Written by John Owens, email@example.com Wednesday, 24 April 2013 08:56
I hope George Maragos is right. He insists that Nassau County isn’t broke and isn’t hurtling toward financial Armageddon.
“The sky is not going to fall,” the county comptroller told our editors during a recent visit to Anton Community Newspapers.
But for a resident who isn’t especially spreadsheet-savvy and who might see less money in a lifetime than Nassau has as a rounding error on its annual $2.8 billon budget, it’s tough to accept that statement on face value.
After all, the county’s spending and borrowing are under the thumb of the state’s Nassau Interim Finance Authority. In addition, recent court decisions will, if upheld, leave county taxpayers liable for more than $225 million in back wages and benefits for county employees and an estimated $80 million a year in property tax refunds. That’s on top of debt roaring past $3 billion, while reserves are just $40 million.
Maragos, however, isn’t panicking.
“Those would be challenges,” he said. “You are always going to have challenges. The question is do you step up to the plate and address them.”
His demeanor suggests that he addresses them with the calm of a Chief Financial Officer who’s used to facing huge numbers and is intimately aware of money flows and due dates.
Maragos points out that even if the county must pay the property tax refunds, checks won’t have to be written until 2015.
The back pay? The county could borrow, if state overseers permit it.
“Right now, we can borrow short-term money for under 0.5 percent,” said Maragos. That’s cheap, indeed.
And although it appears the county is deep in hock, Maragos maintains that debt is actually quite low relative to the tax base and county budget.
“Our borrowing capacity is $18 billion.”
Beyond that, he sees “significant forward challenges,” yet nonetheless an improvement in the county’s financial health as sales tax revenues rise in tandem with a better overall economy. He also believes that by fostering new businesses and supporting development that keeps young people from fleeing the area’s high cost of housing, Nassau’s economy will thrive and sales tax revenue will grow further.
Maragos points out that despite Super Storm Sandy, sales tax revenue (which represents 40 percent of Nassau’s income) has climbed in recent months. While some see this signaling the return of the consuming consumer, I’m not so sure. Maragos concedes that a great deal of this money comes from the sale of new cars. As I see it, these are not only as replacements for vehicles lost in the storm, but also replacements for all of the cars drivers didn’t buy since 2009. As Long Island’s busy car dealers can attest, a huge amount of pent-up demand has been released since late ’12. When you consider that the sales tax on a $30,000 car is more than $2,500, it’s pretty clear why there’s been an up-tick in the county’s take. Though if car buying doesn’t continue at this pace, Maragos isn’t about to worry.
“We’ll deal with it,” is his mantra.
Borrowing and taxing are obvious avenues. But perhaps even wiser is cutting costs. He points to a range of initiatives that have trimmed hundreds of millions from county spending. For one, tying payments to Department of Public Works contractors to deliverables. (“They were infamous for their cost overruns.”)
While overall staffing decisions are not in his purview, the comptroller volunteered that “the no-layoff guarantee” with county workers “expired in 2012.”
Maragos is fond of benign buzzwords like “streamlining” and “smart government” (After all, who’s against a streamlined and smart government?)
But I got the impression that he believes costs must be cut further, and that it’s time to play hardball on county staffing and benefits.
I could be reading too much into the comptroller’s words and manner. But if I’m not, on that point at least, I don’t have to hope George Maragos is right. He is right.