Maragos projects $57.6M Nassau budget deficit

Noah Manskar
Nassau County Comptroller George Maragos is seen in Blank Slate Media's office on Thursday, April 27, 2017. (Photo by Noah Manskar)

The Nassau County comptroller projects a $57.6 million county budget deficit for this year, an estimate largely in line with that of Nassau’s financial control board.

The projection from Comptroller George Maragos last Thursday came two days after a Nassau Interim Finance Authority report saying the county is on track to close 2017 with a $53.5 million deficit.

Maragos’ midyear report was the first from his office that does not make projections on a “budgetary” basis by subtracting all expenses from all income, including borrowing. The change is “an effort to simplify financial reporting and eliminate confusion,” the report says.

The report still uses both the comptroller’s and NIFA’s interpretation of generally accepted accounting principles, or GAAP, which produce the same deficit projection in this case because the county eliminated borrowing for property tax refunds, the report says. NIFA’s method does not count borrowing for operating expenses as revenue.

“Comptroller Maragos’ midyear projection … is very close to ours and reflects our joint mission to lower the County’s deficit,” Adam Barsky, the NIFA chairman, said in a statement.

Maragos, a Democratic candidate for county executive, expressed confidence that Republican County Executive Edward Mangano’s administration would find ways to shrink the deficit. But he said Nassau’s reserves will fall to $67.8 million from $170.5 million if it does not close budget gaps.

The county has drawn down its reserves this year instead of borrowing for certain expenses, Maragos said. Ending borrowing is good, but depleting reserves could put the county in a tough position next year, he said.

“There continues to be a divergence between recurring revenues and expenditures,” Maragos said in an interview. “Expenditures are growing more rapidly, and the structural issues continue to remain.”

Maragos and NIFA agreed that the county faces a $60 million shortfall.  The 2017 budget called for that much borrowing to cover property tax refunds, but the county is instead using reserves to pay them this year, Roseann D’Alleva, Mangano’s budget director, said. That amount will not count as income.

Other risky budget items include $10 million in expected revenue from a law requiring business owners to report income and expenses to the county or face a fine, which is being challenged in court; and an expected $12.5 million in additional payroll costs due to more police officers retiring, Maragos said.

Nassau and its related borrowing authorities, including NIFA, will see their overall debt decline by $102.2 million to about $3.53 billion.

D’Alleva said using reserves to pay for tax refunds was the fiscally smart move because it allowed the county to stop borrowing for them a year ahead of schedule.

The Mangano administration projects a deficit of less than $40 million this year, D’Alleva said.

“Although we do feel that there will be a GAAP deficit, I think it won’t be to the magnitude that NIFA and George Maragos’ office are projecting,” D’Alleva said in an interview.

NIFA has required the county to keep its deficit below $60 million this year.

While the county has “made progress” to reduce the deficit, NIFA’s “objective is to get that number to zero,” Barsky said.

Maragos has said the county’s reserve fund has ballooned because of unnecessary borrowing for operating expenses.

Last week Maragos reported that Nassau closed 2016 with a $27.1 million surplus based on what he calls generally accepted accounting principles. County and NIFA officials have said the county and NIFA use different accounting methods based on GAAP.

Share this Article