Comptroller report: Nassau had $79.7 million surplus in '22
Nassau County recorded a $79.7 million budget surplus in 2022, its fourth in a row after a decade of deficits, buoyed in large part by delayed debt payments, record sales tax receipts and federal aid.
Sales tax collections totaled $1.4 billion last year, up $90.2 million from 2021, and $129 million more than what was budgeted, according to the Nassau County Comptroller Office's Annual Comprehensive Financial Report.
The 2022 budget surplus, along with surpluses of $27.2 million in 2021, $90.6 million in 2020 and $76.8 million in 2019, came after a string of annual deficits.
Nassau had shortfalls of $189.2 million in 2014, $125.3 million in 2015, $83.1 million in 2016, $63.2 million in 2017 and $61.2 million in 2018, according to past comptroller reports.
Experts have said a key reason Nassau has been able to achieve surpluses in recent years was the Nassau Interim Finance Authority's decision to refinance more than $1.1 billion in county and NIFA debt in 2021. That saved the county $435 million in bond payments that would have come due between 2020 and 2022.
"Nassau County is in the best fiscal condition it's ever been in," Nassau Comptroller Elaine Phillips, a Republican who took office in 2022, said in an interview.
"Sales tax continues to be a driver of Nassau County's revenues, and it continues to increase every year. It really has to do with the composition of Nassau County," Phillips said, citing the high median incomes of residents, as compared with other municipalities in the state, and the strength of the health care sector, a major county employer.
"Industries that drive Nassau County are much more resistant to economic downturns," Phillips said.
Nassau also benefited from a second round of federal coronavirus relief aid and lawsuit settlements with opioid manufacturers. The county received $192.5 million from the American Rescue Plan Act and $20.5 million in opioid settlement awards, according to the comptroller's audit.
Asked whether Nassau could revert to the budget deficits of the past, Phillips said: "We're just structurally different and just fiscally in such better shape" than in prior years.
The Nassau Interim Finance Authority, which put the county in a "control period" in 2011, said it's pleased with the progress but needs more information before ending it.
"Leaving our mission almost accomplished or impulsively bending to external pressure could have unfortunate consequences," NIFA chairman Adam Barsky said in a statement.
County Executive Bruce Blakeman said: "We are very happy that we are able to produce a large surplus and we will make provisions to allocate these funds in a way that will stabilize taxes for Nassau residents so that tax increases will not be necessary for the forseeable future."
Kevin Dolan, a director and regional manager for Fitch Ratings, a Wall Street credit rating agency, said Nassau is similar to other municipalities across the nation that have benefited from increased consumer spending.
"There probably will be a slowdown on the sales tax revenues. We're not expecting that level of growth to continue," Dolan cautioned.
Nassau has more in reserves and is better suited to weather economic downturns than in the past, Dolan said.
The county had more than $440 million in reserve funds as of September, NIFA reported last year.
In April, Fitch upgraded Nassau's bond rating from A to A+. The agency said that with Nassau's strong sales tax receipts and reserve balances, it is positioned to cover its spending for major budget items, including tax refunds, labor and retirement contributions, bonded indebtedness, insurance and health care.
Fitch warned that Nassau should not revert to frequent borrowing, which has landed the county in trouble in the past.
"Prior to 2022, the county had been a frequent issuer of revenue and tax anticipation notes, including a $365 million cash flow borrowing in 2021. A continued reduction in dependence on cash flow borrowing in future years would be a positive credit consideration," the agency wrote.
After years of deferring pension payments, the county is no longer behind on the expense for the first time in more than a decade. Nassau paid off $122.9 million last year, and another $30 million in February 2023, auditors wrote.
The county also resolved a yearslong tax dispute with the Long Island Power Authority and National Grid, settling for $260 million.
The settlement decreased the county's tax certioriari backlog from $707.3 million in 2021 to $383.4 million in 2022.
Nassau's real estate related fees that climbed in 2021 as the market boomed were lower in 2022.
Mortgage and deed recording fees totaled $43.1 million last year, down $17.5 million from 2021.
Also last year, the county recorded $38.4 million in revenue for a fee to verify a property's section block and lot, down $19 million from 2021.
A state appellate court in April upheld a lower court's ruling that found the $355 fee was illegal and unconstitutional. The County Legislature then reduced it to $270.
In May, the plaintiff, Jericho homeowner Jeffrey Falk, filed a motion to hold the county in contempt of court for continuing to collect the fee.
For the second year in a row, Republican officials said the surpluses showed Nassau no longer needs to be under the control of NIFA, created in 2000 after the county had suffered a series of annual budget deficits.
The seven-member state board implemented a "control period" in 2011 that allows it to approve or reject county budgets, as well as labor agreements and contracts for county work. NIFA can place a wage freeze on the county workforce and issue certain orders to county officials, under state law.
Phillips said in an interview that NIFA's continued involvement was "silly."
In her report, she wrote: “It is my contention, as Nassau County Comptroller, that Nassau County no longer qualifies for a NIFA imposed Control period and NIFA is overdue in releasing the County from such.”
But NIFA chairman Adam Barsky said he needs to see key data from county officials about pressing items, including how Nassau would respond to the possible closure of NuHealth, the public benefit corporation that runs Nassau University Medical Center.
NuHealth suffered a $164 million operating loss in 2022, and the county is on the hook for $115 million in debt should the corporation fail.
Phillips' assertion that NIFA's control needs to end is "premature," Barsky said.
"It omits that NIFA also takes into account the historical record and the County's likelihood of a deficit," he said.
NIFA officials said they sent a letter to county officials in July 2022, requesting information about key county issues, and have yet to receive a response.
"Without this information, Nassau County's short- and long-term financial position is not clear enough to begin addressing the end of the Control Period," Barsky said.
Chris Boyle, a spokesman for Blakeman, said Monday after this article was published online: "The Office of Management and Budget is preparing a detailed answer to NIFA's letter."
Nassau County recorded a $79.7 million budget surplus in 2022, its fourth in a row after a decade of deficits, buoyed in large part by delayed debt payments, record sales tax receipts and federal aid.
Sales tax collections totaled $1.4 billion last year, up $90.2 million from 2021, and $129 million more than what was budgeted, according to the Nassau County Comptroller Office's Annual Comprehensive Financial Report.
The 2022 budget surplus, along with surpluses of $27.2 million in 2021, $90.6 million in 2020 and $76.8 million in 2019, came after a string of annual deficits.
Nassau had shortfalls of $189.2 million in 2014, $125.3 million in 2015, $83.1 million in 2016, $63.2 million in 2017 and $61.2 million in 2018, according to past comptroller reports.
WHAT TO KNOW
- Nassau County recorded a $79.7 million budget surplus in 2022, its fourth in a row after a decade of deficits.
- The county benefited from delayed debt payments, record sales tax receipts and federal pandemic aid.
- The Nassau Interim Finance Authority says it needs more information before ending its 13-year control period.
Experts have said a key reason Nassau has been able to achieve surpluses in recent years was the Nassau Interim Finance Authority's decision to refinance more than $1.1 billion in county and NIFA debt in 2021. That saved the county $435 million in bond payments that would have come due between 2020 and 2022.
"Nassau County is in the best fiscal condition it's ever been in," Nassau Comptroller Elaine Phillips, a Republican who took office in 2022, said in an interview.
"Sales tax continues to be a driver of Nassau County's revenues, and it continues to increase every year. It really has to do with the composition of Nassau County," Phillips said, citing the high median incomes of residents, as compared with other municipalities in the state, and the strength of the health care sector, a major county employer.
"Industries that drive Nassau County are much more resistant to economic downturns," Phillips said.
Nassau also benefited from a second round of federal coronavirus relief aid and lawsuit settlements with opioid manufacturers. The county received $192.5 million from the American Rescue Plan Act and $20.5 million in opioid settlement awards, according to the comptroller's audit.
Asked whether Nassau could revert to the budget deficits of the past, Phillips said: "We're just structurally different and just fiscally in such better shape" than in prior years.
The Nassau Interim Finance Authority, which put the county in a "control period" in 2011, said it's pleased with the progress but needs more information before ending it.
"Leaving our mission almost accomplished or impulsively bending to external pressure could have unfortunate consequences," NIFA chairman Adam Barsky said in a statement.
County Executive Bruce Blakeman said: "We are very happy that we are able to produce a large surplus and we will make provisions to allocate these funds in a way that will stabilize taxes for Nassau residents so that tax increases will not be necessary for the forseeable future."
Sales tax growth could slow
Kevin Dolan, a director and regional manager for Fitch Ratings, a Wall Street credit rating agency, said Nassau is similar to other municipalities across the nation that have benefited from increased consumer spending.
"There probably will be a slowdown on the sales tax revenues. We're not expecting that level of growth to continue," Dolan cautioned.
Nassau has more in reserves and is better suited to weather economic downturns than in the past, Dolan said.
The county had more than $440 million in reserve funds as of September, NIFA reported last year.
In April, Fitch upgraded Nassau's bond rating from A to A+. The agency said that with Nassau's strong sales tax receipts and reserve balances, it is positioned to cover its spending for major budget items, including tax refunds, labor and retirement contributions, bonded indebtedness, insurance and health care.
Fitch warned that Nassau should not revert to frequent borrowing, which has landed the county in trouble in the past.
"Prior to 2022, the county had been a frequent issuer of revenue and tax anticipation notes, including a $365 million cash flow borrowing in 2021. A continued reduction in dependence on cash flow borrowing in future years would be a positive credit consideration," the agency wrote.
After years of deferring pension payments, the county is no longer behind on the expense for the first time in more than a decade. Nassau paid off $122.9 million last year, and another $30 million in February 2023, auditors wrote.
The county also resolved a yearslong tax dispute with the Long Island Power Authority and National Grid, settling for $260 million.
The settlement decreased the county's tax certioriari backlog from $707.3 million in 2021 to $383.4 million in 2022.
Fee revenue dropping
Nassau's real estate related fees that climbed in 2021 as the market boomed were lower in 2022.
Mortgage and deed recording fees totaled $43.1 million last year, down $17.5 million from 2021.
Also last year, the county recorded $38.4 million in revenue for a fee to verify a property's section block and lot, down $19 million from 2021.
A state appellate court in April upheld a lower court's ruling that found the $355 fee was illegal and unconstitutional. The County Legislature then reduced it to $270.
In May, the plaintiff, Jericho homeowner Jeffrey Falk, filed a motion to hold the county in contempt of court for continuing to collect the fee.
End of NIFA control 'premature'
For the second year in a row, Republican officials said the surpluses showed Nassau no longer needs to be under the control of NIFA, created in 2000 after the county had suffered a series of annual budget deficits.
The seven-member state board implemented a "control period" in 2011 that allows it to approve or reject county budgets, as well as labor agreements and contracts for county work. NIFA can place a wage freeze on the county workforce and issue certain orders to county officials, under state law.
Phillips said in an interview that NIFA's continued involvement was "silly."
In her report, she wrote: “It is my contention, as Nassau County Comptroller, that Nassau County no longer qualifies for a NIFA imposed Control period and NIFA is overdue in releasing the County from such.”
But NIFA chairman Adam Barsky said he needs to see key data from county officials about pressing items, including how Nassau would respond to the possible closure of NuHealth, the public benefit corporation that runs Nassau University Medical Center.
NuHealth suffered a $164 million operating loss in 2022, and the county is on the hook for $115 million in debt should the corporation fail.
Phillips' assertion that NIFA's control needs to end is "premature," Barsky said.
"It omits that NIFA also takes into account the historical record and the County's likelihood of a deficit," he said.
NIFA officials said they sent a letter to county officials in July 2022, requesting information about key county issues, and have yet to receive a response.
"Without this information, Nassau County's short- and long-term financial position is not clear enough to begin addressing the end of the Control Period," Barsky said.
Chris Boyle, a spokesman for Blakeman, said Monday after this article was published online: "The Office of Management and Budget is preparing a detailed answer to NIFA's letter."
Scott Eidler is a deputy editor for the towns department at Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.
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Newsday Live Music Series: Long Island Idols Newsday Live presents a special evening of music and conversation with local singers who grabbed the national spotlight on shows like "The Voice," "America's Got Talent,""The X-Factor" and "American Idol." Newsday Senior Lifestyle Host Elisa DiStefano leads a discussion and audience Q&A as the singers discuss their TV experiences, careers and perform original songs.
