Nassau's financial condition is "deteriorating" with a continued reliance on borrowing and a projected 2015 budget deficit of nearly $62 million, County Comptroller George Maragos told lawmakers Thursday.

But administration officials contend the county will end the year with a $1.9 million surplus, in part by borrowing $124 million for tax refunds and legal settlements and using $16 million from the county's fund balance for operating expenses.

The Budget Review Committee hearing provides lawmakers with a mid-year report on Nassau's finances and comes 12 days before County Executive Edward Mangano delivers his 2016 budget.

Maragos projected a 2015 budget shortfall of $61.9 million and pegged the structural deficit -- which calculates the difference between recurring revenue and expenses -- at $241.3 million by year's end.

The culprits, he said, include an "unanticipated" sales tax drop of $35 million to $40 million, the loss of more than $30 million in expected revenue from the canceled speed camera program and a $9 million loss from the delayed implementation of the video lottery terminal program.

"Major structural changes to the county operations and revenue sources will be required to align operating expenses without borrowing," Maragos said.

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Maragos also chided the county for "accelerated" bonding to cover operating expenses and noted that Nassau's long-term debt is up to $3.68 billion.

Minority Leader Kevan Abrahams (D-Freeport) said the bonding, although approved by the legislature, "saved" the county from significantly higher budget deficits in earlier years.

The county owes $306 million in residential and commercial tax refunds. Committee Chairman Howard Kopel (R-Lawrence) said with interest rates low, Nassau should "clean out its books" and borrow the full amount.

Eric Naughton, Nassau's deputy county executive for finance, said paying down the backlog at once "makes sense."

Naughton said Nassau's fiscal outlook was improving. "We recognize that this county has historical financial issues that we've been trying to address," he said. "We've been making improvements every year."

He points to the declining size of Nassau's workforce, the elimination of a $13 million annual subsidy to Nassau University Medical Center and a new program that would force commercial property owners who grieve their taxes to pay into an escrow fund pending the outcome of their appeal.

Naughton offered few details on the 2016 budget, which will be submitted to lawmakers Sept. 15, but said "we will not be cutting any programs."

The budget also will include a new fund to be used to pay for future judgments and settlements, which total $10 million to $20 million annually. The fund would be financed from operating surpluses, he said.But additionalfinancial costs are on the horizon.

Roughly 100 Nassau police officers have retired this year and another 100 are expected to put in their papers by year's end, Naughton said. Nassau must borrow about $50 million to cover the outgoing officer's termination costs, which includes unpaid sick and vacation days. Officials said Nassau will also need to spend $5.5 million in operating funds to cover the termination costs of an estimated 200 Civil Service Employees Association members who are expected to accept an early retirement incentive.