NIFA: Nassau’s 2017 deficit expected to be $53M, cites improvement

Nassau County is expected to end 2017 with a deficit of more than $53 million, an improvement from previous years, but the budget gap could rise to nearly $190 million by 2020, according to a new report by the county’s financial control board.

The Nassau Interim Finance Authority’s midyear review of the county’s finances found Nassau is “progressing favorably” in reducing its projected 2017 deficit from an original estimate of $100 million to $53.5 million based on generally accepted accounting principles, which do not allow the proceeds from borrowing to be counted as revenue toward operating expenses.

But the control board said annual expenses continue to outpace revenue and County Executive Edward Mangano continues to rely on reserve funds to pay for operating expenses such as court judgments and retirement system contributions.

While the 2017 projected deficit is an improvement from the $83.1 million shortfall last year and less than the $60 million deficit cap imposed by the board, it’s still too high to end a NIFA control period that has been in place since 2011.

“The county has made good progress,” said NIFA Chairman Adam Barsky. “I don’t know if they deserve a pat on the back . . . but we are cautiously optimistic they will meet our goals for 2017.”

Nassau Budget Director Roseann D’Alleva said NIFA is “overly conservative” in its assumptions and she projects an $8.6 million surplus for 2017 based on budgetary standards and a deficit of less than $40 million using GAAP standards.

For example, D’Alleva disputes the board’s projections that the county will not meet revenue projections for fines and forfeitures and for the sale of county properties.

County Comptroller George Maragos, who expects to release his midyear report Wednesday, projects a $57 million deficit using GAAP standards.

NIFA’s $53 million projected deficit is driven by a $60 million shortfall in bond proceeds after the county decided to end its practice of borrowing to pay for tax refunds one year earlier than anticipated.

The board also says $10 million in revenue is at risk from a law, being challenged in court, that requires commercial property owners to submit annual income-and-expense statements or face a fine of up to $300,000. Nassau is also projected to be $9.5 million over budget for contractual services, largely due to a new contract with Nassau Health Care Corporation to take over inmate health care, according to the 16-page report.

Those risks, the report said, will be partially offset by $26.4 million in lower tax refund payments, $4.1 million in higher-than expected sales tax revenue and a $3.7 million reduction in utility costs.

County legislative leaders each took credit for the county’s improved fiscal outlook.

Presiding Officer Norma Gonsalves (R-East Meadow) said NIFA’s report is “an acknowledgement that the financial choices made by the legislature have been effective.”

Minority Leader Kevan Abrahams (D-Freeport) said the improvements occurred because Democrats “worked tirelessly to reign in the failed Mangano-Republican borrow-and-spend policy.”

NIFA contends the county’s multi-year plan for 2018-2020 “does not build on the progress” made in 2017 and relies on “recycled” initiatives such as the privatization of the county sewer system and overly “optimistic” revenue assumptions.

The board found the out-year budget gap could reach $145 million in 2018, $174 million in 2019 and $189 million in 2020. If the county fails to address these risks, Barsky said NIFA could unilaterally impose “significant cuts” next year.

By Robert Brodsky

robert.brodsky@newsday.com@BrodskyRobert

Robert Brodsky is a breaking news reporter who has worked at Newsday since 2011. He is a Queens College and American University alum.