Nassau County Executive Thomas R. Suozzi announced that Nassau County achieved a $45.4 million operating surplus in 2006, representing the fifth consecutive year that his administration has generated an annual surplus. This marks a cumulative $368.6 million surplus between 2002 and 2006, he stated.

This multimillion dollar surplus achievement contradicted several pessimistic predictions, Suozzi said. He noted that the Nassau County Interim Finance Authority (NIFA), the state agency that oversees the county's financial affairs, had identified potential deficits of up to $37 million in the county's 2006 budget; Nassau County Comptroller Howard Weitzman predicted a potential deficit of $21 million, and the Legislative Budget Review office predicted a $26 million deficit.

"Once again, we've proven all the naysayers wrong," Suozzi said. "By reducing our workforce to its smallest in 30 years, cutting borrowing in half, achieving historic labor concessions, controlling overtime and using leaner smart-government initiatives, we've achieved yet another multimillion surplus. And we've managed to do it without raising property taxes for the fourth year in a row."

Suozzi said that despite this year's surplus, the upcoming budget will be a challenge and that the county must achieve additional savings in the 2008 budget.

"2008 will be a very tough year for us," Suozzi said. "There is a lot more to be done. We are continuing to look for ways to save money for the taxpayers."

While reporting on the Suozzi administration's achievement, Nassau County Comptroller Howard Weitzman also stated that the county's structural deficit is continuing to widen. Weitzman has written to the county executive and leaders of the county legislature to urge them to start working now, on a bipartisan basis, to begin to make the hard choices necessary to balance next year's budget.

"This was the fifth consecutive surplus since 2002 and represents the third year in a row a surplus was achieved without a tax increase. The continuing surpluses are the result of strong fiscal management by the Suozzi administration, including a 2006 freeze on non-essential hiring and purchasing. In fact, had it not been for a one-time accounting change, the surplus would have been almost $20 million higher. 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.

"But despite the county's robust fiscal recovery," Weitzman said, "we must still deal with the realities of a mature suburban economy with little economic growth and increasing expenses. Our reserves are being depleted and the structural deficit - the extent to which recurring annual expenses exceed recurring annual revenues - is increasing.

"By the end of 2007 we expect the county's reserves to be essentially exhausted. Moreover, the 2007 budget included a number of items that might not be achievable, including aggressive assumptions about labor concessions and other cost-cutting initiatives totaling more than $30 million. Two months into this budget year, those concessions have yet to be achieved. Meanwhile, looking ahead to 2008, we face a $164 million structural gap, according to the 2007-2010 Multi-Year Financial Plan.

"With such an enormous gap projected for 2008 and little likelihood of a surplus from 2007 to help reduce it," Weitzman said, "the administration and the legislature have no time to waste. That's why I wrote today to the county executive and the leaders of the legislature to urge them not to wait until September to start planning strategies for 2008. They need to begin now to determine what spending is truly necessary and where the revenue to support that spending will come from. We will also need the help of our state representatives with state initiatives, such as the cigarette tax increase proposed by Presiding Officer Judy Jacobs.

The comptroller noted that most of the 2006 surplus has been earmarked for 2007 budget relief and so will not be available for 2008. Under legislation creating the Nassau County Interim Finance Authority, the county is no longer permitted to issue debt to pay for property tax refunds. Therefore the administration plans to use $25 million of the 2006 surplus to set aside funds for 2007 property tax refunds. The remainder of the surplus is planned to be used as follows: $16 million for the pension reserve and $500,000 for a management study, with $3.9 million added to accumulated fund balance.

"The county balanced the budget in 2006 with the use of 'one-shots' (i.e., non-recurring sources of revenue or expense reduction), as it did in 2005," Weitzman said. "But because the structural deficit was larger in 2006 than in 2005 - $59 million this year, compared to $37 million last year - more one-shot revenues were needed to close the gap. The greater reliance on one-shots demonstrates the ever-increasing difficulty of balancing the county's budget."

In all, there were $121.6 million one-shots in 2006, including $94.4 million reserves established from prior years' surpluses.

Weitzman cited less than robust growth of sales tax revenues, which totaled $989.2 million in 2006, a growth rate of 3.8 percent over the previous year and $6.6 million under the amount projected in the county's 2006 budget.