October 15, 2008 

Weitzman on 2009 budget: ‘More spending cuts are necessary due to national economic crisis.’

Comptroller labels $82 M in budget ‘at risk’

The extraordinary crisis in the world economy has greatly changed the financial outlook for Nassau County since the County Executive proposed his spending plan for 2009 last month and as a result, Nassau County Comptroller Howard Weitzman is warning the County must cut more to cope with the harsh economic times ahead.

 “When this budget was developed, no one could have predicted the fiscal uncertainty that we are now faced with,” Weitzman said. “But we are certainly not alone, as the State, cities and local governments are also working to realign their spending plans.”

Weitzman’s comments came in connection with his report on the administration’s proposed budget.

"In the month since the administration presented the budget and multi-year plan, the economy has changed drastically, major Wall Street investment banking firms have collapsed, national banks have been closed or forced to merge,  the credit markets have frozen, and market indices have nose dived,” Weitzman said.  “The budget must reflect the bleak realities of these times."

The Comptroller’s budget report found a total of $82 million in items considered to be “at risk” of not being realized, including revenues needing state legislation, state aid for social programs, overtime projections for police and the interest on NIFA and County debt.

The budget proposes a 3.9% tax increase, the first in six years. The tax increase will generate about $34.6 million.  

Weitzman said he is concerned that the budget contains $82 million in risks and uncertainties, more than in any previous year of this administration.

 “This budget must be adopted in a time of unprecedented economic insecurity,” the Comptroller said. “This is not the year to be making any optimistic predictions.”

Some of those risks and uncertainties included in the budget are:

-a $23 million projected 2008 surplus that will be used to help pay for 2009 pension expenses

-$19 million in revenues requiring state legislation

-$10 million in sales tax revenue

-$17.9 million in revenues collected by County departments

-$15.7 million in overtime reductions

 The Comptroller also identified several unquantifiable risks, including:

 -cuts to state aid

 -more demand for social services

 -additional property tax refunds

- increased borrowing costs

-a further reduction in sales tax receipts

"As always, revenue from sales tax will be closely watched, as it accounts for over 40% of the County’s $2.6 billion operating budget," Weitzman said. "Because of the economic decline, we are projecting sales tax will only increase by 1% in 2009, leaving $10 million at risk. Considering the uncertain economy, even those numbers may be too optimistic, which is why we have a further sales tax decline as an unquantifiable risk. The most recent sales tax numbers put the County at $720.8 million in collections, up 2.1 percent from the same period last year. Leading local economists project the rate of increase next year will decline."

 “The Suozzi administration has done an outstanding job of managing the County’s finances,” the Comptroller’s report states. “It has put the interests of our hard pressed taxpayers first by presenting no tax increase budgets for the five prior years; held the rate of increase in spending to under 2.9% over the past seven years and 2.5% in 2009; reduced spending with smart governmental initiatives; imposed a hiring freeze and a hold on purchase of supplies for programs; and tightened control of spending on gasoline and utilities.”

"All these steps are important, but in light of the recently deteriorating financial condition even more needs to be done now, in 2008, to prepare the County for 2009,” Weitzman said. 

Spending reductions can take the form of an across-the-board decrease in all County spending, or scaling back targeted programs, the Comptroller stated.

"Across the board cuts can be inefficient in departments that have already absorbed significant cuts,” Weitzman said. “Targeting individual programs means losing services valued by County residents. The choice between these alternatives is difficult, but necessary in order to ensure that the County can end 2009 in sound fiscal shape.”

The Comptroller has advanced cost-saving initiatives for health benefits including encouraging more employees to decline health coverage by raising the “buy back” payment; and working with the administration and the State to explore whether the County’s health insurance rates are overstated and can be reduced, which would provide budget relief in 2009.

 “This budget will be a painful process,” said Weitzman. “It will require sacrifices from all segments of our community. But we are certainly not alone in facing this harsh reality. Governor Paterson has called for a special legislative session to implement an additional $2 billion in cuts in the state’s current budget, and has warned that the state faces an $8 billion gap for its 2009-10 budget. Mayor Bloomberg has called for an immediate reduction in city spending of $1.5 billion and a 7% increase in property tax rates. Local towns are proposing spending reductions and tax increases, including a 6.6% increase in the Town of Hempstead, in light of the economic downturn. Here in Nassau elected officials from both sides of the aisle, business, labor and the residents who pay taxes and use County services, must all be parties to the solution.”

2009 Proposed Budget Report