COMPTROLLER ENDORSES COUNTY’S PROPOSED 2004 BUDGET BUT CAUTIONS ON 4-YEAR FINANCIAL PLAN

Structural Deficits in Out-Years Are Still a Concern, Weitzman Says

The county's proposed 2004 budget is "balanced" and incorporates "appropriately conservative" assumptions about the likely rapid growth in expenses and slow growth in revenues, Nassau County Comptroller Howard S. Weitzman said today. He expressed concern, however, about looming structural deficits in the next four years.

Mr. Weitzman's remarks came at a hearing of the Nassau County Legislature Committee on Finance in Mineola, at which he issued an analysis of the Suozzi administration's proposed 2004 budget and four-year plan for 2004-2007. The multi-year plan is required by the Nassau Interim Finance Authority (NIFA).

"A conservative fiscal strategy is especially warranted given the uncertain economic times and projected structural deficits in the coming years," Mr. Weitzman said. "These same conservative budgeting principles were incorporated in the 2003 county budget, which should allow the county to achieve a surplus at the end of this fiscal year. The administration plans to use these funds to provide budgetary relief over the next several years by paying for a number of liabilities that otherwise would have had to be financed over an extended period."

Comparing the proposed 2004 budget to both the current year's projected expenses and actual expenditures from 2001 (see table below), the Comptroller

commended the county for holding the line on those expenditures under the county's control. "The lack of growth in those expenditures was entirely appropriate, considering the stagnancy in the county's revenues during the period, as would be expected of a mature suburban county. These controllable expenses were little changed throughout the four years since 2001, whereas the mandated expenses - such as Medicaid, health insurance for county employees and retirees, and pension contributions - rose steeply, as they have throughout the state," Mr. Weitzman said.

Mr. Weitzman cautioned, however, that large structural deficits loom in the out-years, projected at $121 million in 2005, $288 million in 2006, and $395 million in 2007.

"These structural deficits are something every mature county is going to face as revenues show little or no growth while state or federally mandated expenses grow in double digits each year with rising medical costs and an aging population," he said. "One of the largest of these "unfunded mandates" is Medicaid, the cost of which New York State requires every county to share. The crushing burden represented by the county share of Medicaid costs under existing state formulas represents a serious threat to the future solvency of every county in the state."

The county's share of Medicaid costs are forecast to increase from approximately $240 million in 2003 to more than $408 million by 2007 unless the manner is funding Medicaid in New York is overhauled, Mr. Weitzman said. "There is a critical need to restructure the relationship between counties and the state to fund Medicaid. It was never intended to be funded by local property taxpayers."

Mr. Weitzman also cited expected hefty increases in the county contribution to the state employee pension systems and in the cost of employee and retiree health insurance.

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October 15, 2003 - Comptroller Weitzman's Comments on Nassau's 2004 Budget
(~149 kB .pdf file-13 pages)