As if Nassau County didn't have enough financial problems, a downswing in the nation's economy could mean County Executive Thomas Suozzi has to implement further ways to close budget deficits that were not part of his four-year financial plan.
Nassau's budget was released this week and includes initiatives designed to close a $20 million budget deficit, including a 19.4 percent property tax increase that Suozzi promised will be the only tax increase in his first term as county executive.
In April, the county executive was required to submit a four-year financial plan to the Nassau Interim Finance Authority (NIFA) in order to close what the Suozzi administration believed would be a $428 million deficit by 2005. The solutions in the plan called for a 1,200 reduction in the county workforce by September 2003, "smart government" initiatives, labor concessions and debt restructuring that would save the county approximately $310 million and a tax increase that would raise approximately $120 million in revenues.
Suozzi said the $428 million deficit was a result of years of mismanagement. However, the county executive has identified four new problems that have arisen in recent months that could create more of a deficit. The four problems Suozzi identified during a budget briefing last week include flat sales tax revenues based on a less than booming economy, an increase in Medicaid costs, an increase in health insurance premiums for county employees and costs associated with pensions of county workers. These four new problems, Suozzi estimates, could cause an additional $80 million deficit for 2003, $100 million for 2004, $137 million for 2005 and $164 million for 2006.
In the case of Medicaid costs, increases will be upwards of $37 million, which the county's 2003 budget must cover. In the case of county employee pensions, investment dividends may be on the decline, but government is obligated to keep pension funds intact.
As a result of these new problems, the county executive is prepared to implement further initiatives to avoid future budget deficits. One initiative is a further decrease of the county's workforce. As part of the four-year plan, Suozzi instituted a workforce reduction of 1,200 by September 2003. Now, the county executive is calling for a workforce reduction of 1,400 by September 2003. He hopes to achieve the reduction through early retirement and attrition. Layoffs would be a last result, but will happen if the reduction is not achieved through other means. After the workforce reduction, Suozzi concedes Nassau will be hurting in its public works, parks and recreation and probation departments.
Nassau residents will see a 19.4 percent tax increase as part of the budget that was released this week, but Suozzi vowed not to increase taxes again in his first term. However, he said taxes will most likely be increased after that in accordance with the consumer price index each year.
Among the goals for the 2004 budget is making sure everything is his four-year plan is on target, Suozzi said. The county is also seeking to establish a sewer and storm water authority, which, the county executive said, is up to the state legislature. If the authority is not set up, worker layoffs could be in the county's future.
One big issue looming on the horizon is the contract battle between the Police Benevolent Association (PBA) and the county. Suozzi maintains the county cannot increase the rate of pay of police officers the way it has in the past. Nassau Police Officers have averaged $101,000 in salary per year. Suozzi believes the PBA could make the concessions the county is looking for and still receive a raise in pay. Suozzi said that if the county cannot get the concessions from the PBA it seeks, his administration may be forced to close parks and senior centers, cut youth programs in half, eliminate drug and alcohol programs and eliminate subsidies for bus service, since those are discretionary programs.
Further initiatives that may be taken by the county include copying Suffolk County's home energy tax and an increase in sales tax if the economy doesn't pick up. For the 2005 budget, if sales tax revenues are still flat, the county may consider raising the sales tax by a quarter percent, which would require state approval.
Among other initiatives the county will look at in order to avoid future budget deficits is putting a cap on the county's local share of Medicaid costs. "Albany should pay the crushing Medicaid cost increases that it is imposing on Nassau, Suffolk, Westchester and other counties across the state," Suozzi said.
According to the information released at a recent press conference, Nassau County taxpayers send $4 million a week to New York State for Medicaid payments. In addition, Medicaid benefits cost New York taxpayers twice the national average.
The county executive also said it could look at having county employees contribute to health insurance plans. Also, it could look to the state for reimbursement for county law enforcement patrolling state roads.