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Comptroller’s Report - January 14, 2011

Nassau County Finances Are Stable

My office recently released reports that found the county will end 2010 with a small surplus and that the 2011 budget is balanced according to Government Accounting Standards. The 2011 budget includes the elimination of a property tax increase, which was planned by the prior Administration and continues the repeal of the 2.5 percent energy tax. Also, two of the three rating agencies have declared the county financial health as stable and only one has reduced it by a single notch acknowledging the difficult economic conditions facing all counties and certain risk items in the county’s 2011 budget, namely labor concessions.

On January 6, 2011 my office released a detailed comparison of the risk in the 2011 budget to the risk in prior budgets for the years 2006-2010. These budgetary risk items are comparable in dollar amounts but some have higher degree of risk. This is not unexpected in a difficult economic environment, with high unemployment and onerous long-term labor agreements inherited from the prior administration.

Adding to the challenge is the threat of the Nassau Interim Finance Authority (NIFA), the agency responsible for overseeing the county’s finances, imposing a control period. NIFA continues to fuel rumors of an imminent take over of county finances, which may jeopardize the county’s credit rating and overall image. The comptroller believes that any action by NIFA is unwarranted and will be counter productive.

The county executive himself has stated publicly that if the county were to find itself in financial distress he would request NIFA’s assistance. In fact if there is a likely hood of 1 percent deficit, as required by the NIFA statute to declare a control period, the comptroller’s office will be one of the first to declare the financial distress. As of this date the budget is balanced, the county executive has contingencies prepared to back up items that are at risk, and there is not a deficit or likelihood of a deficit.

Furthermore, the county executive’s budget reverses long term spending and borrowing, key trends that will improve the county’s long-term financial health. Nassau County’s finances are stable in an environment where national and state deficits have skyrocketed. The comptroller’s office will monitor the 2011 budget performance and objectively report on its progress. The past practices of budget gimmicks, borrowing for current expenses and expense deferrals will not be condoned.