The Wall Street rating service that downgraded $1.5 billion of Nassau County's debt by a notch on Tuesday might have felt silly when County Comptroller George Maragos announced Wednesdaythat Nassau had amassed a $41-million surplus in 2012. More likely, though, the financial folks at Fitch Ratings, and Moody's Investors Service, which downgraded Nassau debt in October, recognized that while the surplus is a fiction, the county's financial woes are all too real.
In the real world, and according to generally accepted accounting principles, the county had an $85-million deficit last year. The difference between the numbers Maragos touts and the actual ones is that the comptroller wants to count money shifted from one fund to another, and borrowed money, as revenue. They aren't.
The ratings agencies understand this, which is why, in addition to downgrading Nassau's debt, Fitch kept its outlook for the county at "negative." That means further downgrades are likely.
Nassau County owes bondholders more than $3 billion, and the number climbs every year. In addition to the borrowed money, Nassau owes about $335 million to commercial and residential property owners who've won tax certoriari claims but have never been paid. That number is also climbing all the time.
The financial problems are long-standing and can't all be blamed on County Executive Edward Mangano or Maragos, but they're also ongoing. Getting them under control is a difficult problem that has to start with fixing the county's dysfunctional system of assessing property value.
By the accounting rules that are both standard for governments and demanded by the Nassau Interim Finance Authority, the county is running a huge annual deficit and accruing increasing liabilities. At such a time, publicizing surpluses is a purely political move that does nothing to serve the taxpayers.