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Nassau County ended 2018 with significantly improved deficit, comptroller's report says

Nassau County Comptroller Jack Schnirman, seen June 4,

Nassau County Comptroller Jack Schnirman, seen June 4, released his annual financial report Tuesday.. Credit: Newsday/John Asbury

Nassau County ended 2018 with a $27.5 million deficit in its primary operating funds — a significant improvement over the previous year — according to the county comptroller's annual financial report released Tuesday.

The county ended up $122.4 million in the red last year.

The deficit in the county's "rainy day" fund, or unassigned fund balance, also showed improvement in 2018 with a $22 million shortfall, compared to a 2017 deficit of $68.8 million, the findings showed.

Revenue from sales taxes, reduced spending on fringe benefits for county employees and increases in public safety fees drove the county's improved financial performance, said Comptroller Jack Schnirman.

“The numbers show Nassau County is moving in the right direction, but there is a long way to go,” Schnirman said. “We will be monitoring the situation closely to see if this progress is sustainable.”

Main contributors to the reduced deficit in 2018 over 2017:

  • $43.1 million more in sales tax revenue, representing 3.7 percent growth
  • $60 million in savings from reduced personnel expenses, including fringe benefits
  • $10.4 million more in public safety fee revenues
  • $9.5 million more in PILOT (payment in lieu of taxes) revenue

The comptroller's Comprehensive Annual Financial Report, also referred to as CAFR, is required by state law and takes into account data provided by various county departments. In 2017, the comptroller's office expanded its definition of the county's primary operating funds to include the general fund as well as the police district fund and the sewer and storm water fund. The same funds and the same accounting practices were used in the 2018 analysis, the comptroller's office said.

The report comes two months before County Executive Laura Curran releases her 2020 budget proposal. Curran and Schnirman, both Democrats, took office in January 2018.

"These are positive results for 2018," said Curran spokeswoman Christine Geed. ". While we still have some work to do, we are headed in the right direction. On a budgetary basis we have tangible results; the general funds had a $6.2 million surplus."

Geed said the Curran administration's goal is to end the control period implemented by Nassau Interim Finance Authority, the state-appointed agency known as NIFA, which must approve most of the county's borrowing and oversees its spending.

In October 2018, NIFA board members warned the county could have a $59 million deficit in 2019 and more than $70 million in revenue that may not be realized in the current budget.

“We are encouraged to see that the county continues to be moving in the right direction, but more must be done to end borrowing for operating expenses as well as controlling labor costs and escalating overtime," NIFA Chairman Adam Barsky said of the comptroller's report.

Nassau is currently engaged in contract negotiations with four of its five major public employee unions. 

"We continue to meet with all unions except the PBA, which has refused to come to the table," Geed said when asked about the status of collective bargaining. 

Payroll costs, including union and non-union fringe benefits represents the largest expense in the county budget. Sales tax, which fluctuates with the economy, is the county's main revenue stream. Nassau has a budget of about $3 billion.

Both Democrats and Republicans on the county legislature on Tuesday urged caution on what seemed like a positive fiscal trend. 

Minority Leader Kevan Abrahams (D-Freeport) said: "While the comptroller's report indicates the county is on the road to digging itself out of the fiscal mess left behind by the Mangano administration, we must continue to work diligently and closely scrutinize  our finances to secure long-term improvements for Nassau County taxpayers."

Republicans, who hold the legislative majority in Nassau, were quick to criticize Schnirman but said they did not have a chance to fully analyze the report. 

"The majority looks forward to thoroughly analyzing the CAFR to see the true state of our county's finances. Given the comptroller's record in Long Beach, we intend to scrutinize these numbers carefully," said Republican spokesman Chris Boyle. 

Schnirman is the former city manager of Long Beach which has faced four deficits in the past four years, including ending 2018 with a $5.2 million deficit and projecting to end fiscal year 2019 with a $1 million deficit, state officials said. Four consecutive budgets were adopted with overestimated revenues and underestimated expenses.

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