COMPTROLLER EXPECTS NASSAU COUNTY TO CLOSE 2005
WITH A SURPLUS OF AT LEAST $48 MILLION

Despite Surplus, State Insists Nassau Declare a Deficit;
Otherwise, County Stands to Lose $7.5 Million in State NIFA Aid

(The Comptroller's Complete report is available at the end of this page)
Describing Nassau County's fiscal policies as conservative and its financial condition as strong, Comptroller Howard S. Weitzman today predicted the county would close 2005 with a surplus of between $48 million and $70 million.

In an annual assessment of the county's financial condition at mid-year, required by the Nassau County Charter, Comptroller Weitzman said, "This is the third consecutive year in which the county will finish with strong fiscal results. Even better, the county is close to achieving a third straight year of structural balance; that is, a year in which the county will record a surplus without relying on one-time revenue sources."

The projected surplus is "basically a triumph of very conservative budgeting by the administration," Comptroller Weitzman said. "For the last two years, we noted that the administration took the fiscally prudent path of channeling surpluses into reserve funds to enable the county to meet future expenses and retire debt.

"This fiscally conservative approach has enabled the county to avoid tax increases in 2004 and 2005, and hopefully enable it to avoid tax increases in 2006 as well. By setting aside money to reduce future expenses, the county is helping to forestall future tax increases. This conservative budgeting philosophy - saving for future needs - is the fundamental reason county taxes are not going up in Nassau," Comptroller Weitzman said.

In 2005, the report says, the county's reserves will provide nearly $25 million of funds to pay down debt. The county also derived a $34.4 million benefit in 2005 by using a portion of a $79 million pension reserve. The reserve was set aside in 2004 as a result of the pension relief legislation championed by State Comptroller Alan Hevesi, passed by the Legislature and signed into law in 2004. Additional savings resulting from the legislation will be realized over the next several years.

The $21.9 million range in the projected surplus is a result of a pair of uncertainties:

Medicaid Savings for 2005: This year the county is also expected to receive up to $14.4 million in one-time Medicaid savings, depending on the State's interpretation of the Medicaid cap legislation passed in the last legislative session. The legislation provides for county Medicaid contributions to be capped at the 2005 level, beginning in 2006.

NIFA Aid: About $7.5 million of promised state aid from the Nassau County Interim Finance Authority is in jeopardy, Comptroller Weitzman said. The funds represent the final installment of assistance to the county payable under the NIFA Act. In 2004, at the urgent request of the state, the County agreed with the Governor's Office to split the 2004 assistance payment of $15 million over two years (2004 and 2005).

"This year's state budget, however, required the county to certify that it has a deficit in order to receive the promised payment," Comptroller Weitzman said. "In other words, for essentially political reasons, the Governor's Office is forcing Nassau to affirm that it has a deficit before the state will hand over the state aid funds previously promised."

The county still may qualify for the $7.5 million in NIFA aid despite the surplus in the General Fund because of a projected deficit of approximately $10 million in the county's Police District Fund. The General Fund, funded by all taxpayers, cannot contribute to the District Fund to eliminate budgetary shortfalls, since the District Fund does not serve all county residents. Among the report's other findings:

Overtime for Police and Corrections Officers continues to exceed budgeted amounts. "While we agree with the administration that a certain level of overtime in these forces is fiscally prudent, as opposed to increasing the workforce to perform the same amount of work," Comptroller Weitzman said, "the budget should contain realistic, not understated, overtime amounts."

Sales tax revenues, the largest single source of county revenue, have improved after a dip in the first five months. Gross sales tax receipts at year-end are now projected to total $957.3 million, only $7.4 million less than the budgeted amount.

Labor costs: Significant salary savings are now projected this year as a result of vacant employee positions and recently negotiated collective bargaining agreements. In addition, since the 2005 CPI was 2.3 percent, the Civil Service Employees Association (CSEA) raise for 2006, under its contract, will be 2.5 percent, representing an annual savings of $3 million, plus fringe benefits.

Nassau Health Care Corporation: Although still operating at a deficit, the fiscal outlook for the health care corporation has brightened considerably. "Although more needs to be done to improve the bottom line," Comptroller Weitzman said, "working together with the administration, our consultant, and NHCC management, we now believe that the hospital corporation is at a point where it no longer threatens the county's fiscal health."

"Certainly the next few years will continue to be challenging fiscally, despite the progress we have made in making government more efficient and containing the county's costs of Medicaid and pensions," Comptroller Weitzman said. "Nevertheless, the continued confidence of the rating agencies in Nassau County is based on the current administration's proven ability to deal with financial challenges responsibly."

The Comptroller's complete report may be read and/or downloaded by clicking on the report title below.

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Report On The County's Financial Condition For The First Six Months Of Fiscal Year 2005
( ~ 352 kb, 20 pages, pdf file)