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Maragos: County Expected to End 2016 in Budgetary Balance

LongIsland.com

Nassau County Comptroller George Maragos released the 2016 mid-year financial projections.

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$46.5 million in budget adjustments needed to meet NIFA mandate.

Photo by: Sergio Roberto Bichara, via Free Images.

Mineola, NY - August 2, 2016 - Nassau County Comptroller George Maragos released the 2016 mid-year financial projections, which indicate that the County is trending with a budgetary deficit of $14.2 million. The currently projected year-end $14.2 million deficit includes $3.0 million of prior year appropriated fund balance and $103.8 million in borrowing proceeds to pay operating expenditures.

The Nassau County Interim Financial Authority (NIFA) presentation result is projected to end with a deficit of $126.5 million, slightly higher than the prior year’s $125.3 million deficit, and the Structural Gap is projected to improve to negative $116.3 million, down from negative $141.8 million in 2015.  The projected ending fund balance for the primary operating funds will be reduced to $145.9 million on a budgetary basis, down from $163.1 million at 2015, assuming the gap closing opportunities do not materialize.

The Administration should be able to overcome the projected $14.2 million budgetary deficit and end in balance. The greater challenge for the Administration, however, will be to comply with NIFA’s mandate to end the year with no more than a negative $80 million NIFA presentation deficit. This will require $46.5 million in budget adjustments.

“The County’s financials are expected to stabilize in the short term with the improving trends in the Structural Gap, expected improvements in the NIFA presentation result and a sound fund balance,” said Comptroller George Maragos. “However, the continuing reliance on borrowings to pay for operating expenses and the deferment of other expenses and liabilities is a growing issue that must be confronted. These long term and mid-term liabilities are nearing $4.6 billion.”

The noteworthy items affecting the budgetary projection are $18 million of one-shot tobacco settlement revenues that the Administration expects to recognize, $13.5 million of police overtime over-spending, the unlikely collection of $15 million of budgeted revenues from the Nassau Regional Off-Track Betting Corporation’s Video Lottery Terminals (OTB/VLT) and $15.8 million revenues from the Income and Expense Law, which are also uncertain to be collected in 2016.

The total long-term debt for the County and component units is projected to increase by $103.6 million to approximately $3.7 billion ($478.9 million is non-recourse debt) after pay down of $237.8 million in maturing debt. The County also carries additional potential mid-term liabilities, which are projected to grow to over $900 million during the fiscal year from estimated $327 million of property tax certiorari disputes, $232 million of accumulated deferred pension expense payable to the New York State retirement systems, and potentially $345 million from certain non-certiorari (utility) tax cases, dating back to as far as the 1990’s.

The County continues to face heightened risks from old issues. The Nassau Health Care Corporation’s (“NHCC”) operating loss increased, notwithstanding management assurances to the contrary, raising new concerns about its mission to our residents and the ability of NHCC to reimburse the County for its guarantee of the hospital’s debt. Additionally, the precarious financial status of the Nassau Regional Off Track Betting Corporation (“OTB”) remains an issue and the transfer of the County’s authority to OTB of the 1,000 video lottery terminals make it unlikely that the County will be receiving any revenues for years.

In June, the Nassau Community College (“NCC”) was put on probation by its accrediting agency, with unknown consequences to the over 20,000 students and to the County’s reputation. These issues will need higher attention by the Administration and the Legislature.