Nassau County, one of the nation’s richest areas, faces a poor fiscal prognosis.
That was the blunt message from county Comptroller Jack Schnirman in the county’s annual Comprehensive Annual Financial Report (CAFR) to the county executive and legislature.
“Nassau County is in a state of fiscal crisis, bordering on fiscal emergency, due to the previous eight years of mismanagement,” Schnirman said in a statement after a July 2 press conference. “Today, we are delivering a comprehensive annual financial report that further confirms that determination.”
According to the report, the county ended 2017 with a $122 million deficit; a “rainy day fund” of negative $68 million; outstanding tax certiorari liabilities (adjustments to property assessments) topping $500 million; litigation liabilities of nearly $400 million; and more than $200 million in liabilities to the New York State Pension System.
“We aren’t going to play the game of using whatever set of books makes the county look best,” Schnirman said. “The county must operate from one consistent set of financial facts that is accessible to all. The days of using budgetary math to gloss over problems and kick the can down the road are over.”
Spokesman Rob Busweiler, when asked if Schnirman had any specific officials in mind, answered, “[The comptroller] was referring to the practice throughout government in previous years of pulling numbers from different accounting standards at different points and not being consistent.”
The Nassau Interim Finance Authority (NIFA), created by the state legislature, has been overseeing county finances since 2000. It has veto powers over its budget and acting as the county’s borrowing authority.
The report was reviewed by the county’s in-house accounting team and independent external auditing firm. Busweiler said they were in agreement with the figures.
“The newly revitalized Independent Audit Advisory Committee, comprising five Nassau County residents with decades of finance, audit, and accounting experience at the Big Four firms and major institutions, will play a key role examining the county’s annual external audit and ensuring its recommendations are implemented in a timely manner,” the press release noted.
Added Schnirman, “The county’s ability to function as an effective government for the people is in jeopardy, and our ability to borrow money or cover an unexpected catastrophic event is severely limited. Due to the County Guaranty, Nassau County refunds more in property taxes than it collects each year. Coupled with a broken assessment system, as well as years of deferred costs and unconscionable decentralized operations that have allowed each department to operate as its own separate entity, has resulted in dire fiscal consequences.”
Schnirman also revealed that the county’s “financial tracking and payroll processing software are severely outdated, inefficient, and on the verge of crashing. Hundreds of staff hours annually are wasted by manually inputting data into voluminous Excel files, which is prone to risk. There is also a very real possibility of these decades-old systems crashing and the county having no ability to restore these functions, losing its ability to track even basic financial functions or process payroll.”
“The comptroller’s report once again illustrates that the prior administration drained the county’s cash and spent more in 2017 than they did in 2016 without a source of funding,” said Nassau County Executive Laura Curran in a statement. “The outstanding tax certiorari payment debt continues to be the number one fiscal challenge for Nassau County. In June, without warning, the Nassau legislative majority voted down the home-rule message which the state senate requested in support of legislation to increase NIFA’s borrowing capacity. NIFA was created to access credit markets at better rates, and the county’s legislative majority neglected this assistance. This was short-sighted.”
Curran had hoped the measure would have authorized NIFA to borrow an additional $400 million to pay for tax refunds to commercial property owners. NIFA can borrow at lower interest rates and the county’s repayments could be spread out to 2041.