A major inaccuracy in the New York State Comptroller's office devastated local governments across New York last week when word spread that the office is now demanding more than 1,178 percent increases in payments by municipalities whose employees are members of the state's retirement system. The office had originally estimated increases of 394 percent.

"Two months into the fiscal year and we have a bombshell dropped on us," Town of Hempstead Supervisor Kate Murray told reporters during a press conference in Mineola Feb. 20. "The sound you're hearing is that of municipal budgets exploding throughout the state."

In a letter to the Town, new State Comptroller Alan Hevesi, stated, "In August, 2002, you were furnished advice for estimating the employer contribution rates that would be used in calculating the Dec. 15, 2003 payment. The estimated rates assumed that the stock market would return to its April 1, 2002 level by March 31, 2003.

"This means that the Dow Jones Industrial Average would have to reach 10,400 and the Domestic Equity Market as registered on the Russell 3000 would have to reach 638. As the fiscal year draws to a close, this assumption seems very unlikely..."

As of Jan. 31, the Dow Jones closed at 8053 and the Russell 3000 was approximately 474. Hevesi continued, stating, "An extended estimate process cycle was established with the State of New York and has allowed the state to budget on the most current market conditions. I feel a similar process would be advantageous for you as well, in what will be an extremely difficult budgeting cycle for all of us."

Murray said that the office's inaccurate portrayal of the pension outlook would affect virtually every county, town and village in the state, in addition to the state itself. "With Hempstead Town expecting a more than $8 million hit, we can only imagine the impact the comptroller's error will have on Nassau County and cumulatively, on the units of government within it."

After contacting Garden City Village Hall, the Garden City Life was advised that officials are aware of the significant increases, which will impact this year's budget. Adjustments will be made accordingly in this year's budget, which will be presented to trustees for their review.

When reviewing the capital budget, village trustees look to maintain the level of services provided to the community first and foremost. With this news, officials admit that some projects slated to take place this year, although not specific as to which ones, may have to be put on the backburner. As part of the whole review process, trustees will then evaluate what the needs of the retirement system are mandated by the state and what effect that will have on the overall big picture.

Hevesi noted that if the market does close on March 31 at the Jan. 31, 2003 level, the value of the fund would have dropped $33 billion from its high of almost $130 billion three years ago.

"This is responsible for the Employees' Retirement System estimated composite rate increasing to 11 percent of covered payroll and the Police & Fire Retirement System estimated composite rate increasing to 15 percent of covered payroll. Covered payroll is defined as those who participate in the retirement system," he said.

The New York Conference of Mayors (NYCOM) has requested that Hevesi, the sole trustee on the retirement systems, consider an "actuarially sound method of smoothing the increase over the next several years." NYCOM urges local mayors to contact Hevesi's office to reinforce this request. Although Hevesi will not be attending NYCOM's upcoming legislative meeting, he is sending a representative to discuss the issue.

As for Murray, "tightening our belts is a must if we are to make ends meet," she said. "Hempstead Town's fiscal strength makes it possible for us to absorb most routine cost hikes. No government, however, - no matter how strong - can absorb these pension increases."