Nassau County Cuts Structural Deficit, Ends FY 2010 With Surplus

Nassau County, N.Y., ended fiscal 2010 with a $17.2 million surplus and cut its structural deficit to $131.6 million, according to unaudited fiscal results from Comptroller George Maragos.

Expenditure reductions of $60.2 million helped offset fiscal 2010 revenues that underperformed by $56.1 million. In addition, Nassau will realize the surplus by tapping into an additional $13.1 million of bond proceeds — rather than taking it from the operating budget — to help pay its fiscal 2010 property tax refunds. The county’s fiscal year ended Dec. 31.

While the $13.1 million of bond proceeds will help generate a surplus for the county, its overall property tax refund bill is lower in fiscal 2010 than in fiscal 2009 and the county will use fewer bond proceeds overall.

The county owes $79.3 million of property tax refunds in fiscal 2010 and will pay that with $42.4 million of bond proceeds and $36.9 million of operating funds. In fiscal 2009, it paid a $114.5 million property tax refund bill with $64.5 million of borrowing and $50 million of operating funds, according to budget documents supplied by Maragos’ office.

For the next two years, Nassau plans to use only bond proceeds to meet its entire property tax refund obligation and not tap into operating funds.

“They have decided to pay the tax refunds 100% from borrowing during this transition period going forward,” Maragos said in a telephone interview.

The anticipated surplus will bring the reserve fund to $81 million. It is the first time since 2005 that the county is adding cash to the fund, Maragos said. Officials have grabbed from that fund during the past few years to help balance the budget. The fund totaled $285 million in 2004.

“We’ve begun to turn Nassau’s finances around by cutting millions in spending, reducing the number of employees, and by cutting government waste,” County Executive Edward Mangano said in a statement. “Despite inheriting a $133.2 million deficit and putting money back into taxpayers’ pockets by eliminating the home energy tax, we still managed to end the year with a healthy budget surplus.”

Officials now peg the structural deficit at $131.6 million, down from $251.6 million a year before. The county is in discussions with public-employee unions to address a 3.5% salary increase. In addition, its pension contribution will increase by nearly 38% next year and health insurance costs could go up by approximately 13.2%, Maragos said.

“Even though we’re controlling expenses and cutting costs, the financial pressures that we will continue to face are going to continue to be substantial,” he said.

The Nassau County Interim Finance Authority in late January placed the county under a control period after it determined that the county faces a $176 million deficit for fiscal 2011. The county then challenged NIFA’s action. New York Supreme Court Judge Arthur Diamond is currently reviewing the issue.

Last month, Diamond ordered a temporary stay on NIFA’s request that the county file a revised fiscal plan.

Authority chairman Ronald Stack did not immediately respond to an e-mail requesting comment regarding the county’s unaudited surplus and structural-deficit reduction.

Moody’s Investors Service last month placed $1.4 billion of outstanding general obligation and GO-guaranteed debt on review for possible downgrade due to the county’s legal challenge. It rates the credit A1.

For reprint and licensing requests for this article, click here.
New York
MORE FROM BOND BUYER