Brushing aside widespread assertions to the contrary, Nassau County Comptroller George Maragos last week flatly declared: “The county is not broke.”
In a wide-ranging discussion with editors of Anton Community Newspapers in Mineola, the Republican comptroller declared, “Why can’t people believe that if we give an audited financial statement, performed by outside auditors and show that we have a surplus, why isn’t it real?”
Maragos, who has not yet formally declared he is a candidate for re-election in November, said he even expects Nassau to show a slight surplus. The surplus, Maragos said, is a result of the ongoing cost cutting. But Maragos said Nassau borrowed about $300 million in the past term. He said about half of that was used to fund capital projects.
Maragos said he expects the county to post a surplus by the end if this year, even after it absorbs approximately $25 million in FEMA related, unreimbursable expenses. He explained that this surplus only takes into consideration current obligations and not future liabilities such as the next year’s debt payments.
“The county’s finances are stable,” said Maragos. “We’ve managed to keep the A+ bond rating, which is the second highest that the county has had in the past 10 years. “We are fiscally sound, but we are not drowning in money,” concluded Maragos. His Comptroller’s Report will be made public in about one week.
Maragos said that in 2005 there was $400 million in county reserves, and by 2009 the reserves were down to $60 million as a result of borrowing and drawing from the reserves. He said there is approximately $50 million in reserves currently.
Former Nassau County Comptroller Howard Weitzman, a Democrat who lost his seat to Maragos four years ago and is running to win it back in November, took issue with Maragos’ remarks. Weitzman noted that in 2012 Nassau posted a $45 million deficit. He said there are a number of issues Maragos is not taking into account when he talks about a surplus, including court decisions that have gone against Nassau in cases involving repayments to county workers.
Weitzman said he doubted the county will show a surplus.
Is the County Broke?
The county’s total debt is at $3 billion, accrued through property tax refunds, which have accumulated over the years, and also money borrowed for capital projects. The county would also owe $180 million as part of the wage freeze ruling reversal, if the ruling were reversed.
“If I have a liability, I will put it on my balance sheet,” said Maragos. “I’m the comptroller; I am not going to pay a bill until it’s due.” He said he would ensure there were funds in the budget to allow the bill to be paid when it becomes due.
“Every municipality is challenged,” said Maragos. “Most from having to confront 15-25 percent in pension contribution increases, health insurance premium increases, and unfunded mandates. “
In context, the county’s debt is approximately 1:1, meaning the actual budget costs are near the debt level. The federal government is at 4:1 debt. The state is about 2:1 debt. “We are not drowning in debt,” said Maragos. “The county’s borrowing capacity is about $18 billion; and I am still not saying we should borrow.”
He said if the county truly needed money, it could easily raise taxes. “We’ve been paying our bills; we are not borrowing to pay our bills and we have not raised property taxes.”
Taxes
“Raising property taxes at this point is regressive,” said Maragos. “I’d much rather do things to stimulate the economy and continue to have equivalent increases in other sources.”
The county earns approximately $800 million in property taxes from all property classes. Instead of property tax increases, Maragos is convinced the county can do more with streamlining government, bringing in better technology, implementing programs, and making a small reduction in the county’s workforce.
Maragos said his office is presently studying some of the financial challenges that face the county, specifically why young adults are leaving. The findings are obvious, he said: the high cost of housing and high property taxes. Overall, he said raising taxes would drive more people and more businesses away from the county.
Property tax refunds
Assessments remain unchanged for a cycle of four years unless a homeowner challenges. Approximately one-third of county homeowners appealed their assessments last year and about 85 percent of those received a reduction as a result of the appeal. Maragos explained that last year most of the residential property grievances were resolved before the assessments took effect, saving the county from a $30 million liability.
“The issue comes with the commercial; that is still an issue, with an outstanding liability, but from a budgetary point of view, those are being contested in court and those liabilities are not current,” said Maragos. The court-contested properties are not listed against the county’s budget, but are listed on the balance sheet as potential liabilities.
Definition of a Comptroller
“As the chief financial officer of the county, I have a responsibility to monitor the budget and make sure that we stay on course,” he said. He is the fiscal watchdog, raising red flags along the way when he feels that the county is deviating from its financial goal. Maragos also makes sure that contracts the county approves deliver value for the dollars spent, and ensures that claims that are paid against contracts are a result of valuable work performed.
Most recently, Maragos said that the county dispatched electricians and plumbers to residences affected by Hurricane Sandy. “We sent people to knock on doors to check on claims before we paid them, check that the work was done and that people were satisfied with the work done.” He estimates that staff from his office visited the homes of about 70 residents who were affected by Hurricane Sandy to get a personal response whether they were receiving the services and restoration assistance necessary.
“Government has this habit of giving contracts that define a scope of work and provide for progress payments that are not tied to any deliverable milestone performance,” Maragos said. “DPW is infamous for cost overruns,” said Maragos, demanding that contracts over 10 percent of budget go back for re-approval. He said that more than $300 million has been saved over the past three years by contract cost controls that are in place. He said that some contracts have been cancelled, some better values have been offered, contracts and are not automatically renewed for more than five years without being rebid.
“I’d like to think I’ve been partially responsible for [the county] being able to stay afloat financially during the difficult, past three years we’ve been in the middle of a recession.”
Ways to Reduce Costs
“We need to become more efficient, have our workforce become more productive, employ technology better,” and not lay off county workers, said Maragos. “They [unions] also have to give something back,” citing police overtime and unlimited sick days, union workers comp time and accruals. He said the county pays out approximately $16 million annually in overtime at the police department. “A lot of the police officers earn as much in overtime as they do in salary,” said Maragos. “We cannot afford to have cops earning [up] to $300,000; someone has to stand up to that.” Maragos conceded, “[This] is not my responsibility as a comptroller. My responsibility ends where policy-making begins.”
Red Light Cameras
Maragos said the county earns between $27 and $40 million in revenue from ticketing through the red light cameras after 40 percent of the total is paid to the camera vendor, which provides the hardware, technology, and monitoring.
“Shouldn’t we have a company here that we incubate, not only as a start-up, but take the business and leverage it out to other municipalities?” Maragos suggested that not only would there be a viable new business in the county, but the county could share in the profits.
Sales Tax Revenue
According to Maragos economic stimulation is key, while sales tax in Nassau County is more than 40 percent of the county’s source of revenue. He said that after Hurricane Sandy, sales were up by four percent; in the first quarter of this year, the sales are up over seven percent. Every percentage point is equal to $10 million.
Some of the highest sources in recent quarters have been from automobile sales, hurricane recovery, FEMA and insurance reimbursements.
The county requested $6.7 billion through the Federal Supplemental Appropriation. “Given what was finally passed, we expect that we are going to get anywhere from $4 to $4.5 billion to help the county recover and rebuild.”
Audits
Maragos spoke about Weiztman’s claim to savings by eliminating double healthcare for county employees who are married to each other. “That claim is, and I am going to use strong language, may be fraudulent,” said Maragos. Weitzman denied the assertion, saying the program to eliminate double healthcare for county workers was approved in a bi-partisan vote in the county legislature, and is currently in effect.
“It’s a matter of record,” Weitzman said.
The county’s healthcare is provided by NYSHIP. The plan gives reimbursements for what is underspent, given back as reduced costs to the municipalities. Maragos said that the savings for eliminating joint coverage is something that is already built into the NYSHIP plan.
Audits performed by Maragos’ office that resulted in significant savings included one that identified more than 18,000 telephone lines through the county, for a workforce of about 8,000 employees. The lines were disconnected, saving approximately $2 million annually. Additionally, an audit on infrastructure electric meter units identified more than 300 meters on buildings that no longer belonged to the county, or that were being leased, and were being billed to the county.
The Hub
Prior to the public vote last year, Maragos held a press conference, speaking out against issues with rebuilding of the Nassau Coliseum, the Hub. He did not agree with the county’s proposed deal with Charles Wang. “The deal was atrocious,” but Maragos said he is not against the rebuilding of the structure. His feelings about the Coliseum remain, “Let’s get something done, get something off the ground and we can improve it from there.”
If the Islanders leave in 2015 — Maragos said the net revenue currently is a little more than $2 million, including concessions and rentals. The loss will not destroy the county’s budget. Maragos does believe that having a better facility, which supports conventions, entertainment, and sporting events, is the key to stimulating the local economy; the redevelopment will boost the local economy and help the county’s budget.
Impact of Consolidating The Police Precincts
Maragos said that taking more officers from behind desks and putting them in cars has helped county finances. “It’s gone very well,” said Maragos. “It has helped us reduce costs by almost $20 million annually.” Not considering the public safety costs due to Hurricane Sandy, Maragos also said the overtime costs are lower.
