2010 Budget Review

Sales tax and cigarettes. That’s what the 2010 budget hinges on, according to Nassau County Comptroller Howard Weitzman. The Comptroller spoke today before the Legislature’s Finance Committee to give his analysis of the County Executive’s proposed 2010 spending plan, a plan that Weitzman says may need to be revisited once several unknowns become clearer.

Weitzman said he believes the administration’s budget contains two critical “if’s.” The first is the Administration’s projected final sales tax revenues for 2009, which the Comptroller says presents a risk of approximately $11.2 million; the second is the $16 million in revenue included from a cigarette tax that has not yet been approved by Albany lawmakers.

"There is great uncertainty surrounding our final sales tax numbers,” Weitzman said. “The recession has slashed Nassau’s sales tax receipts and since those receipts comprise the largest portion of County revenue, it may be necessary to realign the budget once the final numbers are in. Overall, this office projects a 7% drop in sales tax for 2009; the administration is projecting a drop of 6%.”

The Comptroller explained his projections are based on the assumption that fourth quarter 2009 receipts will be flat with last year. However, fourth quarter receipts will not start to be known until November 5.

In addition, the projected $16 million from a new cigarette tax depends on State legislative authority. It is possible that the State leadership will agree to reconvene the Legislature before the end of the year because of the difficult financial choices facing the State. But the speed at which this can be implemented presents a risk, the Comptroller stated.

"I urge our State leadership to continue to work with the County and authorize the proposed cigarette tax,” Weitzman said. “I anticipate that the administration and Legislature need to be prepared to reconvene early in 2010 to determine whether further spending reductions are necessary, depending on the outcome of both the proposed cigarette tax and the sales tax receipts.”

The combination of no increase in property taxes and falling sales tax revenues leaves the County with the question of how to best manage the risks in the 2010 budget. Options include reducing spending with across the board decreases in all county spending; or scaling back targeted programs.

"The County may not be able to support all worthy programs,” Weitzman said. “The most conservative step the Legislature could take would be to cut $20 million in spending from the budget before adoption. However, until the outcome of the proposed cigarette tax and the critical last quarter sales tax numbers are known, the full scope of any cuts cannot be determined.”

While the County administration and Legislature have been focused on keeping tight controls over the growth of expenditures, the County’s recurring revenues have not kept pace with the growth in recurring expenses.

“Nassau has kept expenditure growth down to below that of the Consumer Price Index, but the gap between recurring revenues and expenditures are now obviously exacerbated by the drop in sales tax revenues,” said Weitzman.

The Comptroller also points out that after 2010 recurring expenses will rise dramatically as the County faces approximately $44 million in increased pension costs in 2011, rising an additional $14.7 million in 2012 and obligations for labor expenses that were deferred in earlier years will need repayment in 2012 to 2015.

As always, the Comptroller also presented his assessment of the proposed budget’s “risks” and “opportunities” in the proposed spending plan.

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"We have identified approximately $39 million in net budgetary risk, less than half of what was identified in the proposed 2009 budget, but more risk than can be eliminated strictly through tight management of hiring and spending,” Weitzman said.

Weitzman notes that uncertainties in the 2010 budget include the State’s failure to fully come to grips with the impact of the national recession on State spending so the County faces the threat of unpredictable new spending requirements, such as the MTA payroll tax imposed in mid-2009, or unanticipated mid-year cuts in State funding during 2010.

One opportunity in the budget is Comptroller Weitzman and County Executive Suozzi’s continuing talks with the State to bring down the rate of health insurance premiums set by New York State Health Insurance Program.

The Comptroller commended the Suozzi administration for putting the interests of Nassau’s hard pressed taxpayers first by not proposing an increase in the property tax levy in the 2010 budget, for the sixth time in the last seven years.

"We believe that the Legislature will agree that our taxpayers cannot be asked to pay more in County property taxes in 2010, especially given the inexorable rise in school district property taxes,” Weitzman said.

Weitzman says 2010 budget will hinge on sales tax figures and approval of cigarette tax