Nassau faces $77 million cash deficit, county comptroller says

Nassau County Comptroller George Maragos on June 12, Nassau County Comptroller George Maragos on June 12, 2013. Photo Credit: Howard Schnapp

advertisement | advertise on newsday

County Comptroller George Maragos projected Tuesday that Nassau will end the year with a nearly $77 million cash deficit, primarily due to a steep decline in sales tax revenues and increasing costs of police overtime.

Maragos also said in his midyear budget report, required by the county charter, that the difference between recurring revenues and recurring expenses -- the structural budget gap -- will increase to $242 million by the close of this year, after dropping to $99 million last year.

Maragos said fellow Republican County Executive Edward Mangano and the county's financial control board, the Nassau Interim Finance Authority, must take "immediate steps" to close the deficit to "avoid the unpleasant consequences that will arise from our projections, should they be allowed to materialize."

Tim Sullivan, Mangano's deputy county executive for finance, said the administration already has submitted a plan to NIFA to reduce overtime spending through "management initiatives" and by cutting funds budgeted for supplies, equipment and contractual expenses.

Sullivan said the county has asked for proposals from an independent economic consultant to review and report on the sales tax data by Sept. 5. The administration had questioned the accuracy of the state's allocation of sales tax revenues, after Nassau's collections dropped by 9 percent through June compared with the same period last year.

The county charter requires Mangano to submit his proposed 2015 budget on Sept. 15.

advertisement | advertise on newsday

Maragos projects that police overtime will cost $67.4 million this year compared to $50 million budgeted. He also predicts a $90 million shortfall in sales tax revenues, which he said reflects slower economic activity after a surge in spending after superstorm Sandy in 2012, and a shift to online shopping.

Sullivan is projecting a $51 million sales tax shortfall but says changes in police contracts that restrict the use of leave time, along with the hiring of new police officers at a lower pay scale, will slow the growth in overtime.

NIFA recently lifted a three-year wage freeze on four of the county's five major unions after they negotiated new contracts that the administration and labor leaders said will save tens of millions of dollars in future years. NIFA is expected to approve a new deal for county correction officers next month.

NIFA chairman Jon Kaiman had asked Nassau to develop new revenues to cover immediate costs projected at about $130 million over four years.

Sullivan, in a memo to NIFA, said some of those initiatives, such as increased fees and new speed cameras in school zones, will help close this year's projected deficit.

The county also plans to borrow to pay $25 million in employee termination costs and $75 million in tax refunds before a new commercial refund system takes effect in 2017. He predicts the county will end this year with a $10 million cash surplus.

Kaiman could not be reached for comment.

NIFA member Chris Wright, who warned that the new union deals would cost more than anticipated, called Maragos' projected $76.9 million cash deficit "unfortunate, but not surprising. It's exactly what was to be expected -- and was predicted by objective analysts -- when the county added substantially to its cost base in the face of declining revenues. That the county did so with NIFA's approval compounded the error."

advertisement | advertise on newsday

Wright was the only NIFA board member to vote against the four union deals approved so far.

The best of Newsday every day in your inbox. Get the Newsday Now newsletter!

Comments

Newsday.com now uses Facebook for our comment boards. Please read our guidelines and connect your Facebook account to comment.

You also may be interested in: