The oversight board that monitors Nassau County, N.Y., said the county’s proposed 2011 budget is not balanced due to risky assumptions.
In a review released Tuesday afternoon, the Nassau County Interim Finance Authority identified $234.4 million of risks in County Executive Ed Mangano’s $2.8 billion spending plan. The two largest items of concern: $100 million of bonding for tax certiorari settlements and $61 million of presumed labor concessions.
“Based on our analysis at this time, and given the magnitude of the risks, we cannot project budget balance,” the review said.
NIFA also said that $8 million of projected savings from a refunding of the authority’s debt was not achievable.
“I fully anticipated criticism from NIFA for my unwillingness to hike property taxes and balance this budget on the backs of homeowners,” Mangano said in a statement in response to the NIFA report. “I look forward to working with residents to develop solutions that address the structural problems plaguing our county.”
In his Sept. 15 budget proposal, Mangano said that his budget proposal would close a $343 million deficit without raising property taxes,adding: “Nassau County’s fiscal history is a tale of neglect, malfeasance and broken promises.”
Mangano said he would order concessions from the unions, citing the Taxpayer Relief Act of 2010 that authorized county officials to set 2011 wages at levels consistent with the budget. NIFA said this would require revising existing collective bargaining agreements with the assent of the county Legislature and the plan could face litigation.
New York created NIFA in 2000 to issue bonds and oversee county finances at a time of fiscal crisis, partly due to borrowing to pay tax certiorari liabilities. In 2003, Nassau began a shift toward satisfying the liability through pay-as-you-go funding. By 2006, it had set aside $50 million to cover the claims but borrowing to settle the claims has increased since then.
NIFA has regularly criticized the practice. Nassau is the only county in the state that pays successful property tax challenges to underlying school districts, towns, and special districts within the county. Mangano said he intends to end that practice in 2013 to save $80 million annually.
Calls to NIFA chairman Ronald Stack were not returned by press time.
Moody’s Investors Service in June changed the county’s outlook to negative from stable, citing its expectation that the county’s financial position will decline further in 2010. Moody’s rates the county Aa3.
“We believe that structural gaps are likely to increase given recent changes to the county’s multi-year financial plan, which decreased recurring revenue sources and replaced these with expenditure savings targets which management may be challenged to achieve,” Moody’s said in a rating report.
The agency said increased reliance on bond funding for tax refunds was expected to exacerbate the county’s structural operating imbalance.
Nassau County has 1.35 million residents and is located on Long Island, just east of New York City. Its median household income is $93,579, compared to the national median of $52,175 in 2008, according to the U.S. Census.
Nassau plans to sell bonds for capital projects as well.
Under the budget proposal, the county would sell $153.5 million of bonds to help finance $185.4 million of capital spending in 2011.
Including the current year, the county would sell $563.5 million of bonds through 2013 to partially fund $677.2 million of capital projects.