Curran balances two Nassau budgets – By George J. Marlin

The following appeared on Monday, March 22, 2021 on The Island Now’s website

When serving as county executive, the convicted felon Ed Mangano failed to grasp the precepts of Generally Accepted Accounting Principles as it pertains to balancing Nassau’s operating budget.

Discovering his disinterest in learning the ABC’s of GAAP during my tenure as a director of the Nassau Interim Finance Authority, I was not surprised. After all, Mangano’s Republican predecessor, Tom Gulotta, drove the county to the brink of bankruptcy in the 1990s with his reckless spending and chronically unbalanced books—resulting in the very need for NIFA’s existence.

Like Gulotta, Mangano foolishly thought one can balance a budget by borrowing money to fill in the deficit hole.

This approach, however, is a violation of the fundamental principle taught to every student in Accounting 101: Borrowed money is not revenue.

Why? Borrowing only kicks the fiscal can down the road. It is like drawing down your VISA card line of credit to cover your mortgage payment. You are still in debt for the amount of the mortgage. And if you continue this practice, eventually you go broke.

Mangano was back on the road to fiscal perdition when NIFA declared a control period in 2011 and began to guide the Mangano administration toward achieving a GAAP-balanced budget.

Mangano fought NIFA tooth and nail, and when he left office in disgrace, the county’s operating budget was still structurally unbalanced.

When Democrat Laura Curran took office in January 2015, she inherited a fiscal mess and had to continue running deficits.

But, working with NIFA, and thanks to a strong economy, Nassau’s operating deficits on a GAAP basis began to significantly decline.

Since Curran has taken office, the deficit declined to $61.2 million in 2018 and in 2019 the county incurred for the first time in years a GAAP operating surplus of $76.8 million.

However, that major achievement, appeared to be in jeopardy due to the onset of the Coronavirus pandemic in March 2020.

In its August 2020 review of the county’s multi-year fiscal plan, NIFA painted this dreary picture: “Nassau County had been making progress toward resolving its fiscal problems before the onset of COVID-19 pandemic…. An examination of the county’s finances shows that the COVID-19 pandemic causes … financial problems. The threats manifest in projected risks that if not addressed could result in deficits of approximately $334.2 million in FY 2020 and $481.4 million in FY 2021.”

The good news for county residents is that the fiscal picture changed dramatically by December 2020, and it looks like when the books are audited, there will be a GAAP budget surplus for 2020 between $45 and $75 million.

While total income is projected to be $3.239 billion, down $320.7 million from the 2020 modified budget, total expenses are projected to come in at $3.164 billion, a decrease of $395.7 million.

The biggest savings, $152 million, were in salaries and fringes from vacancies, health insurance costs, and offsets to costs paid for by CARES Act funding.

Curran effectively managed the payroll and proved, that the county government could deliver services with less people—even in an emergency.

Granted, the federal COVID aid received in 2020, and the debt service savings are one-shot revenues. Nevertheless, incurring any GAAP surplus in 2020 is a major victory and a far cry from the projected GAAP deficit of $334.2 million.

With the economy bouncing back in 2021, Curran will have the opportunity to continue restoring financial stability to the county, particularly if she does not surrender to the municipal unions in an election year and continues to manage the employee headcount effectively.

One suggestion for the county executive to ponder: Since the $300 million from the 2021 federal COVID Relief Act the county will receive is a one-shot revenue, how about using that money to settle the $300 million in Tax Certiorari claims? In 2020, the county was able to balance the budget with far less in COVID relief due to the loophole which sent over $100 million to the Town of Hempstead rather than the county. This year the county is receiving the full amount, which can result in a windfall considering that it wasn’t contemplated in the adopted 2021 budget in nearly that amount.

Using the money to settle old claims would eliminate the need to burden taxpayers with more long-term debt, and could bring an end to the need for extending the NIFA control period any further than necessary due to the outstanding uncertainty. The county executive could, in that way, add a third balanced budget to her record and put the county’s elected officials in the position of being able to determine their own fiscal fate for the first time in a decade.

That’s what I call a genuine twofer. Think about it, Mrs. Curran.

Explore posts in the same categories: Articles/Essays/Op-Ed

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