Nassau County Comptroller Fred Parola announced this week that the county has closed its books for fiscal year 2000 with a $48.3 million operating budget surplus. Parola said the surplus came as a result of intervention from the Nassau County Interim Finance Authority (NIFA) and a series of "one shot" revenues. However, the county comptroller warned that Nassau is not out of the woods yet when it comes to the county's financial troubles.

When adding the $48.3 million surplus to the opening fund balance of $27.8 million inherited from 1999, the county concluded the year with a total balance of $76.1 million, according to Parola.

The county comptroller described the surplus as a "NIFA induced surplus" and said it would not have been possible without the intervention of NIFA, which was formed by Governor George Pataki to help get Nassau back on the right fiscal path. If not for the NIFA Transitional Aid of $25 million and its $42.6 in savings from debt refinance, the county would have had a deficit of $19.3 million.

In addition, $69.5 million of the surplus came from non-recurring revenues. "If you add it to the NIFA figure [$67.6 million], this county would have a deficit of $88.8 million dollars," Parola said.

Despite Parola's claim that Nassau has yet to recover from its fiscal crisis, Nassau County Executive Thomas Gulotta expressed satisfaction over the surplus. "This is good news for the residents of Nassau County and yet another indication that the county's financial difficulties are behind us," he said.

Parola warned, however, that Nassau is still facing monetary problems. "This county remains in serious financial circumstances. This is not a signal to reduce our efforts. In fact, I would suggest that the signal is to rededicate ourselves to holding to the plan of tight fiscal management," he said. "Anything that diverges from that will certainly spell financial disaster for this county."

Democratic majority leader of the Nassau County Legislature Judy Jacobs disagreed vehemently with Gulotta's claim that Nassau has fiscally recovered from its difficulties. The legislature's presiding officer also said she doesn't believe Nassau even has a surplus. "It's a delusion to think we have a budget surplus and anyone who thinks that our budget problems are behind us is really not in good grasp with reality. It's a desperate act of misinformation for anyone to release statements that our budget problems are a thing of the past," Jacobs said. "We are only at the beginning. Truthfully, without NIFA being the training wheel for this county, we would have already fallen into a ditch at this point."

Jacobs believes that since $67.6 million of what some are calling a surplus came as a direct result of NIFA's intervention and $69.5 million of it came from non-recurring revenues, boasting a budget surplus isn't putting the county's financial status in accurate perspective. The county's financial future remains in question, according to Jacobs and Parola, who both agree that careful consideration must be paid to limit the role of "one shots" since they cannot be counted on in future budgets. "When you don't see one shots, quite obviously you have to make up for it in recurring revenues, which, to some extent, adds to the county's responsibility and burden during the year 2001," he added.

Among some of the $69.5 million in "one shot" revenues for 2000 include $23.7 million in direct aid from LIPA, $16.7 million in deferred payment some employees took, $14.9 in reimbursement from the state for housing of inmates convicted of state offenses and $14.2 from tobacco monies. The Democratic majority of the Nassau County Legislature also considers $27 million of an unanticipated sales tax surplus, $27 million in investment income and $4.5 of the OTB capital fund refunds as "one shot" revenues for fiscal year 2000.

The county comptroller said the county has come a long way in terms of relying on non-recurring revenues. In the 2000 fiscal year, the county's non-recurring revenues amounted to $69.5 million as opposed to $351 million in fiscal year 1999.

"We've taken a lot of steps forward in not relying on them as much as we did in the past, but I think we would be very foolish not to recognize that so much of the way we got through 2000 was one shots," Jacobs said.

With fiscal year 2000 now behind, Gulotta said the county must now keep a close watch over the county's finances in order to ensure fiscal health. Parola maintains that the county has taken a first step on the road to fiscal recovery. He believes the estimated revenues and expenditures for 2001 and 2002 appear reasonable. However, he did say that "the numbers for 2003 and 2004 are not financially viable and without substantial modification, will result in serious deficits to the county."

Parola said Nassau County could be turning around its financial situation but only if it sticks to tight fiscal management and the four-year financial plan mandated by NIFA and doesn't go back to the practices of poor budgeting and excessive expenditures. "There continue to be serious pressures on this budget," he said. "The 2003 budget and 2004 budget are very seriously handicapped in terms of revenues expected that will never come to fruition," he added.

One source of revenue Parola believes the county may be counting too heavily on is a commitment by the state to increase Medicaid funding. Parola also recommends that the county take a close look at tax grievance and certiorari claims, especially in the commercial sector. Also, he suggested the county continue to hold strong in its negotiations of labor contracts and to address the level of borrowing and debt service costs that amounted to $273.4 million in 2000. In addition, the county comptroller believes the Public Benefit Corporation, which controls the county's health facilities, must be able to hold up its financial commitment or the county would have to take it over, putting Nassau in a tough financial situation.

"There's plenty of time to work on 2003 and 2004, but it is serious," the county comptroller said.

Now, in the year 2001, the county finds itself with $76.1 million, which Parola believes must be used for debt reduction. "That's a good thing considering Nassau County's appetite to borrow for everything. If you reduce debt, it's as if the monies are unencumbered because you're using it for something that is crucial for the county to engage in," he said.