When he campaigned for the office of Nassau County Comptroller the first time, Republican George Maragos touted his independence. But that was when the incumbent, Democrat Tom Suozzi, was expected to win over the underdog, Republican Ed Mangano.
But it was Mangano who eked out the win by a couple of hundred votes, and Maragos who has spent the last four years as an enabler for Mangano’s fiscal fiascos and malfeasance.
Weitzman in his two terms as Comptroller proved himself to be actually independent – even launching audits and ruffling feathers of municipalities and special districts managed by fellow Democrats.
In that first campaign, Maragos also presented as a virtue the fact that he was not a career politician, having been a successful businessman who just wanted to “give back” to the community. I believe he also suggested he did not intend to stay in government long.
But that assertion is undercut by the fact that just months after being elected Comptroller, Maragos made a bid to be the Republican nominee for US Senator, and instead of having an arm’s length relationship with the Republican establishment, he had to fall into line and be a team player and actively courted the Tea Party wing on everything from the government role in public education to a woman’s right to choose.
And yet, he conveniently sidesteps his party’s obsession with the national debt – so fanatical we are facing the first default in the nation’s history and the collapse of the “full faith and credit” of the USA. Instead of regarding borrowing as an evil worthy of Satan, Maragos has enabled Mangano’s proclivity to borrow money to pay current expenses.
Now the comptroller is supposed to be the numbers guy. That’s all a comptroller is supposed to do. So the way he sidestepped and obfuscated the widely criticized County budget numbers at the Thursday, Oct. 10 debate at Molloy College was bizarre.
Maragos dismissed NIFA’s scathing report of the state of Nassau County’s finances and the projected $100 million budget shortfall as “political.” Instead, he insisted that under his leadership, the budget has improved.
And denying that the Mangano Administration has borrowed $2 billion (he puts the figure at $1 billion, though the discrepancy can reflect a common practice to issue Tax Anticipation Notes to tide the municipality over until tax revenues come in), he said that the $3.5 billion in total indebtedness – a record for the county – is “manageable” and that the County has the capacity to borrow as much as $19 billion.
Weitzman came back that the $3.5 billion in indebtedness represents $3000 per person, and is twice the level of nearby counties like Westchester. But the key complaint is that the Mangano Administration is borrowing to pay for operations which should have been part of the general operating budget, funded through taxes and fees; bonds are typically reserved for investments in infrastructure and projects with a long life.
“This administration financed operations through debt over the last four years.” Even the cost of terminations for police and retirees have been financed through debt, amounting to $110 million.
I frankly expected more from Maragos – he was supposed to have brought a businessman’s analytical skill to his office. The only time I saw him almost stand up forthrightly in challenging the fiscal assumptions of this Administration was around the privatization of Long Island Bus, but not the Nassau Coliseum bonding. He should have stood up against shifting the liability for tax certioraris onto school districts, which will destroy each and every one. But he didn’t, probably because he has expressed contempt for school district spending and advocates consolidation. He didn’t provide any useful fiscal analysis of the police consolidation which apparently hasn’t saved the county money because of overtime spending, while the county has had to bond $100 million to cover termination costs.
And yet, he takes credit for an economic analysis that shows that “for every dollar invested in the Youth Board, the county received $3 in benefit so those dollars were restored to the benefit of our minority communities.” He could have offered more of that sort of analysis when Mangano used public workers as hostages in the budget negotiations, ending up firing more than 1000 of them (and still winding up in the red).
The biggest single drag on the County’s economy, though, is the property assessment system which costs taxpayers $250 million each year – $100 million in cash refunds and $150 million in interest on debt incurred to pay old tax settlements. Altogether, borrowing to full the tax cert obligations account for over $1 billion of the county’s debt. When Mangano made assessment reform a campaign issue, he said the average propertyowner in Nassau County pays 30% more in property taxes because of the broken assessment system. But by May 2010, Mangano was already resorting to new borrowing to finance the tax refunds. (He ignored the Democrats’ plan to pay off the certs through an annual fund.)
Maragos was complicit in Mangano’s firing of the county’s first professional Assessor, Ted Jankowski, so that he could install his own man. And he clearly supports Mangano’s position to shift the liability for the assessment refunds onto school districts, which, given the constraints of the property tax cap on school budgets, would be the nail in the coffin of public education which has been a pillar for County home values and the economy.
But the record shows that the Mangano Administration was not successful in getting a hand on the certs: under Tom Gulotta, unpaid tax cert obligations amounted to $400 million; Suozzi’s administration reduced that amount to $164.3 million, but under Mangano, the amount increased again to $388.4 million, according to figures provided by the Democrats.
Maragos offered a solution to the assessment problem: get the state to allow a margin of 15% between the assessed and market value (not a bad idea, though 15% might be high, but the problem with assessments is the market is fluid). Currently, if the county is off by only 5%, the county has to pay a refund. Since most grievances are settled within the rate of 8-12%, a 15% margin would eliminate most grievances.
Suozzi actually has offered a real solution to the problem: replacing the cash refund with a tax credit on the following year’s bill and require all properties within a particular class to be responsible for it.
The two candidates differed markedly on how they see their role and responsibility as Comptroller.
“The role of Comptroller is to be chief financial officer of county, to instill confidence in business community, in residents, that our kids have future,” Maragos said. “It all stems from fiscal responsibility, financial responsibility and having a healthy business environment.”
You could almost see Weitzman cringing.
“I am surprised again, after four years in office, you still don’t know the role,” Weitzman said. “The comptroller is not the chief financial officer of county – the CFO is the treasurer, appointed by the county executive. The comptroller is the financial watchdog. There is a difference, a major difference, and it is time you understood.
“We both agree it is important to restore credibility – the county doesn’t have now. The county has no credibility because time and time again the county has been ‘disingenuous, deceptive and delusional’ – that’s not me saying it, but was quoted at a public meeting.
“The role of the comptroller is to instill confidence in the county’s finances. That’s why we never had a question when I was in office about the numbers – there were questions about policy – there always are – but not about the numbers… Now all we do is argue about what the numbers are because no one has confidence in the statements coming out of your office.
“Specifically the comptroller can work with the executive on assessment system – that has to be fixed, whether Republican or Democrat, politics has to move to the side and officials must govern.
“There needs to be distinct clear analysis of the county’s financial statements so they can be understood.”
Maragos retorted, “You just heard the difference: a passive, uninvolved comptroller as to what the responsibilities are.”
“The job of comptroller is to be an active participant in government, to be effectively involved in all the fiscal decisions, to guide the county in direction of fiscal responsibility to taxpayers don’t end up with higher and higher property taxes as we are seeing in school,” Maragos said.
Weitzman responded, “If that is the role he sees, he should have run for county executive. The charter is very clear what the responsibility is – the comptroller is not part of governance of the county with respect to legislature or county executive and that’s why the office is an independent financial officer. You can’t be independent and part of policy – either you represent the taxpayers or you work with administration but you can’t do both at same time.”
Maragos asserted, “The actions, the policies, the initiatives that I have helped, working with county executive have been beneficial to all our communities. Here you have a comptroller [Weitzman] who says I’m not responsible – only look at a box, but under his nose, millions of dollars on books…
The difference, Maragos said, is “myself being proactive, taking up initiatives, and somebody who sits back and says ‘not my responsibility’.”
But no one can dispute that the function of Comptroller has to do with overseeing the numbers. And here, there were plenty of dispute about what the numbers were.
During their debate, Maragos accused Weitzman of “fabrication” of the county’ budget deficit, charged that the deficit was actually larger under Suozzi (who had eight balanced budgets) saying that NiFA “turned a blind eye to my opponent, and decided that despite vast improvement [in our budget], to take control. Totally politically motivated.”
Disputing the NIFA report, Maragos said there are two accounting methods in order to evaluate the size of the budget surplus or deficit. “One method includes borrowing the other doesn’t – under both county improves financial basis – under Generally Accepted Accounting Principles (GAAP), from $250 negative, to less than $100 million deficit – over 100% improvement,” Maragos said.
“Under GAAP – excluding borrowing sources, we were left with a $250 million deficit in 2009, now we are left with less than $50 million deficit – a 90% improvement. Under both measures, the county’s financial position improved. And will continue to improve,” Maragos said.
But then he added as if to excuse the shortfall, “Just think how ludicrous it is for anybody at the beginning of the year to predict and take strong action on the basis of the budget that at the end of year will be off by more than 1% – completely ludicrous. We all know that budgets can vary –it is the responsibility of county executive to make adjustments during year, as expenses come in higher, to finish in balance, so the original action by NIFA was completely politically motivated.”
Maragos also put a different spin on the amounts of borrowing, though, saying that the Mangano Administration has borrowed $1.3 billion, not $2 billion as the Democrats charge “and most of that was rolled over, compared to $2.6 billion borrowed by the Suozzi Administration. (The discrepancy could be because municipalities routinely issue Tax Anticipation Notes to cover the period of time before they receive tax revenues.)
“We need to address the long term debt without saddling the taxpayer.”
Maragos’ figures don’t jibe with those provided by the Democrats, which show that under Gulotta, total debt hit $3,209,189,000; under Suozzi the amount was reduced to $2,958,009,500; in the four years of Mangano’s Administration, the debt climbed to $3,524,356,000.
What is not in dispute despite Maragos’ efforts to spin the numbers, is that NIFA moved to take over the county at the end of Gulotta’s administration and the credit agencies downgraded the county’s rating to near junk; under Suozzi, the credit rating agencies issued 13 upgrades to the highest credit rating the county had ever received, but under Mangano, there have been three downgrades by the credit rating agencies.
Asked, “What have you done, or what did you do to uncover waste or fraud in county government?” Maragos replied, “Unlike my opponent who focused on special districts without any benefit to taxpayer for eight years, the focus of my administration was to look internally – I audited most departments and found substantial waste and abuse. Some of findings were simply appalling, left undiscovered by prior comptroller, costing tens of millions of dollars. The county had 8000 employees yet in this day and in the age of cell phones, we had 19,000 landlines we were paying for. We did an audit of LIPA bill and found 300 meters that didn’t belong to the county – waste – fraud – under this comptroller’s very nose. We looked at social services, housing, and found rampant waste and abuse.” Maragos estimated his audits resulted in $300 million in savings to the county.
Weitzman responded, “Maragos tried that same line, $300 million savings, at the Newsday editorial board, and when pressed to come up with dollar figure, came up with $9 million. It turns out that $300 million was based on savings based on inflation– it wasn’t real money – and the bulk was the result of the NIFA wage freeze of $200 million. Had it not been for the wage freeze, spending in Nassau County would have been off the charts.”
Weitzman also said that Maragos was taking credit for audits that he did and Maragos reissued, such as the audit of phones. “He reissued one of my first audits, in 2003.”
Weitzman pointed to “actual money saved” through his office: $25 million by eliminating the double coverage in health care for people married to others in county, improvements in union contracts; $100 million saved taxpayers by reducing health premiums, $11 million flowed directly to Nassau County.
He said that audits his office performed showed how the Corrections Department abused overtime; how the Probations Department had people working only 9-5 weekdays, so those subject to probation weren’t being monitored nights or weekends; an audit found that there was a 1000-page directory on how much taxis could charge and as a result, taxis were going to the entrance in Queens so they could charge $100 rather than the entrance in Nassau for $40.
“We did more audits in the eight years than ever before, and most are on the website.”
The differences between the two candidates – and the credibility of each – was manifest in their closing statements.
Maragos called himself, “a very active, progressive comptroller, who brought about real, significant change, made the comptroller’s office more significant, more powerful, delivered results for taxpayer, instrumental in restoring confidence, financial stability of county, and having done so without turning to the taxpayer.
“I brought to county government 35 years of private business experience and philosophy that government needs to live within its means, live within obligations, but that government can be beneficial force for change to make our communities better. I think we laid the groundwork in the first four years establishing stability, credibility, and the next four years will be very exciting in making government even more so, without asking taxpayers for more and more money.
And in his closing statement, Weitzman said, “I am running for this office again because I am deeply troubled about the county’s finances. Every independent outside source, including NIFA has been critical of Maragos and the county’s financial management. Maragos has stood here tonight and tried to convince you everything in the county is fine and things are improving, This is in face of three [credit] downgrades… As late as yesterday, NIFA reported a projected deficit of 2013, four more years of deficits of $100 million starting in 2014, and no end in sight of financial control.”
Weitzman maximizes his background as a CPA in campaign literature In his campaign literature,
“After four years as county comptroller, I would hope that Mr. Maragos, who is not a CPA, would understand Generally Accepted Accounting Principles (GAAP) and how the very different set of rules he’s using in presenting the county’s finances are hiding the truth about the county’s deficit and debt. The GAAP standard is what is used by the Nassau Interim Finance Authority (NIFA), and the county is required to show a balanced budget using the GAAP standard in order for outside controls by NIFA to be lifted.”
Weitzman also notes that during his eight years in office, he played a central role in the financial rescue of Nassau County, and implemented programs that made his office transparent and accountable, such as posting audits online.
This is significant because Weitzman has gone so far as to file a complaint with the U.S. Securities and Exchange Commission (SEC), presenting evidence that financial reports issued by Maragos “may be false or misleading and deceiving taxpayers and county bondholders” and suggests that financial reports may be masking the county’s deficit.
I don’t think it is a political stunt, but the Mangano Administration, rather than have the confidence to let the SEC investigate, chose instead to threaten to sue Weitzman unless he withdraws the complaint – going through the expense of hiring outside counsel (and refusing to disclose the amount being paid to the Democrats).
“Mr. Weitzman has raised concerns about the state of the county’s finances and taxpayers have a right to know how much money the county is spending on this frivolous legal action against him,” said Nassau County Legislature Minority Leader Kevan Abrahams. “I am concerned about whether it is appropriate for the administration to hire lawyers to silence and intimidate their critics.”
Karen Rubin, Long Island Populist Examiner
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