October 15, 2007

COMPTROLLER WEITZMAN: 2008 BUDGET WILL REQUIRE
UNPRECEDENTED LEVEL OF COOPERATION

Unions, County and State Legislatures Must Commit to Help Achieve Budget Goals

Comptroller Howard Weitzman today reported that the Suozzi administration’s proposed 2008 budget is balanced, but noted that it will take an “unprecedented” amount of cooperation from all parties to make it work.  The Comptroller’s analysis of the budget found a total of $50.6 million of items considered to be “at risk” of not being achieved, largely dependent on the outcome of labor negotiations, legislative initiatives and continued stringent management.

Weitzman’s comments came in connection with his report on the administration’s proposed 2008 budget, which he presented to this evening’s session of the Finance Committee of the Nassau County Legislature.

“Avoiding an overall county tax increase in 2008 was great news for our beleaguered residents, many of whom are struggling to pay their other local property taxes,” Comptroller Weitzman said.  “But to make this budget work will require an unprecedented amount of cooperation between the administration, the unions, and the state and county legislatures, all of whom need to make a commitment to help achieve these goals.”

Comptroller Weitzman cited the PBA contract as an example of the kind of cooperation that will be required.  “This year’s PBA contract demonstrated that the county could realize ambitious targets for reducing labor costs.  Negotiations with the county’s other unions must achieve similarly creative solutions.”

The 2008 budget includes $37.7 million in concessions that the county must negotiate with four labor unions: Civil Service Employees Association (CSEA), Detectives Association Inc. (DAI), the Superior Officers Association (SOA), and the Sheriff Officers Association (ShOA).  The Comptroller estimates that approximately $19 million of the hoped-for concessions in 2008 may be at risk.

Another major budget element found to be at risk is sales tax revenue.  “The administration projects 2.5 percent growth in sales tax revenues next year, which I believe is a reasonable and appropriately conservative figure,” Weitzman said.  “Nevertheless, our analysis indicates that because of weakness in 2007 receipts, $10 million of budgeted revenues from sales tax are at risk.

“Because sales taxes account for over $1 billion of the $2.6 billion operating budget, or approximately 41 percent of total county revenue, the administration will have to make major adjustments to spending if sales tax revenues come in below target,” Weitzman said.  Sales tax revenue figures received from the state last week indicate that the rate of growth in the current year-to-date has been only 1.4 percent, significantly lower than the administration’s latest forecasted 2007 growth of 2.1 percent.

The proposed 2008 budget also contains significant amounts of new revenues that require state and county legislative approval, Weitzman said.  One such revenue generating measure, worth $15.5 million annually to the county, is a statewide increase in filing fees charged by county clerks.  The matter may be discussed at a possible fall session of the State Legislature, but it is uncertain whether or not the session will take place.

Overall, these uncertainties add up to a significant net risk of $50.6 million, greater than the amount of budgetary risk the Comptroller identified in last year’s budget.

“The Suozzi administration has kept Nassau’s expense growth at or below the level of inflation, without sacrificing essential services,” Comptroller Weitzman said in comments prior to his testimony.  “The County Executive and his staff deserve a great deal of credit for their overall management of Nassau County finances.  The county’s fiscal discipline is the reason we have been able to avoid an overall tax increase since 2003.  But the administration will have to “continue its extremely tight management practices to ensure that budgeted savings are achieved, and adapt if budgeted revenues do not materialize and expenses do not decline as they project,” he said.

The proposed budget holds overall county tax levies flat and includes a modest 1.9 percent increase in spending.  Weitzman noted that the County Legislature will have to abide by this expense budget, balancing any additional spending initiatives with reductions in other expenses.

In a sign of fiscal progress, Weitzman noted that the county’s multi-year financial plan projects smaller budget gaps in future years than previously forecast.  The plan projects baseline gaps of $124.7 million in FY 2009, $174.6 million in FY 2010, and $197.5 million in FY 2011.

“We are also glad to note that the administration has begun to reverse the trend of increasing structural gaps – i.e., the gap between the county’s recurring expenses and recurring revenues,” Weitzman said.  “The $67.5 million structural gap the administration projects for 2008 represents a substantial improvement over the $105.7 million structural gap forecasted for 2007.

“It is common for municipalities that forecast multi-year plans to show budget gaps in the out years,” Comptroller Weitzman said.  “The issue is how the administration proposes to close the gaps and whether it can build a consensus to support the necessary measures.  Although the administration has held expense growth to 3.2 percent since 2002, and only 1.9 percent in the proposed 2008 budget, the gaps are still significant because recurring revenues have not increased sufficiently to cover even this low rate of growth in expenses. 

“The administration has avoided raising taxes in part by using reserves and fund balances to pay for higher expenses.  By the end of 2008, however, the reserves will have been substantially depleted and fund balance sharply reduced.  As a result, it will be difficult to balance the county’s budgets after next year without new recurring revenue sources or significant recurring expense reductions.”

Comptroller's Comments On The Proposed Nassau County 2008 Budget And Multi-Year Financial Plan (.pdf)

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