Nassau's financial control board has taken an unusual step of warning the county of "significant" ongoing fiscal risks, including a $65 million projected deficit this year, before County Executive Edward Mangano submits his proposed 2016 budget next month.
Jon Kaiman, chairman of the Nassau Interim Finance Authority, delivered a draft staff report analyzing the county's fiscal condition and updated multiyear plan to Mangano and county leaders Tuesday even before it was presented to the NIFA board "so that your budgeting team is aware of our concerns prior to your final budget being presented."
Usually the analysis is prepared and voted upon by the NIFA board after Mangano presents his proposed budget and four-year financial plan, scheduled this year for Sept. 15.
"It is important to note that we are concerned with the failure to realize revenue goals in last year's budget items identified as 'risks.' This year the risks remain and projected deficits become more dire," Kaiman wrote in a letter to Mangano accompanying a 14-page midyear review and analysis of the county's budget updates.
The NIFA report projects a $64.9 million budget deficit by the end of the year -- though a top Mangano aide predicts the county will end the year with a small surplus.
Earlier this month, Nassau Comptroller George Maragos predicted the county will end 2015 with a $61.9 million budget gap while the county legislature's budget review office put the shortfall at $56.7 million by year's end.
The NIFA report also found the county's multiyear financial update shows recurring spending exceeding recurring revenue, a continuing reliance on borrowing to pay property tax refunds and judgments through 2017, and "nonrecurring savings and optimistic assumptions." Budget deficits are projected to grow from $68.9 million in 2016 to $311 million in 2018, without the county taking gap-closing actions.
"We conclude that the plan is out of balance and believe that the county must act quickly to address its growing risks," the report says.
It notes the loss of $30.7 million in recurring revenue because of the county's repeal of the controversial school zone speed camera program, a $36.5 million shortfall in sales tax collections, and a $9 million loss in revenue from delayed implementation of the county's proposed video lottery terminals.
In response, Eric Naughton, deputy county executive for finance said, "We are reviewing NIFA's midyear report and concur the repeal of school safety cameras, sales tax abnormality and delayed VLTs impacted budgeted revenue, which the county has proactively addressed through departmental budget cuts. The 2016 budget will further address NIFA's recommendations with respect to revenue and we believe the county will end 2015 with a small surplus."
NIFA board member Chris Wright, a frequent critic of the administration's budgeting practices, said, "The county is in horrible financial shape, and its plans to achieve balance seem to revolve around hoping for a miracle transaction, when they should be focused on either raising revenues or substantially cutting programs and costs."