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July 12, 2007

COMPTROLLER WEITZMAN ISSUES ANNUAL REPORT,
CONFIRMS $45.4 MILLION BUDGET SURPLUS

County’s Fifth Annual Surplus Since 2002;
Tax Refund Liability Has Been Significantly Reduced

Nassau Comptroller Howard S. Weitzman said today that the county ended its 2006 fiscal year with a surplus of $45.4 million, its fifth annual surplus under the Suozzi administration.  The budget surplus was confirmed in the county’s 2006 Comprehensive Annual Financial Report (CAFR), which Comptroller Weitzman released today. 

The surplus would have been approximately $65 million, almost $20 million higher, were it not for a one-time accounting adjustment recorded in 2006, Comptroller Weitzman said.  The report is audited by Deloitte & Touche LLP, an independent certified public accounting firm.

“Five consecutive surpluses and four consecutive years of stable taxes is an unprecedented achievement for any county in this state,” Comptroller Weitzman said.  “It’s even more remarkable considering where we started in 2002: Nassau County was on the verge of fiscal collapse five years ago. 

“In another very welcome development, I’m pleased to announce that the county has achieved, for the second year in a row, a manageable year-end liability for residential and commercial property tax refunds,” Comptroller Weitzman said.  “This is critical to the county’s finances because, under legislation creating the Nassau County Interim Finance Authority (NIFA), Nassau can no longer borrow to pay each year’s refunds, a bad habit that resulted in Nassau borrowing more than $1.3 billion under prior administrations.  The county’s total property tax  liability at the close of 2006 was $137.2 million, a modest increase from the previous year’s level, but a dramatic reduction from the range of $400-700 million of only a few years ago.”

Comptroller Weitzman estimated in 2004 that, in order to reduce annual tax refund payments from the $100-million plus level of prior years to $50 million a year – the amount set forth in the county’s multi-year financial plan – the county would have to reduce its outstanding liability to no more than $231 million by December 31, 2005.  “Remarkably, we have exceeded that goal by almost $100 million – an achievement that speaks volumes about Nassau County’s return to responsible financial management,” Comptroller Weitzman said.

“Now for two years in a row we have closed our books with a relatively low year-end tax refund liability, demonstrating that Nassau has made good on its promise to reduce the backlog.” 
The continuing budget surpluses are the result of strong fiscal management by the Suozzi administration, including a 2006 freeze on non-essential hiring and purchasing, Comptroller Weitzman said.  Because in recent years the county has used its annual surpluses to establish reserves, it has been able to fund normal expense growth without raising property taxes.

Looking ahead to 2008, that the county still faces a sizeable structural gap, i.e., the gap between recurring revenues and recurring expenses, Comptroller Weitzman noted.  Most of the 2006 surplus has been earmarked for 2007 budget relief and so will not be available for 2008.  The administration has reserved $25 million of the 2006 surplus to pay 2007 property tax refunds.  Of the remainder, $16 million will be used to fund pension reserves, $2 million for a municipal cooperation agreement with the town of North Hempstead; with most of the remainder added to accumulated fund balance.

Among the highlights of the 2006 annual report:

  • There were $121.6 million of non-recurring revenues in 2006, including $94.4 million of reserves established from prior years’ surpluses.
  • The county made a one-time, non-recurring accounting adjustment of $19.5 million to record the change brought on by its transition from using debt to pay for property tax refunds to “pay-as-you-go” funding of such refunds.
  • Investment income totaled $24.9 million, $10.9 million over budget, thanks to more available cash to invest and better short-term interest rates than the budget projected.
  • Payroll was $31 million under the $832.6 million budget, due in part to the County Executive’s freeze on non-essential hiring.  Included in this amount were:
    • Police Department overtime totaling $43.8 million, $3.6 million under budget;
    • Correctional Center overtime of $22.2 million, $1.7 million over budget; and
    • Police termination pay totaling $16.7 million, $6.6 million under budget.
  • Workers’ compensation of $21.2 million, $3.6 million over budget.
  • State aid was approximately $16.6 million over budget, primarily due to reimbursements for higher than budgeted special education and Medicaid administrative costs.
  • The county transferred $10.3 million of the tobacco settlement funds to the Nassau Health Care Corporation.

“Although the ability of the county to achieve five consecutive surpluses provides further proof of its current financial health," Comptroller Weitzman said, “from here on in there are no easy ways to balance the budget.  The administration and the Legislature will face very tough choices as they consider the county’s 2008 budget in the fall.”

The annual report received a “clean opinion” from Deloitte & Touche, signifying that the accounting firm found no unresolved issues that would qualify its assessment.  The full report is available by clicking the document title in the link below. A CD-ROM version may be obtained by calling the Comptroller’s communications unit at 571-2677.

pdf file Comprehensive Annual Financial Report Of The Comptroller
For The Fiscal Years Ended December 31, 2006 And 2005

(large file ~18mB - allow adequate download time)