Mineola, NY- Nassau County Comptroller George Maragos released the 2015 unaudited fiscal results today and reported that the County is expected to end the year with a $29 million surplus in the primary operating funds based on Generally Accepted Accounting Principles (GAAP). The surplus is primarily due to $122.3 million of borrowing approved by the Nassau County Legislature and the Nassau County Interim Finance Authority (NIFA) to pay for operating expenses including property tax refunds and a portion of police termination pay. It should be noted that the Structural Gap and the NIFA Presentation results improved from the prior year. However, they continue a deteriorating long-term trend with the Structural Gap at negative $141.9 million and the NIFA Presentation result at negative $105.3 million.
“The apparent positive year-end results mask continuing weakness in the County’s fiscal fundamentals reflected in the negative Structural Gap and NIFA presentation numbers,” Comptroller Maragos said. “The use of borrowing to fund the County’s operations and boost reserves cannot be condoned. Nevertheless, the increase in the budgetary fund balance to $164 million increases the County’s resilience and should lessen its reliance on borrowing to cover operating expenses.”
Table 1 summarizes the major variances to the 2015 Adopted Budget. After adjusting for the effect of $151 million of borrowings, recurring revenues were lower than budgeted by $78.3 million and recurring expenses were higher by $63.6 million. The resulting $141.9 million negative variance was reduced by $33.5 million in one-shot revenue items, $44.3 million of expense reduction opportunities, and $122.3 million of operating expenses paid with borrowings, resulting in a $29 million GAAP surplus after adjustments. This surplus assumes a $19 million transfer to the newly established Litigation Fund pending County Legislature approval. The final 2015 results may vary if Legislative approval is not obtained.
On a budgetary basis (not GAAP), the County ended 2015 with an estimated surplus in the primary operating funds of $58.2 million, which included $15 million of appropriated prior year fund balance. Consequently, the estimated ending 2015 budgetary fund balance increased $43.2 million to $164.2 million from $121.0 million in 2014. The Administration moved $8 million to the Retirement Contribution Reserve Fund to reduce future pension costs for non-police department employees. Had this transfer not taken place, the ending fund balance would have been $8 million higher.
The County issued a total of $198.5 million in serial bonds to fund operating expenses and capital projects, which were offset by maturities and the refinancing of NIFA’s debt. The net effect was a decrease in the total outstanding long-term debt of the County and its component units to $3.63 billion from $3.68 billion in 2014 (a net decrease of 1.3% or $48.3 million - see Table 2). Of the $3.63 billion outstanding debt, $3.2 billion is recourse and the balance of $472.8 million is non-recourse debt. The $472.8 million debt is recourse only to the Nassau County Tobacco Settlement Corporation (NCTSC), a component unit of the County.
However, the $3.2 billion of recourse debt of the County does not include an estimated $221.1 million owed to the New York State (NYS) Retirement Systems from the County’s continuing election to defer a portion of its annual pension contribution expense and $316.4 million in estimated total property tax certiorari liability. In addition, there is approximately $385 million of potential liability from certain non-certiorari tax cases dating back as far as the 1990’s. The County is still making legal arguments and negotiating to reduce this liability.