Comptroller: $140-million gap in Nassau

A state control board for the first time Friday told Nassau it is violating the law and needs to balance its $2.6-billion budget and multiyear financial plan or face "specific orders" to do so.

The warning by the Nassau Interim Finance Authority came as two local fiscal monitors reported separately Friday that Nassau could end this year with a budget deficit of more than $100 million.

County Comptroller George Maragos predicted a $140-million shortfall while the county legislature's nonpartisan Office of Budget Review projected $101.4 million in red ink if County Executive Edward Mangano does not increase revenue or cut expenses.

Mangano put the county on a collision course with NIFA when he sent them a financial update late Thursday indicating that he will cover projected gaps this year and next by using $80 million in money borrowed to pay tax refunds, $150 million collected from the planned privatizing the county sewer system, and $37.5 million from selling 30 years of rent from Mitchel Field leases.

He also proposed a series of significant spending cuts for 2012: additional layoffs, 26-day unpaid furloughs, cutting social service programs by 25 percent and paring $20 million from $169 million in planned construction projects.

NIFA, which took control of the county's finances in January, two weeks ago rejected Mangano's four-year financial plan, saying NIFA accounting regulations prevent the use of borrowed money, the sewer revenue and the Mitchel Field rents to balance the budget.

But Mangano said his outside auditor and financial adviser advised that the money can be counted as "other financing sources" under NIFA law.

"The residents of Nassau County cannot afford a county government and an oversight agency at a standstill over the interpretation of accounting regulations," the update said. "NIFA, while properly encouraging the county to make best efforts to achieve structural balance as a long-term fiscal goal, must also review the plan realistically. The perfect is the enemy of the good."

NIFA immediately responded in a statement: "The county has failed to submit a balanced financial plan for 2012 by July 28th and is now in violation of the NIFA Act. We will review the County's submission in greater detail and hold a public meeting in the near future to consider specific orders to the County to achieve the fiscal balance required by law."

The state law that created NIFA says its orders are "binding" and that anyone who violates them is subject to suspension, removal from office or conviction of a misdemeanor.

"The time for political posturing and drama must end," Mangano replied. "I inherited a fiscal mess that was created on NIFA's watch. The time is now for NIFA to provide solutions for the problems that arose on their watch. My solutions have been to cut spending by over $170 million and reduce the size of government to the lowest level since the 1950s while protecting our homeowners from an increase in property taxes."

NIFA allowed former County Executive Thomas Suozzi to count borrowed money as revenue. NIFA has said it had made a mistake in Suozzi's case.

Maragos said he did not endorse the use of borrowed funds, but that NIFA should allow the county to taper off its reliance on them.