Is There A Budget Surplus Or Deficit?

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Divining the real numbers in Hempstead

There have been three numbers bandied about regarding the 2016 Town of Hempstead budget’s final figures.

One resident decided to get to the bottom of this conundrum.

At the Oct. 17 public hearing on the 2018 budget, Valerie Lamp of Baldwin approached speakers’ desk and said, apropos the budget, that she was having hard time as “an average, everyday taxpayer. There seems to be a lot of controversy and discrepancy.”

Lamp is a registered Republican, and received a “get out the vote” call in which she was told about the $5 million 2016 operational surplus that Supervisor Anthony Santino has been touting.

“And then I have seen our comptroller stating that there is a $6 million deficit. On the one hand we get mailers saying that we turned around a $23 million deficit and we have an awesome surplus. And other people are saying there is a $52 million deficit on Open Book New York, the state comptroller’s website.”

She ended with a plea: “Can somebody, anybody—the comptroller, Supervisor Santino, somebody—tell me what’s the bottom line number?”

Santino called on Comptroller Kevin Conroy to respond.

Conroy admitted that the budget and its accounting nuances can be confusing. He said that every municipality needs to file what is tabbed an Annual Update Document (AUD) to the state comptroller. The AUD for the previous year’s budget have to be submitted by April.

“As I said before, it is not an audited financial statement and does not conform to generally accepted accounting principles (GAAP),” he asserted. “It is a configuration mandated by the state comptroller to achieve uniformity [in reporting] among all state municipalities.”

The AUD for 2016, which is reflected on the comptroller’s Open Book New York website, shows the town’s 2016 budget as carrying a $52.2 million deficit. This was the figure that skeptics were bandying out during public comment the past few months when challenging Santino’s numbers.

“The reason for that deficit,” Conroy continued, “is that approximately $45.7 million of capital expenditures that we made in 2016 and did not go into the bond market until 2017 was deemed part of the deficit. Once we went into the bond market in 2017, that wiped it out.” Conroy suggested that residents look at the town’s quarterly financial statements made by an independent CPA firm to get a better grasp of its finances.

“You’re cherry picking a number from the AUD to come up with $52 million, then you’re confused because you hear $6.1 million,” he told Lamp. “That’s the audited financials for the town in 2017. It is a real number, that’s the number to go by. It conforms with GAAP [and] measures the financial liability of an entity.”

Conroy explained that this $6.1 million deficit was turned into a surplus because of two one-time items that, had they not been included in the 2016 deficit, would have resulted in the operational surplus. One related to a $25 million judgment that the town won against the county over a longstanding garbage tax case. The town forgave $7.4 million of that figure. In addition, the town’s highway department wrote off $3.7 million in inventory in 2016. Both added to the deficit.

“You factor those two items out…and you’ll get an operational surplus of $5 million,” Conroy concluded.

Santino again emphasized that the 2016 budget, adopted in 2015, called for the use of $23.5 million in the fund balance to balance the budget. When he became supervisor in January of 2016, Saladino has related, he went about to make the numbers work and managed to significantly reduce the cost of government.

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Frank Rizzo is a journalist at Anton Media Group. With decades of experience in the industry, he is exceptionally equipped to cover local politics, business and other topics that matter to readers.

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