OLBR report suggests millions of dollars in delinquent property tax bills while NIFA control could be over

                                                                                 

First Page of Legislative Budget Review report

Financial reports are often difficult to interpret and that's the case with a memo issued today by the county legislature's independent Office of Budget Review reporting on Nassau's 2021 year-end budget results.

The memo pretty much follows the voluminous Annual Comprehensive Financial Report issued by the county comptroller last month. Both say Nassau ended the year with nearly a $480 million surplus, primarily because of sales tax revenue came in way over budget.

But the Budget Review memo also points up two other interesting statistics:

There was a $22.7 million deficit in property tax collections.

Property tax revenue do not depend on the vagaries of consumer spending, like the sales tax. It's generally pretty cut and dried.

OLBR reports revenues were down for two reasons. 

The first is property tax refunds. The administration of former County Executive Laura Curran acknowledged last year that it expected to pay more than $17 million in property tax refunds -- the largest amount in a decade. 

Former County Executive Ed Mangano had instituted a mass settlement program in 2011 for property tax assessment challenges while freezing most assessments. The result was a skewed assessment roll. But the early settlement program also eliminated an average $30 million in residential tax refunds the county owed each year after homeowners won assessment reductions in small claims court after tax bills went out.

Curran reassessed in 2018 to re-balance the tax roll, but homeowners again were successful in challenging their new values in court.

The second reason for the drop in property tax revenue, according to OLBR is "a higher than
usual uncollectable property tax adjustment."

Uncollectable property taxes?

It gave no other explanation but it could suggest that some homeowners were not able to pay their property taxes last year, during the height of the coronavirus pandemic.

The OLBR report did not breakdown the numbers.

The other interesting statistic in the OLBR report is that, according to the way the Nassau Interim Finance Authority calculates deficits and surpluses, the county's state-appointed financial oversight board recognized a $27 million county surplus last year.

But doesn't that void NIFA's control period? 

NIFA imposed financial controls on the county in 2011, citing a section of state law that allowed it to take over county spending when the budget deficit exceeds one percent.

That control period is allegedly still in effect. But if NIFA recognizes a surplus, how can it legally maintain a control period?

Here is the section of the state law allowing for controls:

"A control period will occur upon the Authority's determination that any of the following events has occurred or that there is a substantial likelihood and imminence of its occurrence; (1) the County shall have failed to pay the principal of or interest on any of its bonds or notes when due or payable; (2) the County shall have incurred a major operating funds deficit of 1% of more in the aggregate in the results of operations during its fiscal year assuming all revenues and expenditures are reported in accordance with generally accepted accounting principles;...."

And here is the section of the OLBR report on the NIFA calculated surplus.

A NIFA spokesperson did not respond to a request for comment. What a surprise.

The OLBR report makes no mention of the comptroller's calculation that the county has an estimated tax refund backlog of $707.3 million.

But that backlog is not part of the county's major operating funds used by NIFA to calculate the county deficit.