Maragos: Bonding Failure Increases Budget Deficit

Written by Joe Scotchie Friday, 20 July 2012 00:00

NIFA, Democratic legislators targeted for criticism

Last week, Nassau County Comptroller George Maragos announced that the 2011 unaudited budget deficit would reach $50.4 million. He added that the projected deficit for 2012 is set at $45 million. However, he placed the blame on both NIFA and the Democratic Party caucus in the county legislature.

Maragos said that the failure of both NIFA and the Democratic caucus to work with County Executive Edward P. Mangano and approve $43.1 million in bonding for property tax refunds caused the deficit to balloon. With such approval, he said the deficit for 2011 would be at only $7 million and the 2012 projected budget would be nearly balanced.

“The deficit in 2011 was avoidable,” Maragos reiterated, citing the failure to approve bonding legislation. “Similarly, the projected $45 million deficit in 2012 is partially the result of the anticipated failure of NIFA and the Legislative Minority to again approve the 2012 budgeted bonding for tax refunds. This ongoing lack of cooperation will continue to negatively affect the county.”

Maragos emphasized that the audited results will be finalized on July 30. He said that the county executive is expected shortly to release a revised budget. Maragos told reporters that the revised budget should find $85 million in savings, from a combination of spending reductions and revenue enhancements, but also without an increase in property taxes.

Maragos said that the unexpected deficit problem is “not insurmountable.” Otherwise, he said that county finances have seen improvements. Sales tax revenues, Maragos said, are expected to increase by 5 percent as opposed to the projected 3 percent. That, he added, has brought an extra $20 million to the county’s coffers. Maragos also said that the county’s cash flow basis remains “very healthy” and the deficit situation does not endanger any county employee.

In addition, Maragos said the budget’s 2011 Structural Gap improved for the second consecutive year by approximately 7.3 percent to $127.6 million, down from $137.6 million in 2010. The amount of general borrowings during 2011, he added, was reduced by approximately 75 percent from $324 million in 2009 to $82 million in 2011.

Still, Maragos said that the county needs to replenish its reserve funds by not just eliminating the deficit, but also by achieving a budget surplus in 2012. Benefits to a surplus, he said, would not just be higher credit ratings for the county, but also the ability to eventually phase out borrowing for property tax refunds. To do that, the county will have to achieve savings of $90 million, a number that would deal with both the 2011 and 2012 budgets. To achieve those savings, Maragos recommended that the county executive’s office should make additional budget cuts along with plans to “refocus” government on core functions: seek in-sourcing where possible, cancel all nonessential contractual services and maintenance contracts, halt all non-essential general expense purchases.

More Partisanship

The press conference had partisan overtones and the responses were similar.

“The facts are that Ed Mangano has not achieved the projected savings he promised; he has given out tens of millions in crony contracts and wasted millions on baseless lawsuits; overtime in the county under his watch has run amok; he went back on his word to the youth and seniors in the county by cutting their funding; and he has consistently begged the legislature over and over to bail him out by borrowing and creating more and more deficits for years to come,” said Minority Leader Kevan Abrahams (D – Freeport). “The only real savings he was able to achieve was due to the wage freeze imposed by NIFA, which he initially fought. Of course with this type of blatant fiscal mismanagement he will end the year in a $50 million deficit. I am surprised it’s not more.”

“The Democrats created Nassau’s fiscal mess and have refused to provide the votes necessary to assist the county in fiscal recovery since losing their power over the legislature,” said County Executive Mangano. “I am certain every resident is nauseated at the Democrats thinly-veiled attempt to create fiscal chaos for their own political advantage. All know that I put forth a plan, approved by the majority in the legislature and NIFA, to put Nassau on road to fiscal health. It is outrageous that the Democrats have not provided one vote to implement this plan. Notwithstanding their reckless act, I am working closely with NIFA to modify the multi-year plan to attack the $310 million deficit I inherited when taking office. With bipartisan cooperation, the deficit has been eliminated. Instead, the Democrats have blocked the fiscal stability plan which merely creates more burden on our taxpayers, more cost to our county and greater fiscal challenges for those seeking their rightful property tax refund.”