To his political opponents, George Maragos’ report last week that Nassau County ended 2016 with a surplus was a sign that the comptroller is out of touch with the county’s financial state.
But to Maragos, the question of whether the county has a surplus has nuance that has not been discussed, he said in a sit-down interview with Blank Slate Media last week.
Calling the county’s finances “very stable” and its debt level “manageable,” Maragos said the use of three different financial reporting methods has caused confusion about whether Nassau runs a surplus or a deficit.
He wants the Nassau Interim Finance Authority, the state-appointed board that controls the county’s finances, to agree that reports should only use generally accepted accounting principles — which, Maragos said, allow governments to count borrowed money as revenue.
“The situation we have right now, where we have three methods of reporting that we’re required to report, I think is terribly confusing to the public,” Maragos said in the interview, which his office solicited.
Maragos, among three Democrats running for county executive, last Monday said Nassau ended 2016 with a $38 million surplus according to generally accepted accounting principles, or GAAP, mostly due to $105.8 million in borrowed money.
The borrowing led Maragos’ Democratic opponents to charge that the county has no surplus but a deficit, which NIFA estimated to be about $73 million under generally accepted accounting principles and the NIFA Act, the state law governing the authority.
Maragos opposes any borrowing for operating expenses, he said, but the deficit was actually calculated under a special reporting formula NIFA conceived that does not count borrowing and certain revenue sources.
To make Nassau’s financial reports more straightforward, NIFA and the county should agree to a single method rather than three, Maragos said. His annual reports also calculate surpluses and deficits on a “budgetary” basis, evaluating all money received and spent.
But regardless of the formula used, the county would have had about a $5 million surplus without any borrowing last year if it had not moved any money into its reserve funds, Maragos said.
“It’s up to the [county] Legislature and NIFA — if they don’t want to approve borrowing they shouldn’t, but they certainly shouldn’t approve borrowing and complain about it,” he said.
A NIFA spokesman declined to comment beyond Chairman Adam Barsky’s statement last week, maintaining that Nassau had a deficit last year and that borrowing for operations “is one of the leading causes for the county’s current fiscal stress.”
“NIFA remains steadfast in requiring the County to eliminate these practices and the deficit to end the state-mandated control period,” Barsky said in the statement.
Maragos, who was elected comptroller twice as a Republican and switched parties in September, has defended Nassau’s finances in the three-way Democratic primary for county executive.
Other candidates for the county’s top office from both parties rejected Maragos’ argument. The formula that produced a surplus is irrelevant as long as the surplus comes from borrowed money, they said.
State Assemblyman Charles Lavine (D-Glen Cove) said it’s “common sense” that borrowing cannot form a surplus. County Legislator Laura Curran (D-Baldwin) charged that Maragos is “ignoring” the county’s poor fiscal management.
“It’s time George Maragos stopped playing politics and had an honest conversation with taxpayers,” said E. O’Brien Murray, a spokesman for the Republican county executive candidate, Jack Martins.
Brian Nevin, a spokesman for Mangano, blamed the county’s overborrowing on Maragos’ previous projections of a deficit in the 2016 county budget.
Mangano’s administration already stopped borrowing for payouts to terminated employees and legal settlements, and plans to end borrowing for property tax refunds, Nevin said.
But “[i]f the Comptroller would have properly projected the surplus last year, instead of improperly projecting a deficit,” borrowing for refunds could have ended last year, he said.
Maragos rejected the notion that Nassau was on shaky financial ground. At $3.6 billion, its total debt is at a stable level, and it has a $202 million reserve fund that’s been fed by overborrowing, he said.
Maragos credited NIFA with helping the county reduce borrowing for operations and managing its debt. All county departments could cut expenses by 2.5 percent to further strengthen Nassau’s financial footing, he said.