Nassau County has 30 days to come up with a plan to reduce a $103 million deficit for 2016 without using borrowing, reserves or other prohibited revenue sources, a state oversight board that controls county finances said Thursday.
The Nassau Interim Finance Authority unanimously passed a resolution requiring the county to develop a plan to shave $23 million in expenses from its operating budget.
As part of an agreement last year with NIFA, Nassau agreed to limit its 2016 deficit, using Generally Accepted Accounting Principles, to $80 million. GAAP compares recurring revenues and expenses.
Midway through the year, that deficit has grown to $103 million, NIFA officials said.
“Nassau must cut expenses to get their GAAP deficit to $80 million,” NIFA Chairman Adam Barsky said at a meeting in Uniondale.
NIFA said the $103 million deficit is comprised of $60 million in borrowing to pay property tax refunds; $40 million in excess bond premiums — additional money received from borrowings for county projects — for debt service; and $3 million from county reserves to pay NICE Bus expenses.
“It’s problematic because these moves simply increase the deficit,” Barsky said.
Eric Naughton, Nassau’s deputy county executive for finance, said higher than expected sales tax revenues along with anticipated revenue from Nassau Regional Off-Track Betting Corp’s agreement transferring its authority to host 1,000 video slot machines to Resorts World Casino in Queens, “will improve the county’s expected financial results this year.”
Nassau’s 2016 budget projected two percent sales tax growth. Midway through the year, sales tax growth is at four percent, Naughton said in a letter to Barsky Thursday.
Beyond the $103 million deficit, an internal NIFA memo obtained by Newsday projects that the county has an additional $19.2 million in risk in its 2016 budget because of revenue that may not materialize or expenses that could exceed expectations.
A county law that fines commercial property owners who fail to detail their business income and expenses is held up in litigation, putting $15.8 million at risk, the memo says.
NIFA also places $6.4 million in projected savings to pay for police overtime overtime at risk, along with $5.6 million from the sale of county properties.
Increased sales tax revenues and payroll and fringe benefit savings are expected to offset some of the risks, the NIFA board said.
As part of its agreement last year with NIFA, each quarter Nassau must submit a list of $20 million in proposed revenue increases or spending cuts to close that potential budget hole.
Naughton said that for the third quarter beginning Friday, the county expects to save $7 million through retirements of 30 police officials; $5 million through reduced Health Department early intervention cases; $4.5 million in NICE Bus savings and $3.5 million in increased mortgage recording fees.
Nassau’s “strong fiscal management ... will guarantee that the county’s fiscal results for 2016 will be within NIFA’s parameters,” Naughton wrote.
NIFA also noted that earlier this week the Rules Committee of the county legislature approved a $45 million settlement related to a wrongful conviction case involving the 1984 rape and murder of 16-year-old Theresa Fusco.
Although the $36 million judgment and $9 million in related costs are under appeal, the county is required to show that it can cover them. A request for bonding to pay for the settlement will go before the full Legislature July 11.