowed under the NIFA statute.
NIFA praised the county for ending the practice of borrowing to pay property tax refunds, but said that this also caused a shortfall because the county had initially included the borrowing in its adopted budget to fund $75 million in payments.
Overall though, NIFA’s directors said that the county using its fund balance rather than bonding for the refunds — although not a help in achieving a balanced budget on Generally Accepted Accounting Principles — is viewed as a credit positive, because it reduces the county’s debt burden.
This year, the county is likely to spend $9.5 million more than it had budgeted for contractual services, the report indicated, partially because of its new contract for inmate health care services at the correctional center with Nassau Health Care Corporation.
Also, the county’s current financial plan for 2017-2020, according to NIFA, includes recurring expenditures that exceed recurring revenues, and relies too heavily on “non-recurring savings and optimistic assumptions.”
Consequently, the county’s budget gap could reach $145 million in 2018, $174 million in 2019 and $189 million in 2020.
If the county does not address the concerns laid out in the report, NIFA could step in to make their own “significant cuts that could negatively affect taxpayers” and county employees.”
“However, decisive action by the county could still change this outcome,” NIFA’s directors said.
With the county required to submit a new multi-year financial plan for 2018-2021 by Sept. 18, NIFA’s directors said that officials should immediately work on a plan that moves the 2018 budget closer to being balanced, which will be required in 2018 and onward.
“We recommend that the county seize the opportunity to get a head start on closing projected risks in 2018 by implementing initiatives which provide recurring savings and revenues sooner rather than later,” NIFA’s directors wrote.
County Budget Director Roseann D’Alleva on Aug. 4 responded to NIFA’s report, calling their revenue projections “overly conservative,” and projecting a GAAP deficit for 2017 of at least $36 million.
“But I may be able to mitigate that even further,” said D’Alleva.
Both Maragos and NIFA’s deficit estimates are conservative, and the county has historically been able to “achieve or exceed” its revenue projections, despite NIFA’s discounting them, she said.
“I’m not being optimistic — I’m being conservative,” she added. The comptroller and NIFA “are just being much more conservative.”