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Having closed the books on 1997 late last week, Nassau's comptroller had some unsettling news for both County Executive Thomas S Gulotta and local residents Monday: the county would end the year with a deficit in its police district fund of $35.6 million.

During a lengthy press conference, held at the Supreme Court Building in Mineola, Comptroller Fred Parola said that significant revenues anticipated to be in county coffers by the first of the year had failed to materialize.

Among these were $73.8 million, which was supposed to be transferred from the combined budget of the Nassau County Medical Center and A. Holly Patterson Nursing Home and into the general fund &hibar; instead that budget ended the year with a shortfall of $70.9 million &hibar; other medical related revenues &hibar; including Medicaid receipts which fell short by $36 million; managed care, which fell short by almost $23 million; and patient receipts, which fell short by $8.1 million and lastly, disappointing sales tax numbers for fiscal year 1997.

In formulating his budget for last year, County Executive Gulotta had estimated that $710.4 million dollars in sales tax revenue would be realized over 12 months. Instead, local sales only generated $694 million in revenues; $16.4 million shy of budget estimates.

"And next year, the situation could be even worse," Parola warned. "In this year's budget, we've anticipated sales tax revenues of $748 million.

"Given the shortfall this year, that means we need sales tax revenues to increase by about eight percent; that's $54 million; over the next 12 months to meet our expectations."

Because of those shortfalls, the county reneged, by about a third, on a subsidy that it was obligated to give to the police district fund. The police district budget had been slated to receive $96.3 million from the general fund, but instead, only got $62.7 million.

While some would be moved to say, "What difference does it make where the deficit is, a deficit in a county budget is a deficit for the county," the comptroller disagrees with that notion.

"It does make a difference," he said. "If this deficit was in the general fund, it would be far more serious, because the general fund not only indicates revenues and expenditures, it reflects how the overall budget is being managed by the administration and the legislature.

"The police fund is far more isolated," Parola continued. "It deals with only one area of the county's business."

And yet there is this: before this year's deficit was identified, the 1998 budget called for a transfer of $90.9 million from the general fund to the police district fund. Adding what was denied the police district this year, the county's total subsidy for the police this year will now be $126.5 million.

Parola called on County Executive Gulotta and the county legislature to take immediate steps to stem the red ink.

"The good news is, it's only February. We still have ten months to address this situation before it adversely impacts on our projections for the 1998 budget," the comptroller said.

"However, the situation does strike me as extremely troublesome," he continued. "Nassau County, to my mind, has structurally built-in problems that plague us on an ongoing basis and could result in increased deficits in the year ahead and the erosion of fiscal stability."

"Though Parola raised the specter of the $100 million sinkhole which plunged the county into a fiscal crisis in 1991 and 1992, he also said that timely, deliberate action; particularly in regard to reining in costs; could bring the county's numbers back around.

"The worst case scenario is that in the not too distant future, if we continue on the current course, we could face a large deficit on the scale that we experienced six years ago," the comptroller said. "That triggers taxes and at the same time, it triggers a reduction in services. No one wants that. That's why I believe the political will is there to straighten this problem out."

A major challenge facing the county, the comptroller said, is spiraling salaries in the county, salaries that continue to rise while the property tax rate remains fairly constant. Unfortunately for local lawmakers, that trend in salaries is expected to continue relatively unabated for the foreseeable future; this past fall, an arbitrator awarded the principal police union a 27 percent raise over the next five years.

"We began paying for that large arbitration award only in the last three months," Parola said. "That, coupled with the fact that we've always been very open to requests for additional funding from the police has resulted in greater expenditures in that budget."

"Now, the plus side of that is we have the lowest crime rate of any suburban county in the country. On the other hand, we've paid a price to achieve that distinction. What I've told the county executive is that in the future, we're really going to have to do more with less."

"When you're talking about a situation where costs will continue to rise, something has got to give," Parola said. "We have some major problems here and I'm urging everyone to take significant action to solve these problems that plague us... we've got to bite the bullet and do the right thing here."

"Obviously, we are concerned about what the comptroller has had to say," said John Ciotti, chairman of the county legislature's finance committee. "At the same time, while I don't want to downplay anything, relative to the gross budget of $2 billion, the deficit seems like it's a manageable number.

"Right now, we're all just waiting for the county executive's recommendations on how he intends to handle the deficit. Once we hear from him, then we'll move on it," Ciotti said.

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