COMPTROLLER RELEASES NASSAU COUNTY ANNUAL REPORT

Report Confirms Surplus of Nearly $13 Million in 2003

Thanks to a policy of conservative budgeting combined with unexpected outside sources of revenues, Nassau County ended its 2003 fiscal year with a surplus of $12.7 million, Nassau County Comptroller Howard S. Weitzman said today, as he released the county's 2003 Comprehensive Annual Financial Report.

The surplus had been higher -- $25.5 million -- before the county decided to use $12.8 million of it to help fund new technology initiatives, a decision Mr. Weitzman endorsed. The annual report, audited by Deloitte & Touche LLP, an independent certified public accounting firm, confirmed the budget surplus, which was first reported by the Comptroller in February 2004.

“In February, I attributed last year’s surplus to the administration’s policy of conservative budgeting and aggressive cost-cutting, as well as several unexpected and non-recurring revenues or expense reductions, including $43 million of pension relief from the State Comptroller. All these factors combined to produce a surplus that initially exceeded $127 million. The county, however, wisely elected to apply approximately $115 million of that amount to reduce anticipated future budget deficits and to invest in technology.

"Nassau County's fiscal turnaround during the last two and a half years has been remarkable," the Comptroller said, citing its two bond upgrades since 2002 and its return to the bond market under its own credit for the first time since 2000.

Despite the county's current fiscal health, the Comptroller warned against complacency. "Although we have come a long way to achieve the current surplus, our fiscal health is simply not sustainable unless we act aggressively to curb several major drains on the county's treasury: in particular, the perilous fiscal condition of the Nassau Health Care Corporation (NHCC), and the unabated double-digit increases in Medicaid that Albany expects counties and other local governments to pay every year." Mr. Weitzman repeated his call for a cap on county contributions to the state-sponsored health program.

Citing these factors, as well as rising pension contributions for employees and the soaring cost of health insurance benefits, Mr. Weitzman has projected future county budget gaps to grow to over $100 million in 2005, and nearly $400 million in 2007, if not addressed.

The latest NHCC financial report shows that the corporation incurred an operating loss of $26.7 million for the 2003 fiscal year. This loss is $17.9 million greater than the loss of $8.8 million that NHCC had projected in its 2003 budget. NHCC's auditor added a "going concern" qualification to the report, indicating substantial doubts about whether the corporation can continue to meet its obligations.

Mr. Weitzman, who is currently performing monthly reviews of NHCC's cash balances, has projected that NHCC will run out of cash by the end of 2004 or fail to make its required New York State pension contributions.

Comptroller Weitzman also noted that the county's net worth - the difference between its assets and its liabilities - now stands at a negative $1.45 billion. Last July, the Comptroller reported Nassau's statement of net assets for the first time, comparing liabilities and assets under a new accounting standard mandated by the Governmental Accounting Standards Board.

"Most of the negative net worth represents the county's historic practice of borrowing money to pay for successful property assessment challenges and other litigation against the county," Mr. Weitzman said. "One way in which the county can begin to turn around its net asset deficit is by reducing the backlog of property tax refunds. The backlog, which we currently estimate to be about $365 million, must be reduced drastically, to no more than $231 million, and preferably lower, in order to meet the county's goals of being able to pay the majority of tax refunds without borrowing by 2006, as mandated by the Nassau Interim Finance Authority (NIFA)."

2003 Highlights

• Among the factors contributing to the $12.7-million surplus were: conservative budgeting; workforce reduction measures taken by the administration; $56.6 million of NIFA aid; $43.1 million of budget relief from the State Comptroller's pension relief initiative; healthy sales tax receipts; and $15.3 million of Medicaid liability forgiven by the State of New York.
  
• The surplus was initially more than $127 million, before $114.8 million of discretionary actions taken by the county to reduce projected future deficits. These actions included, among others, the establishment of a $38.5 million police severance reserve; the $16.5 million payoff of the cost of the 2002 early retirement incentive; defeasance of $17.7 million of debt related to retirement costs; and the dedication of $12.8 million for technology initiatives.
  
• The county ended the year with a $76.1 million accumulated unreserved fund balance in the General Fund.
  
• During 2003, the county significantly reduced its reliance on "one-shots," i.e., non-recurring revenues or cost reductions. Even without them, the county would have achieved a surplus in 2003, Mr. Weitzman noted.

The full report may be downloaded, viewed and printed by clicking on the report title below

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Comprehensive Annual Financial Report 2003 (CAFR) ( ~ 22 mB - 223 pages "pdf" file)
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