NASSAU COUNTY SOLIDLY IN THE BLACK
WITHOUT “ONE-SHOTS,” WEITZMAN FINDS

For Second Year in a Row, a Surplus Not Dependent on One-Time Revenues;
Comptroller Credits Spending Restraint, Hospital Agreement

Confirming Nassau County’s fiscal turnaround, Comptroller Howard Weitzman announced today that the county had a 2004 budget surplus of $75 million, marking the county’s second straight year of surpluses that are not dependent on one-time revenues or aid from the Nassau Interim Finance Authority (NIFA).

The Suozzi administration has said it plans to earmark about $54 million of the surplus to establish reserves for police retirements ($31 million), early debt retirement ($20 million), and litigation ($3 million).

“Balancing the budget and producing surpluses two years in a row, without relying on one-time revenues, or ‘one-shots,’ is a remarkable achievement for Nassau County,” Comptroller Weitzman said. “Since taking office in 2002, the Suozzi administration has put county government on a diet, weaning it off its previous unhealthy dependence on debt, “one-shot” revenues, and fire sales of its assets, such as the 1999 disposition of the Nassau County Medical Center.

“By controlling labor costs, exercising smart management controls, budgeting realistically and avoiding fiscal gimmicks, the county has earned its new reputation for efficiency, as reflected in its eight bond-rating upgrades in the last two years,” Comptroller Weitzman said.

“Last year, the county had projected a structural deficit of $120 million in 2005 and $287 million in 2006, due in large part to state-mandated expenses such as Medicaid and pension contributions. Although we did receive considerable help from pension relief enacted in 2004, the Suozzi administration clearly deserves much credit for balancing the 2005 budget and reducing the structural deficit going forward. We now project a 2006 structural deficit of about $195 million, about $90 million less than previously projected,” Comptroller Weitzman said.

“Nassau government used to balance its books by massive use of one-time revenues (see charts, p. 4) and inflated revenue estimates. Those days are over. This year’s “one-shots” are about $68 million out of a total budget of $2.7 billion, approximately half of last year’s level,” Comptroller Weitzman noted. For 2004, the one-shots include $31.5 million that had been held in reserve to pay for police terminations that did not occur; $9.1 million of NIFA debt restructuring; $7.5 million of transitional state aid from NIFA, and $9.1 million in reserves eliminated as a result of the county’s 2004 agreement with the Nassau Health Care Corporation (NHCC) to stabilize its finances.

“The NHCC agreement, which took the hospital off the critical list, had a significant effect on the county’s financial health,” Comptroller Weitzman said, “allowing us to eliminate a major source of financial uncertainty and reduce our reserves for possible expenditures for the hospital corporation. Moreover, it appears that no additional county funding will be needed by NHCC during 2005 and 2006.”

Another unexpected boon was an un-budgeted additional settlement from the federal government for funds forfeited by defendants in the BPA health insurance case, adding another $3.3 million to the county’s coffers.

“One of the major stories of 2004 was the pension relief legislation proposed by State Comptroller Hevesi and adopted in 2004 by the state government,” Comptroller Weitzman said. “This legislation enabled the county to set aside funds in 2004 to ease our transition into the era of higher pension contributions that the state has projected. We are pleased to note that the county followed our office’s recommendations in this regard. As a result, we expect Nassau County taxpayers will save $80 million dollars over three years.”

Nevertheless, the Comptroller sounded a few cautionary notes about looming deficits in the “out-years.”

“The financial pressures faced by all counties in New York State, especially the continuing double-digit increases in Medicaid, have not yet been contained,” he said. “Growth in Medicaid spending consumed about half of the growth in county sales revenues for 2004; it is projected to consume more than 100 percent of the growth in sales tax revenues in 2005. This is why it is so important to cap county contributions to Medicaid, as proposed by the state’s county executives with the support of many state legislators.”

Sales tax revenues, at $940 million in 2004, have become the largest source of county revenue, Comptroller Weitzman noted, “But sales taxes can fluctuate. As such, they bear careful watching.” The county’s 2005 budget includes estimated sales tax revenues of $965 million, $25 million more than received in 2004.

*Includes:

General Fund
Police Headquarters Fund
Police District Fund
County Parks & Recreation Fund
Fire Prevention, Safety, Communication & Education Fund
Debt Service Fund (not including sewer debt)