After an in-depth analysis of Nassau County's 2000 budget, Comptroller Fred Parola announced earlier this week a projected deficit that could reach as high as $180 million.
In the press room of the Nassau County Supreme Court building in Mineola, Parola termed the county's remedial measures to date as being 'inadequate' and cited the county administration's failure to make the 'hard decisions' in addressing the county's fiscal dilemma as being symptomatic of the problem.
According to Parola, the county is facing a best case scenario of a $125 million deficit, but admits it will likely reach a level between $150 and $180 million. Preliminary estimates in early November had the deficit at approximately $110 million, but the repeal of the transfer tax, as well as unrealistic revenue and spending estimates included in the budget, have dramatically bolstered that figure.
"This county is on the precipice of disaster," said Parola. "The promised hard decisions that were to be made by the administration by Dec. 31, 1999 have not been made and we find a looming deficit, a structural imbalance, to the tune of at least $125 million."
He continued, "It is my hope that this report, which has gone to the legislature and the county executive, will be utilized to get down to brass tacks and get down to the real solutions that will finally end this nightmare of red ink that has plagued this county."
Since late November the county executive has proposed several cost cutting initiatives to reduce the 2000 budget deficit. To prevent the layoff of 500 county employees, union leaders agreed to a lag payroll last week. This measure would effectively save $20 million, but it is still waiting final approval from employee unions. The county is also preparing to reduce funding provided for program services contracts.
"Sadly, what I have seen from the administration is an initiative that goes two steps forward and then it is withdrawn when there is opposition and concern, and justified concern for groups that are impacted. So, until I see it actually done and completed, as county comptroller, I cannot include it [in the report]."
Other measures that are not budgeted for 2000, and could potentially reduce the deficit, are the deferment of an annual $20 million payment for train station maintenance, and the proposed reduction of funding to the MTA Long Island Bus.
Despite the likelihood of these initiatives being implemented and the savings they might incur, Parola stated that they are merely a continuation of the county's 'irresponsible' budgeting practices. He declared that the deferment of the train station maintenance bill and the lag payroll are non-recurring revenue deals, or one-shots, that will end up costing the county more in the long-run. They fail to address the basic structural flaws of the county's fiscal practices, he said.
A report from the state comptroller's office, released the same day as Parola's, seconded Parola's assessment as it projected a county deficit of $190 million. In a press release, State Comptroller H. Carl McCall chastised the county executive and legislature for failing to arrest the county's 'fiscal recklessness.'
The report stated that the 2000 budget "contains many of the same problems and irresponsible gimmicks" that an October review of the proposed budget revealed.
Their reports revealed that several items in the financial plan do not reflect realistic numbers. Specifically, the county's Medicaid costs may exceed budgeted funds, funding anticipated from the state might not be realized during the year 2000, revenue generated from sales tax may be overestimated and there may be inadequate funds for fringe benefit costs.
The county was able to avoid carrying a large deficit into 2000 by securing funds from the federal tobacco settlement earlier this year. Despite dramatically reducing the 1999 deficit, the county's credit rating was adjusted to just above junk bond status. Parola indicated that Nassau has done nothing to encourage its creditors to believe that the county is making an effort to right itself.
"The rating agencies are aware of this situation and they are awaiting definitive action, so, sadly, I do not think a great deal has changed at this point," said Parola.
Despite the grim outlook, Parola reiterated that there is time to address this situation, but that it has to be soon.
"The county still has a full year to deal with this problem . . . to come up with a balanced approach. We are not at the end of the line where there are few options available that cannot be implemented now and that could have a real impact during the year. So that is the good news," Parola said. "The bad news is that there has to be a political will demonstrated from leadership in the administration or the county legislature to undertake these hard decisions."