‘Concerned citizens’ worry about county’s financial future

“There is ‘growth,’ and then there is ‘growth.’… You put in a subdivision, and for every dollar the homeowner pays in taxes, it costs the county $1.38 in services. But in mixed-use development, with commercial and retail and light manufacturing along with residential, it is the opposite. For every dollar in tax revenue, it costs the government 80 cents.” - Robert Spaeth, Co-Chair, Citizens for a Better Nassau County

Nassau County’s fiscal future is at risk.

That is the message that members of Citizens for a Better Nassau County want county residents to be aware of.

A newly formed 501(c)(4) nonprof- it organization, Citizens for a Better Nassau County, currently has 15 mem- bers, including representatives from the private, commercial and industrial sectors.

“We are an organization for education of Nassau’s residents,” said organization co-chair Robert Spaeth in a recent inter- view with the News-Leader. “We are very worried about the future financial sustainability in the county.”

Utilizing the results of the county’s most recent financial audit conducted by Burton & Associates, members of the Citizens group stress the ongoing deple- tion of the county’s reserve fund as well

as the continued use of revenues from the 1-cent tax to shore up the county’s operating budget.

“The audit painted an undeniable pic- ture of a looming fiscal crisis that could lead to the insolvency of the county, downgrades of the county’s bond rating and the inability of the county to meet its financial obligations,” according to the group’s mission statement. “If left unaddressed, this crisis will impact every county resident and property owner and will inhibit the county’s ability to pursue economic development opportunities that are vital to restoring the economic sustainability of our community. County services will be severely restricted, our ability to adequately fund our A-rated schools will be challenged and our gov- erning decisions could ultimately be dic- tated by the state.”

Making sure Nassau residents are aware of and understand the county’s fiscal status is the underlying goal of the organization, Spaeth said. “We’re afraid that most peo- ple in this county have no idea what’s going on with their coun- ty government,” he said, adding that conflicting messages from local government officials further confused the situation for many residents.

“There are two separate ideas about our county’s financial situ- ation; one of them is our county clerk and the other is the county manager, representing the major- ity of the county commissioners,” he explained, referencing County Clerk John Crawford’s multiple public statements that the county’s financial status is strong.

“I assure you, we have enough recurring revenues to cover operational expenditures, and the current fiscal health of Nassau County is very good,” Crawford said earlier this year. “We have just over $12 million set aside in safety reserves, $2.1 million in reserve for contingen- cy and nearly $10 million reserve for minimum fund balance. This level of safety reserves is an all- time high for Nassau County and consistent with standards rec- ommended by the Government Finance Officers Association. The county holds a credit rating of AA-, and has accelerated debt reduction for the opportunity to be debt free within 17 years.”

Statements made by coun- ty officials, including Office of Management and Budget Director Shanea Jones and com- mission chairman Pat Edwards, highlight a more cautious view of the county’s fiscal security.

“We have things we want to do, but as a commission, we are $7 million in the red today, so I have a hard time committing to do something we don’t have the money to do,” Edwards said during this year’s budget process.

“Recovery has started, but it will be a very long and slow pro- cess because of legal restrictions on taxable value,” Jones added.

Citizens for a Better Nassau County subscribe to the less rosy outlook, and stress the need to heed Burton & Associates’ warning regarding the county’s capital improvement program.

“Nassau County is on the brink of a financial meltdown that could challenge the pros- perity of our county for genera- tions to come. Unfortunately, a comprehensive audit by Burton & Associates, which painted an undeniable picture of a looming fiscal crisis, largely fell on deaf ears, as many of our communi- ty leaders still see the county’s fiscal stability and status through rose-colored glasses,” states the group’s website.

“This is a very bad situation, we have less revenue coming in than cash going out, and beyond 2017, capital investment will be limited to fleet replacements only,” Spaeth added. “That means no further investment in capital projects, and that doesn’t take into account unfunded state mandates, pension increases, landfill costs, inflation or surprises. Some of it is going to hit and we are going to be out of financial stability by 2017.”

“The status-quo, current practices projection of each fund reveals that the general, transportation and MSTU funds are not structurally balanced – expenditures exceed revenues – and must continue to rely on significant transfers in from the one-cent fund to provide payment for ongoing operations and capi- tal. Without the continued sub- sidy from the 1-cent fund, each individual fund would need reduc- tions to recurring costs or addi- tional revenues to be sustainable and structurally balanced,” states an Oct. 21 memo from Burton & Associates regarding the July audit. “The combined fund analysis reveals that the county will be unable to sustain ongo- ing operations without reducing the reserve for minimum fund balance requirement, or achieve other solutions for sustainabili- ty. Additionally, the county will not be able to fund any capital improvements beyond the cur- rently adopted CIP and the Fleet Replacement Program. Without systematic investment in capital projects, assets will deteriorate and costs will increase. Short of a change to the county’s current funding structure, the county will only be able to fund approxi- mately 25 percent of the county’s identified capital needs over (a) 10-year projection period.”

The 2015 bond rating report for Nassau County, released by Fitch Rating in October, also stressed the county’s risk in connection with capital project funding in the long term.

“Capital needs have been pay- go funded, but allocated resourc- es appear inadequate to meet the needs beyond fiscal 2016,” stated the Fitch’s 2015 review of Nassau County’s financial stability and credit worthiness. “Continued use of the fund balance with no solid plan to address potential structural imbalance could result in (a) negative rating action,” the report warned.

The county’s tax base is once again on the grow, with both expansion and higher assess- ments nudging up the county’s ad valorem tax revenue, but it is a slow process that leaves a gap between status quo and stability, says Spaeth.

“Ad valorem went down $13 million; it can’t go back up quickly because of the tax caps,” he said, adding that growth is a benefit – with stipulations.

“There is ‘growth,’ and then there is ‘growth,’” he said. “You put in a subdivision, and for every dollar the homeowner pays in taxes, it costs the county $1.38 in services. But in mixed-use development, with commercial and retail and light manufactur- ing along with residential, it is the opposite. For every dollar in tax revenue, it costs the government 80 cents.”

That disparity in types of development, along with an overall resistance to growth, is hobbling the county’s financial security, Spaeth said.

“Unfortunately, the words ‘economic development’ are only said in hushed tones in the county, but how else can we financially sustain the county for the long run,” states a Citizens for a Better Nassau County news release. “Private capital invest- ment and high-wage jobs benefit the entire county. They diversify our tax base, help keep residen- tial property taxes low, help the county make key investments in our infrastructure and schools, and help maintain the quality of life we enjoy here in Nassau County.”

The new East Nassau development is a good example of mixed-use development that will benefit the county, but the reve- nue from that development is at least four years down the road, Spaeth added.

“We have to bridge that gap between where we are now and this cash coming to us 2018 or even further away, and if we can get people – our residents – to understand the severity of the situation, that may help,” he said.

“I think it’s very hard to get people to understand what position we are in. We have 75,000 people and I would daresay 2,000 have any idea,” added Citizens member Bill Gingrich. “It’s a communication and education issue, and hence, Citizens for a Better Nassau County.”

“This is a massive problem, and we have to use all available technologies and ways to reach the public,” Spaeth said, explain- ing that local media outlets will be important in disseminating the group’s message, but that they will also be going directly to the population through civic groups, religious organizations and any other opportunity they can find.

For more information on the organization and their efforts, visit www.citizensforabetternassau.com. 


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