Nassau’s four-year financial outlook contains “significant risks and leaves little room for miscalculations” while a proposed $50 million deficit-closing plan for this year “could quickly fall apart,” the county’s financial control board said in a report Tuesday.
The Nassau Interim Finance Authority projects that the county’s budget deficit — estimated as high as $130 million this year — could reach $276 million in 2019 “if the projected risks identified by NIFA all break unfavorably against the county,” the report said.
NIFA chairman Adam Barsky wrote in a transmittal letter to county officials that he was sending them the staff review of the county’s updated multiyear financial plan because County Executive Edward Mangano is scheduled to release Nassau’s proposed 2017 budget on Sept. 15, before the control board’s next meeting.
“In general the update is disappointing and it shows a county still unwilling to forcefully confront its financial difficulties,” the 18-page report to the NIFA board said.
Nassau’s recurring expenditures still exceed recurring revenue, the report said, and the update includes “optimistic assumptions” along with gap-closing initiatives that were unsuccessful in prior years.
Eric Naughton, Mangano’s deputy county executive for finance, said in a statement: “NIFA has already accepted the County’s 2016 plan to balance its budget and the county will continue to confront the budgetary challenges that municipalities throughout the state face caused by increasing pension and health care costs, as well as the increased cost of police patrols in this ever-changing world of national security concerns.”
NIFA member Chris Wright, a critic of the county’s reliance on borrowing, said: “I’m prepared to offer ice cream, or even a pony, to the first countywide elected official who will admit that the county has a deficit because revenues are less than expenses, and not just because NIFA says there’s a deficit.”
The staff review notes Nassau had agreed to limit its deficit to $80 million this year, using NIFA accounting standards that do not allow borrowed money to be counted as revenue or the use of reserve funds to pay operating expenses.
The county submitted a “$50 million action plan” to reduce the $130 million projected deficit for 2016 — a half-page list of unexplained spending cuts and revenue increases — that NIFA and Nassau officials said they had developed together. Barsky termed the plan acceptable.
The NIFA report agrees that the $50 million plan “tenuously accomplishes” the cuts. “However, we note that the Plan could quickly fall apart if current trends are not maintained or requisite timelines followed,” it says.
Legis. Judy Jacobs (D-Woodbury), who criticized the lack of detail in the deficit-paring plan, said Tuesday that she still doesn’t understand how NIFA accepted it. “We’re right back to the iffy kind of figuring that gets us in trouble,” Jacobs said.
The report says that if the county does not mitigate the budget risks, the budget deficit could rise to $198 million next year, $234 million in 2018 and $276 million in 2019.
However, the county administration has always balanced its budget on a cash basis, using borrowed money to pay employee severance and property tax refunds, since NIFA took control of the county’s finances in 2011.
“We have been saying for some time that Nassau County is on a dangerous financial path and is in denial of all the fiscal mismanagement issues they really have,” said legislative Minority Leader Kevan Abrahams (D-Freeport). “I hope Ed Mangano heeds the warning and finally addresses the fiscal crisis more urgently.”