Nassau County Comptroller George Maragos is seen on Oct. 8,...

Nassau County Comptroller George Maragos is seen on Oct. 8, 2014. Credit: Howard Schnapp

Nassau Comptroller George Maragos said Monday that Nassau ended last year with a $10.7 million budget surplus primarily because the county borrowed $121.1 million to pay the cost of property tax refunds, legal judgments and settlements, and police termination pay.

But he warned that the structural deficit -- the difference between recurring expenses and recurring revenues -- had nearly doubled since 2013, to $191.2 million.

The comptroller's year-end report, which must be confirmed by outside auditors, credited County Executive Edward Mangano, a fellow Republican, with reducing expenses by nearly $81 million when faced with a $70 million shortfall in expected sales tax revenues.

Maragos noted that the county also drew $16.2 million from the 2013 fund balance -- $6.2 million more than budgeted -- to cover expenses.

"The increasing reliance on borrowing and use of fund balance is concerning and should be avoided," Maragos said in a news release.

Eric Naughton, Mangano's deputy county executive for finance, responded, "The administration overcame significant obstacles, such as the decline in sales tax revenues, yet addressed each hurdle and reduced expenses for taxpayers."

Nassau Legis. Judith Jacobs (D-Woodbury), a member of the county legislature since its inception in 1996, said the announced surplus "does not even come close to reality" because of the county's reliance on borrowing.

"It's like having five or six credit cards and going right up to the limit," Jacobs said.

Maragos reported the county's control board, the Nassau Interim Finance Authority, which treats borrowing and one-time revenues differently than the comptroller, would calculate that Nassau ended last year with a $158 million deficit.

"That's what happens when a government spends more than it takes in and tries to get by with borrowing the difference," NIFA member Chris Wright said. He said it appeared that NIFA would be overseeing Nassau's finances "for the foreseeable future."

NIFA chairman Jon Kaiman said the "challenges the county faces are formidable. With structural changes occurring through bipartisan efforts in the legislature in conjunction with the County Executive's office, there is hope that the county is in the process of turning the corner."

Maragos said the structural deficit, "which has been used historically to measure the financial health of the county," was nearly twice last year's structural gap of $99.1 million.

Some critics contend that Maragos was inconsistent in reporting the structural gap.

In a chart released Monday, Maragos labeled $21.9 million from a home energy tax adopted by the Democratic administration in 2009 as a one-shot that contributed to that year's structural deficit. Mangano repealed the recurring 2 percent tax when he took office in 2010.

But Maragos did not show $28.1 million collected in revenue from last year's ill-fated school speed camera program as a one-shot even though Mangano and the county legislature repealed the unpopular program in December. If the speed camera revenues were included, the structural gap would have more than doubled to $219.3 million.

Maragos spokesman Jostyn Hernandez said: "The administration has speed cameras as a revenue in 2015. Until it's removed, we will continue considering it a recurring revenue. Once it is removed it will fall under the category of one-shot."

The administration cut two main areas of expense in last year's $2.8 billion budget. Salaries and benefits came in $26.8 million under budget even though NIFA lifted a three-year employee wage freeze last spring. Also, Nassau saved a $28.9 million in debt service, which covers the annual costs of paying off borrowed funds.

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