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The original item was published from 10/9/2014 10:04:05 AM to 10/9/2014 10:20:32 AM.

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County Comptroller News Releases

Posted on: October 9, 2014

[ARCHIVED] Maragos: Proposed 2015 Budget Has $75M at Risk and Tough Choices

Nassau County Comptroller George Maragos released his review of the County’s 2015 proposed $2.98 billion budget and projects a budgetary risk of $75.4 million, if all opportunities materialize. The risk may be as high as $221.1 million should the projected borrowing of $151 million not be approved by the Legislature and NIFA, or other revenues not materialize as budgeted. The proposed budget includes $194 million or 7.0% in increased spending due primarily to accounting changes which now include expenditures that were not included in prior budgets. Without this change, the increase in spending would be $76 million or 2.7%. On the basis of the presentation required by the Nassau County Interim Finance Authority (NIFA), the County is projected to end with a negative $254.7 million, principally due to $151 million in planned borrowing which are excluded as revenues. The projected budgetary risk of $75.4 million is largely due to a sharp decline in sales tax revenues.
“The County is facing major fiscal challenges,” said Comptroller George Maragos. “It is relying on borrowing and use of savings to fund operations, and pay for tax refunds. The Administration, NIFA and the Legislature are well advised to take immediate initiatives prior to the adoption of the 2015 budget to place the County on stronger financial footing. The budget cannot be adopted as balanced without prior borrowing commitments from the Legislature and NIFA.”

The new spending of $194 million is mainly to pay for property tax refunds, employee termination expenditures, higher overtime cost, fringe benefits and contractual services. Salary costs are held to approximately 2014 projected levels due to attrition, which offsets the higher salaries from the lifting of the wage freeze.

The 2015 budgeted Structural Gap is approximately $198.1 million. The Structural Gap is the difference between recurring revenues and recurring expenditures. This level of Structural Gap on the heels of a $242 million Structural Gap projected for year-end 2014 is unsustainable. Additionally, the proposed level of borrowing will increase the County’s Long Term Debt by about $113 million to approximately $3.83 billion after payment of maturing debt.

The County is also facing a new risk; the New York State Court of Appeals recently denied the County permission to appeal adverse lower court decisions regarding utilities property tax assessments dating back to the early 1990’s. Under the “County Guarantee”, the County may now be liable for tax refunds to utilities or reimbursements to the Towns or garbage districts of up to $300 million. This amount may be reduced after further legal determinations, negotiations with the towns and utilities, or appeals to the State Legislature or the Public Services Commission. The County had previously included $285 million for these matters in its estimate of long-term non-tax certiorari liability.

“The County’s fiscal climate has changed significantly due to the steep drop in sales tax revenues,” added Comptroller Maragos. “A fundamental re-thinking of government operations is required to restore the County’s financial health.”

The full report can be found on the Comptroller’s website.

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