Maragos: 2013 Budget Improves County Financial Trends with No Tax or Spending Increases
Low Fund Balance and Rising Costs Need to be Addressed to Avoid Severe Financial Challenges in 2014
Mineola, NY- Nassau County Comptroller George Maragos released his review of the County Executive’s 2013 proposed budget. The $2.8 billion budget contains no tax or spending increases over the prior year. It is a conservative budget with approximately $60.1 million or approximately 2.2 percent of the $2.8 billion budget at risk, the lowest level in over four years. On a NIFA GAAP basis, the projected budgetary risk amount is $125.1 million, or an 11% improvement over 2012 and a 32% improvement from 2009.
"The Mangano Administration, for the third consecutive year, has once again proposed budget that does not increase tax revenues,” Comptroller Maragos said. “The County Executive is to be commended for the extraordinary control of costs, focus on efficiently providing core government services and avoiding new spending promises.”
The Proposed Budget not only avoids raising property tax revenues for the third consecutive year but also continues the improving fiscal benchmark trends; the structural gap is reduced to only $34.8 million or by approximately 86% from the prior Administration’s 2009 peak of about $251.6 million; recurring spending is held to just 1.3% over recurring revenues, the lowest margin since 2004; and borrowing is controlled at a historic low level of $140 million, primarily for capital improvement investments.
The Administration, NIFA and the Legislature need to be mindful of the County’s low fund balance which stands at $40.5 million as of year-end 2011. The Administration’s court pending structured payment plan for property tax judgments, may result in $20 to $40 million of revenue for 2012 by reversing accrued settlements from 2011, and may add up to $20 million to the fund balance. Conversely, the fund balance may be reduced to less than $20 million, if the court does not order payment of the settlement agreements, prior to December 31, 2012.
The County 2013 budget, albeit conservative, has little margin for error due to the low fund reserves, limited contingencies and the possibility of unexpected events. The following years beginning with 2014 will present increased fiscal challenges with rising costs, especially for pension contributions and relatively stagnant projected revenues. We estimate budget gaps in the multi-year plan of $85.1 million in 2014, $114.5 million in 2015 and $163.5 million for 2016.
It would be prudent for the 2013 Budget to eliminate the use of $10 million in fund balance from already reduced reserves of $40.5 million as of year-end 2011 and, to include a mix of additional revenue enhancements and expense reductions. This will ensure that fiscal year 2013 ends in balance, avoids any potential negative fund balance, and helps reduce the projected budgetary deficits in the out years.
Opportunities exist for increased revenues and reduced expenses from: “in-sourcing” of contractual services, where possible; cancellation of all non-essential contractual services and maintenance contracts; better deployment of technology to obtain higher employee productivity; and increases in revenues from non-property tax revenue sources and economic development funding.
Comptroller's Comments on Proposed Nassau County 2013 Budget and Multi-Year Financial Plan