Nassau County faces a $111.2 million deficit in 2021, even if a state control board refinances hundreds of millions of dollars in debt, according to a new report from the Nassau Interim Finance Authority. Failing to refinance the debt, the report said, could result in a deficit of $346.2 million.
NIFA board members voted Thursday night to approve the report, a review of Nassau County Executive Laura Curran's 2021 budget.
Key to Curran's financial plan is having NIFA refinance existing debt to save hundreds of millions of dollars in the short term, as the county copes with revenue losses stemming from the coronavirus pandemic.
Curran, a Democrat, wants NIFA to refinance the county's debt over 15 years. But the County Legislature, controlled by Republicans, must formally ask NIFA to refinance the county's debt by issuing a "declaration of need." The County Legislature, which is controlled by Republicans, is scheduled to vote on the plan later this month. GOP county lawmakers have expressed concern that a refinancing could extend the life of NIFA’s oversight. NIFA is also expected to refinance its own debt.
The restructuring would yield $50 million of savings in 2020, $235 million in 2021, and $150 million in 2022, according to NIFA's report.
Refinancing would be a temporary fix, NIFA officials said.
"If not for the restructuring, they wouldn’t be able to balance the budget," NIFA chairman Adam Barsky said in an interview before the vote. But he warned, "the restructuring isn't permanent," and the county is expected to see large-sized deficits in future years' budgets.
"All the restructuring does," Barsky said, "is help immediately blunt and offset the impact of the sales tax loss, and other revenue losses, as the result of the pandemic. It's a short-term benefit that buys them some time" to address fiscal problems in future years.
If refinancing is implemented, the deficit could reach $137.3 million in 2022, $285.7 million in 2023, and $359.7 million in 2024. Without refinancing, the deficit could reach $346.2 million in 2021, $306.3 million in 2022, $319.7 million in 2023 and $381.7 million in 2024, according to the NIFA report.
Nassau County is likely to incur a $115.2 million deficit in 2020, so long as the refinancing is implemented, the report said.
NIFA officials expressed concern about the "structural imbalance" that continues to plague Nassau County budgets. Recurring expenses, largely salaries and benefits for employees, exceed recurring revenues.
The report states the, "county’s finances continue to have a mismatch between recurring revenues and expenditures during each of the years," in future fiscal plans.
Also Thursday, NIFA directors postponed a $75 million bond payment later this year until 2021. The deferral would provide $50 million in budgetary relief to Nassau in 2020, while the remaining $25 million would be kept to make the payment next year.
Directors approved a resolution that would effectively extend a contract between the county and Nassau University Medical Center, which provides health care for inmates at the county jail. The resolution recommends that NIFA directors not vote on the amendment, allowing the extension to pass by default.
The resolution recommends that the county issue a request for proposals for a long-term contract, detailing what it needs, and provisions to adjust costs and staffing levels.
NIFA declined to approve the contract extension during its September meeting.