Nassau County’s financial control board wants officials to make plans in the next six weeks to cut about $100 million from next year’s budget.
The state-appointed board, the Nassau Interim Finance Authority, told the county’s top financial official last Tuesday that all departments must submit plans to cut spending by 7 percent in 2018 within the next 45 days.
But the county’s response suggests that officials don’t think the exercise is worth their time.
NIFA wants the county to start addressing an $80 million gap between spending and revenue that the authority projects for each of the next four years before County Executive Edward Mangano submits his 2018 budget and four-year financial plan on Sept. 15, Evan L. Cohen, NIFA’s executive director, wrote to county officials in a May 30 email.
NIFA has also identified about $90 million in annual revenue that may not materialize, creating a $170 million deficit risk for each year through 2021.
While NIFA acknowledges county officials’ responsibility to “shape fiscal and programmatic policy,” the authority thinks balancing the budget next year “will be difficult without meaningful reductions in County spending,” Cohen wrote.
“Therefore, it is essential that the County immediately begin the process of developing a realistic financial plan” for 2018 through 2021, Cohen wrote.
The request comes as candidates for three countywide offices and all 19 county Legislature seats begin their campaigns ahead of November’s election. Mangano, a Republican who has pleaded not guilty to federal corruption charges, has not said whether he will run for a third term, so this year’s budget may be his last.
Adam Barsky, NIFA’s chairman, expressed skepticism last year that elected officials would be willing to make hard budgetary choices in an election year, when their potential political consequences are greater.
The county is also preparing to renegotiate major labor contracts in 2018.
Cohen’s email was a nonbinding request, but the NIFA Board of Directors may formally order the county to outline the cuts based on the county’s response, Cohen wrote.
If county officials do not plan for cuts themselves, NIFA could impose them for the first time ever, as it has threatened to do in previous years.
In a response to NIFA last Thursday, Eric Naughton, Mangano’s deputy county executive for finance, called the demand for spending cuts an “exercise in futility” that could lead to “massive layoffs” and the elimination of some county services.
Officials have cut 1,700 jobs over seven years and eliminated millions of dollars in borrowing as the county’s reserve fund has grown to more than $202 million, contrary to NIFA’s projections of annual deficits, Naughton wrote.
The county also plans to end borrowing for property tax refunds a year early, leading Standard & Poor’s, the credit rating agency, to upgrade the outlook of its bond rating last month to stable from negative, Naughton said.
“We will continue to provide an affordable government for taxpayers, while maintaining safety and working tirelessly to make Nassau County the best place to live, work and raise a family,” Naughton wrote.
Because the county counts borrowed money as revenue, NIFA and other elected officials, mostly Democrats, contest Naughton’s claims of budget surpluses.
Based on generally accepted accounting principles, which do not count borrowing as revenue, NIFA has projected that the county will end this year with a $60 million operating deficit.
George Marlin, a former NIFA board member, said the authority’s letter was a smart move given this year’s political circumstances and the county’s persistent fiscal problems.
“I’m delighted that NIFA is sending a strong message to a lame duck administration that they better have their house in order and make the cuts they need to make to get on the road to a truly balanced budget, or in my judgment NIFA has no alternative but to impose the cuts on the county,” Marlin said.
