Office of the Nassau County Comptroller

Nassau County is on course to finish 2004 within its budget, or with a modest surplus, County Comptroller Howard Weitzman said today, in a semi-annual assessment of the county’s financial condition.

“We expect Nassau County to finish 2004 in the black, and perhaps with a modest surplus,” Comptroller Weitzman said. “The expected surplus of up to $38 million is primarily the result of conservative budgeting by the Suozzi administration and several favorable developments. Most notable among these is projected gross sales tax receipts of $937 million, about $35 million higher than had been predicted in the 2004 budget, thanks to a relatively stronger economy.

“The county’s fiscal picture is mixed,” Mr. Weitzman said. “In the short term – the remainder of 2004 and 2005 – I believe revenues and obligations will be fairly balanced. In the longer term – 2006 and beyond – we still have looming and serious structural problems that must be addressed decisively.

“The county was fortunate in 2004 to benefit from a pension relief plan proposed by State Comptroller Alan Hevesi, which the Legislature adopted and the Governor has signed. That legislation could save the county $78 million this year. The administration plans to reserve these anticipated savings to fund future contributions to the retirement system. Because the savings are a one-time occurrence, it is appropriate for the county to create this reserve and to remove the expected savings from its year-end surplus.

“While this one-time pension relief is welcome, for the future we need sources of revenue that recur every year, or we must find ways to reduce expenses in a recurring way. Since no one wants to increase taxes, we are left with the need to cut expenses, with as little effect on services as possible.

“What recurring county expenses are growing at a rate far in excess of the rate of inflation, or are continuing at excessive levels?” Mr. Weitzman asked. “Several familiar culprits come to mind:

The county’s tax refund liability, which persists at unacceptable levels, must be brought down before the county’s authorization to borrow for that purpose begins to phase out at the end of 2005;
The annual double-digit increases in Nassau’s contribution to Medicaid must be tamed, Mr. Weitzman said. “County Executive Suozzi and I have urged Albany to take action to contain these costs;” and
Health costs for county employees and retirees, which are also increasing by double-digits every year, must be reined in. “The New York State Health Insurance Program (NYSHIP) simply must do more to control its expenses,” Mr. Weitzman said.

The possible surplus of up to $38 million may result from a reserve, established at the end of 2003, to cover the potential for an extraordinary number of PBA retirements more during 2004. Based on average 2003 PBA termination pay of $225,000, the $38.5 million reserve would cover the retirements of 171 retiring officers over and above the estimated 110 officers (of all ranks) whose retirement was already covered under the current budget. If fewer than 171 additional PBA officers retire in 2004, savings may materialize.

The year-end surplus is projected despite a number of significant budgetary shortfalls, most notably those generated by higher than predicted costs for police and corrections overtime, Department of Mental Health early intervention educational services, automobile registration surcharges, parks revenues and utility costs. While sales tax revenues are projected to generate the most significant positive budgetary variance, other substantial favorable variances are projected for state and federal aid, employee fringe benefits and debt service costs.

Also, the financial condition of the Nassau Health Care Corporation (NHCC) continues to be a threat to the overall fiscal recovery of the county, Mr. Weitzman said. The Comptroller’s latest monthly review of NHCC cash found that as of July 15, 2004, the balance had dwindled to $23 million. The Corporation continues to spend more money than it takes in. “Despite a number of initiatives to reduce expenses or increase revenues, it appears that a cash crisis is imminent. More has to be done to ensure that these medical facilities can remain viable,” Mr. Weitzman said.

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COMPTROLLER FORECASTS COUNTY WILL FINISH STRONG IN 2004

COMPTROLLER FORECASTS COUNTY WILL
FINISH STRONG IN 2004