Nassau County finished 2020 with a $43.3 million budget surplus after receiving "extraordinary lifelines" that helped plug budget holes during the pandemic, the county’s financial control board reported Thursday.
But the county still faces long-term fiscal danger if it doesn’t balance recurring expenses and revenues, the report by the Nassau Interim Finance Authority said.
"The county’s actually in pretty good shape right now," NIFA chairman Adam Barsky told Newsday Thursday. "In response to the unprecedented revenue loss caused by the pandemic, the county was able to get extraordinary help from NIFA to help them overcome those challenges."
But the emergency measures taken to prevent huge service cuts and tax hikes "will not provide recurring budget relief" in the long-term, the report said.
The surplus and other positive financial developments "do not necessarily demonstrate lasting improvement in the County’s fiscal strength," the report said.
"By no means does this mean they have achieved structural balance," Barsky said.
"More work remains to be done to put the County's finances on a sustainable fiscal trajectory," NIFA executive director Evan Cohen said at a NIFA board meeting Thursday night.
The report on Nassau's fiscal condition, which NIFA produces annually, said the county would have had a deficit of $109 million in 2020 but for two key factors: receipt of $102.9 in federal CARES Act money, and $435 million in debt service savings for fiscal 2020, 2021 and 2022, through NIFA's refinancing of $1.1 billion in county and NIFA debt.
Cohen called those aid measures "extraordinary lifelines that had been passed to the County."
Without the refinancing, Nassau would've had to impose tax hikes, service cuts and employee layoffs, officials have said.
County spokesman Mike Fricchione said in a statement: "Nassau’s future will continue to brighten as we win over the pandemic while continuing to stabilize finances with fiscal discipline."
The county's finances could become a major issue in the county executive's race in November.
County Executive Laura Curran, a Democrat, is running for reelection against Hempstead Town Councilman Bruce Blakeman, a Republican.
The federal CARES Act money, meant to lessen the impact of the economic shutdown caused by the pandemic, went primarily to cover county salaries attributable to the pandemic, along with fringe benefits, according to the report.
The refinancing helped Nassau save $50.2 million in 2020.
The county also saved money by not filling vacant positions.
NIFA said the county is expected to have budget surpluses through 2022. The surplus is expected to be $800,000 in 2021 and $28.6 million in 2022, according to the NIFA report.
Deficits are projected to be as large as $132.8 million in 2023 and $225.5 million in 2024.
Nassau is expected to receive a one-time infusion of $397.7 million from the $1.9 trillion American Rescue Plan Act, which provides $350 billion in aid to state and local governments, to be used in the 2021 and 2022 budgets, NIFA said.
NIFA officials urged Nassau to "identify and evaluate new structural solutions."
Barsky in the interview with Newsday urged Nassau to consider carefully how it decides how to spend money placed in a new "special revenue fund" that holds federal aid and excess sales tax dollars.
Majority Republicans on the county legislature pushed for creation of the special fund last fall during negotiations with Democrats over refinancing county debt.
Barsky said the fund money should not be used to fund new spending initiatives.
Instead, it could go toward paying down a backlog of property tax refunds to businesses totaling hundreds of millions of dollars, and large legal judgments, Barsky said.
NIFA has barred Nassau from borrowing to pay for legal judgments in several cases.
NIFA would not consider removing Nassau from its "control period" until reviewing the 2021 budget, Barsky said, "at minimum."
Nassau has suffered a string of annual budget deficits over the past decade, ranging from $189.2 million in 2014 to $61.2 million in 2018, according to the NIFA report.
The county had a $76.8 million surplus in 2019.
Also Thursday, NIFA officials approved a settlement in which Nassau would pay NuHealth, the public benefit corporation that runs Nassau University Medical Center, $30.7 million to resolve a yearslong billing dispute.