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Maragos Calls For End To Unfunded Mandates

Nassau County comptroller finds county moving ahead in stabilizing finances

Despite the tremendous pressures municipalities face in terms of increasing costs for health insurance and pensions, Nassau County Comptroller George Maragos reports that Nassau County has made “big strides in stabilizing” its finances. Speaking with the Anton Newspapers editors last Tuesday, April 24, the comptroller said that these increasing costs are coming in at “unheard of numbers.” He added that these increasing costs, unfunded mandates from the state, are “unconscionable.”

Mr. Maragos said that the county is facing an increase of 25 percent in Medicaid caseloads, and combined with more and more people losing health insurance, the result will be more people going to local hospital emergency rooms. And when that happens, the bill goes to the county. Combined with health insurance costs for the county rising 30 percent and county pension costs increasing by 60 percent, it is a tough road for the county, the comptroller said.

However, on a brighter note, Mr. Maragos reported that Standard & Poors once again granted the county an A+ rating. “The county has made significant strides in restructuring and improving fundamentals,” he said.

And although Mr. Maragos was happy to report positive financial strides, he expressed great concern over “the fiscal challenges ahead.” He said that Nassau County has reached the end of the cost savings plans and will now have to balance the budget. “I see this happening this year and in 2013 and beyond, unless the economy significantly improves.”

Mr. Maragos did note that the county’s biggest source of revenue is the sales tax and if the current upward swing continues at the current higher rate than was anticipated this will go a long way toward helping finances. But with pensions and health insurance increasing at three or four times the rate of inflation, the county will still need new revenue sources. When asked what revenue sources the county could find, Mr. Maragos said “I am only the comptroller … I don’t have to come up with revenues.”

Mr. Maragos did touch on some privatization issues. He said that privatizing the bus service has been “very successful.” He spoke of “more and better service at a lower cost to Nassau County.”

There has also been talk of privatizing the county sewer system. Mr. Maragos said that his office is evaluating the prospect. Without input from him, Maragos said, the county chose Morgan Stanley to assess the situation. The comptroller’s office is now looking at the contract, and, as well, NIFA will weigh in. The Morgan Stanley contract gives the firm a $125,000 fee for the RFP, and then, if the contract is approved, Morgan Stanley will receive an additional fee of $500,000. When asked if this might be a conflict of interest, Mr. Maragos said that this is “standard procedure.”

Mr. Maragos was unable to answer any further questions regarding possible sewer privatization because he said that he was not a part of the bid process for a financial review company such as Morgan Stanley, nor was he at the bid opening. The comptroller said that he is customarily a part of this process and present at bid openings, but this time he was not invited. After Mr. Maragos and his staff review the contract, NIFA will also do an evaluation. If Morgan Stanley is chosen, they will receive the initial fee, plus a percentage of any further work that is done.

During a brief follow-up the day after the interview with the Anton editors, Mr. Maragos explained that he “would have expected” to be at the bid opening, since he attends many (mostly for the department of public works), but he said that the county administration “has the option” not to include the comptroller and chose not to include him this time.

A phone call to the office of Nassau County Executive Ed Mangano did not offer any real answers to the question as to why Mr. Maragos was excluded from the bidding process. Katie Grilli-Robles, press secretary to Mr. Mangano, said that, basically, participating in the bidding process and attending the bid opening is not the job of the county comptroller. She said that “There is a separation of powers in government and the comptroller’s role is to provide oversight of finances.”

When the topic turned to the recent county decision to consolidate police precincts, Mr. Maragos said that this is a financial savings to the county. He reported that 98 police officers took the early retirement option and this resulted in a savings of $20 million annually. He added that most of these were desk jobs so that there is no impact on public safety.

The comptroller addressed consolidation in general. He said that consolidation “needs to be looked at,” and even though he praised the county’s public schools and briefly touched on county school consolidation, he added that the schools are not the responsibility of the county. As for the county’s many special districts, Mr. Mangano noted that former County Comptroller Howard Weitzman had done many studies and although a consolidated school district might save money, it might not be possible to see any educational benefits from such a set-up. Mr. Maragos said that he would only encourage consolidation “where it makes sense.”

Mr. Maragos, when questioned, also addressed a possible county deficit. He acknowledged that he has thought the county would have a small surplus (about $350,000); NIFA disagrees and finds a possible $41 million deficit, he stated. Mr. Maragos did say that his office and the NIFA office use different standards to determine a deficit or a surplus.

Other strains on the county budget include not just Medicaid, Medicare and pensions, but also property tax refunds. Many of these refund requests were filed years ago but must now be paid.

In general, Mr. Maragos said that the county “needs to get a way to meet current operating expenses.” With a $90 million “shortfall,” he said that the county executive needs to figure out finances for 2012.

Some funds have come in via tickets for red light cameras. This has amounted to $37 million with the use of cameras at 50 intersections. Mr. Maragos said that the county wants to install 50 more such cameras. “It’s worked out well,” he said. “People have adapted their driving.”

Looking toward his own future and his bid for a U.S. Senate seat, Mr. Maragos said that he would work hard to eliminate unfunded mandates (both at state and federal levels). He would also like to see more people with “business common sense” in government positions.

As for the future of Nassau County, George Maragos stated that there is currently $90 million in the county’s reserve fund. However, he said that if the reserve fund is used up, the county would then have a deficit.