Nassau's financial oversight board calls county budget number crunching 'extremely troubling'

The accounting practices used in Nassau County's proposed 2025 budget and the improper use of surplus money from prior years to plug holes is "extremely troubling," according to a recent report by Nassau's financial oversight board.

The report by the Nassau Interim Finance Authority comes ahead of the county legislature's public hearing on the budget Wednesday morning. NIFA could take the extraordinary step of rejecting the budget until lawmakers and/or the administration address the accounting practices.

NIFA's analysis identified several major risks including $30 million of so-called fund balance to subsidize the operating budget in future years, major fiscal shortfalls at the county's safety net hospital and spending on overtime for police and corrections officers. The use of that $30 million is "a sign that the County remains fiscally challenged." Typically, municipalities experiencing financial shortfall resort to tax hikes, reduction in program and services and a hiring freeze. 

"There's no denying that the county has made progress and they have a heck of a lot of cash. But when you look over the horizon I certainly see potential for real trouble," said NIFA Chairman Richard Kessel, without elaborating on what troubles could be.

NIFA, the five-member, state-appointed panel, will need to approve the county's final 2025 budget next month after it is adopted by the 19-member County Legislature. Kessel declined to say whether the Board would go as far as to vote down the county budget at its meeting next month.

Nassau County Executive Bruce Blakeman, a Republican, last month released a $4.2 billion budget plan for 2025 that keeps property taxes flat but boosts spending in areas such as early childhood intervention. Republicans on the legislature, who hold a 12-7 majority, support Blakeman's plan. As of Tuesday, there were no proposed budget changes to consider. 

"It's a conservative budget," said Presiding Officer Howard Kopel (R-Lawrence). "Nassau is one of the most fiscally sound large municipalities in the country. We don't need NIFA." 

NIFA analysts point out that in Blakeman's budget revenues are not keeping up with expenses, the county relies too much on already dwindling federal pandemic funds while structural budget deficits remain, particularly in the years after 2025. 

The county has $522 million in reserve funds, according to the report. The report also warned of deficits in future budgets that are unaddressed, validating NIFA's position that the county is not ready to end the NIFA "control period" that comes with stricter controls and oversight over county spending and con tracts. 

The report also indicates Blakeman's proposed plan does not follow "generally accepted accounting principles" when it draws on reserves as revenue, which analysts say violates the county charter and the NIFA Act. 

"Accordingly, we urge the County Legislature to address these statutory deficiencies and, at a minimum, bring the Proposed Plan into compliance with the aforementioned laws. NIFA will closely monitor the Legislature’s actions," the report says. 

NIFA also noted that Nassau University Medical Center remains a "poorly managed and poorly governed" hospital. The East Meadow institution is a public benefit corporation serving the county's poorest and sometimes sickest patients. The report noted the hospital's "precariously low cash balance." 

Minority Leader Delia DeRiggi-Whitton (D-Glen Cove) said in a statement that NIFA's report validates her caucus' "serious concerns" about Blakeman's budget plan which "is continuing to spread a false narrative and create illusions about Nassau’s fiscal health, when, in fact, his plan is riddled with obvious budgetary holes that could cause ballooning deficits in the future." 

She called on Republicans to address the issues before the legislature approves it. 

"Nassau County taxpayers will be the ones left to deal with the consequences of the County Executive’s reckless approach — one that has failed to deliver promised tax cuts and imperils future funding for critical services," DeRiggi-Whitton said in a statement. 

Blakeman spokesman Chris Boyle said the county "is in the best fiscal condition ever," citing recent increases from Wall Street rating firms. 

By Candice Ferrette

candice.ferrette@newsday.comcandiceferrette

Candice Ferrette covers Nassau County government and politics on Long Island. She has been a reporter at Newsday since 2011.