Infusion of NIFA Aid Enables Nassau County
To End 2001 With a $19 Million Surplus

Weitzman Projects $29 Million Deficit in 2002
And Warns of Larger Losses Looming in 2003

MINEOLA -- Nassau County Comptroller Howard S. Weitzman reported today that the county ran a small surplus of $19 million in 2001. He projected a $29 million deficit for 2002 and expressed serious concerns about 2003.

"Nassau County ended the 2001 fiscal year with an operating surplus of $19 million, however, this surplus is primarily attributable to the financial intervention of the Nassau Interim Finance Authority (NIFA)," said Weitzman. "Without the infusion of $115 million in aid from NIFA, as well as the use of some $22 million in tobacco settlement monies and $13 million of the fiscal 2000 surplus to help close the budget gap, we would be closing Nassau County's books for 2001 with a $131 million deficit.

Weitzman attributed the projected $29 million deficit for 2002 primarily to overstated salary savings by the former Gulotta administration, which formulated the 2002 budget prior to leaving office in December. "There is still time to make the necessary operational changes to bring 2002 into balance," said Weitzman. "However, we are very concerned about next year (2003), when an anticipated decline in one-shot revenue sources will contribute to a projected $172 million deficit." He said the 2003 financial projection already takes into account $36 million in NIFA debt refinancing assistance.

Weitzman said that necessary cost reduction and revenue generating initiatives for 2003 must be in place later this year if Nassau County is to eliminate its projected deficit and achieve a balanced budget. "Restoring fiscal stability to the county will require some tough and concerted action by the county executive and the entire county legislature," said Weitzman.

Since labor costs account for the lion's share of the county budget, he believes "It's imperative that the county establish an office of labor relations with real teeth to engage in serious negotiations with our unions aimed at boosting productivity and morale while containing costs -- without necessarily resorting to layoffs."

"Of critical importance are the county's negotiations with the Police Benevolent Association (PBA)," said Weitzman. "If the recently approved police contract in neighboring Suffolk County is any indication, we could be faced with an increase of $40 million, including the retroactive portion." Weitzman noted that the county's contract with the Civil Service Employees Association (CSEA), which represents most of the county's work force is up at the end of 2002.

The cost of health care and other fringe benefits are rising by more than $20 million annually while Medicaid reimbursement costs are expected to jump by more than $20 million.

Noting that health care costs are straining efforts to restore fiscal health to the ailing county, Weitzman said, "Clearly, we have to take a hard look at the benefit packages we're currently providing for some 10,000 employees and 12,000 retirees. While we want to provide the best health coverage we can afford for our employees and retirees, we need to reign in the costs."

Streamlining county government through restructuring and consolidating county departments also can help reduce expenses and affect efficiencies, according to Weitzman, as can the systematic review of the contracting process that is now underway.

"Re-engineering of the contracting process will yield substantial financial benefits in 2003," Weitzman maintains. He said the county also could trim its costs by reducing outsourcing and having more work done in-house by competent, talented and motivated county employees receiving market-rate salaries.

Ensuring the financial solvency of Nassau Health Care, the public benefit corporation that now runs Nassau University Medical Center, is also critical, according to Weitzman. "Nassau County has provided a $250 million bond guarantee, and we are closely monitoring the medical center's financial situation," he said. The Comptroller noted that the county is not projecting any additional support for Nassau Health Care beyond the $18 million operating subsidy that is currently provided.

While acknowledging that solving the tax certiorari problem will not materially impact the projected 2003 budget deficit, Weitzman said, "We must continue to focus on reforming Nassau County's real estate tax laws and on reducing the overwhelming number of claims for real estate tax refunds facing the county." This will have an impact on 2005, when NIFA will end the county's ability to bond such refunds.

Weitzman believes county officials must look closely at other revenue sources to ensure that the county is maximizing its collection of existing fees, while considering the imposition of additional ones.

"If we are not successful in reducing the projected deficits through expense reductions and increased non-tax revenues, then the county will be forced to look for additional tax revenues," Weitzman warned.

"Steering Nassau County back into a sea of fiscal solvency won't be easy," he acknowledged. "But the tides of change swept through Nassau County last November and we must maintain the political will to do just that.