May 12, 2008

Weitzman releases 2008 budget projections; Stresses that support from Albany is needed

Nassau County Comptroller Howard Weitzman updated his comments on the County’s 2008 budget today, incorporating the administration’s revised plans for finishing 2008 on budget. The Comptroller found a mixed bag of good news and bad.

“When the 2008 budget was first proposed in October 2007, the Comptroller projected the budget risk at $56.7 M.  It is good news that the risks have dropped to approximately $34 million, primarily because of sales tax receipts that continue to show growth, although growth is slowing, and completion of the ShOA agreement.  With the State’s support for the administration’s remaining revenue initiatives, we will be able continue to close the gap and finish the year on target.

 “The first quarter was in general, a positive one for the County and we were able to achieve that through good, sound management” Weitzman said,

Weitzman added that the Suozzi administration’s labor contracts continue to reduce expenses. In the Comptroller’s view, the new ShOA contract savings will fall within the administration’s savings targets.  Additionally, funds that had to be set aside in prior years due to conservative accounting requirements can be released now that the ShOA agreement is in place.  The Comptroller’s Office estimates that $12 million will be available in 2008.

 “This is a challenging economic climate and it is more imperative than ever that we receive help from Albany,” said Weitzman. The administration will need State support to enact revenue initiatives, such as clerk filing fees, and support in the Legislature to enact various County fees.  Since these funds are incorporated into the 2008 budget and the administration’s revised 2008 plan, it will be necessary to work closely with the State and local legislatures to achieve budgetary balance in 2008. 

Weitzman said that the administration will also have to continue to emphasize leaner, more accountable and performance-driven government in 2008.  Our analysis shows that increased overtime beyond what had been budgeted, primarily at the Correctional Center, will put pressure on the  2008 budget.  To date, our analysis projects that the risk to the 2008 salary expense is $15 million, which is offset by vacancies in budgeted positions.

Meanwhile, expenses over which the County has no control have continued to grow, Weitzman said.  State mandates such as preschool special education and labor contract mandates like health insurance have all increased.

Weitzman said the recent collapse of the auction rate securities market would have cost the County approximately $7.5 million because of increased costs for NIFA debt, but since NIFA has agreed to restructure its debt to smooth the interest payments, there will be no net budgetary impact in 2008.

Real property tax refunds are another area that the administration must closely watch, Weitzman said.  Last year the administration estimated its total property tax liability at $137 million and spent $87 million to refund overpayments of county, town, school and special district taxes.  The administration has appropriated $50 million to pay refunds this year but still has available $38 million in funds borrowed last year for this purpose.  “I am deeply concerned about borrowing to pay real estate tax refunds” Weitzman said.  If the refund expense stays on budget in 2008, as it is projected to do, future real estate tax refund borrowings should be unnecessary.

The imbalance between the County’s recurring revenues and expenses continues to be a concern.  For 2008, we see a structural gap of $101.7, which is primarily due to the use of one-time revenue sources such as prior year surplus and reserves.