Nassau County Executive Tom Suozzi, together with his budget team, revealed, after an intensive 30-day analysis of the county's budget, a deficit for the 2002 fiscal year of over $20 million. A previous multi-year plan projected a $208 million deficit for the year 2005. An analysis done by the current administration shows the gap widening to $428 million, $220 more than originally anticipated.

"It's worse than we thought. Nassau County is faced with an operating deficit of more than $20 million," said Suozzi. "We have concluded that with a new analysis including salary costs, sales tax, Medicaid and tax certiorari expenses, we are facing a $428 million deficit in 2005."

This discovery comes after a survey by the Maxwell School of Public Policy at Syracuse University, Nassau came in last of 40 of the largest counties nationwide in terms of financial management, earning an F-grade.

Among one of the factors the county executive's analysis focused on is expected revenues vs. expenses. The four-year plan assumed an average annual sales tax growth at 4.2 percent through fiscal year 2005, yielding a sales tax revenue of $986 million. The revised estimate projects only a 2.7 percent growth based on economic research as well as guidance from the New York State Department of Taxation and Finance. Therefore, Suozzi's analysis has determined the county will receive $73 million less than anticipated through the original four-year plan.

For rents and recoveries, the four-year plan assumed tobacco refunding and restructuring, which increased that line of the budget by $19 million. In the revised estimate, the $19 million is removed since the initiative has not occurred.

The county is expected to gain more revenue through federal and state aid reimbursements through federal/state aid and the 9 percent property tax increase adopted by the county legislature. However, the additional $13.8 million in federal/state aid and the additional $24.6 million expected to be generated by the property tax increase is not enough to offset the shortfalls Suozzi's analysis showed to exist in the revenue estimates within the original four-year plan.

Another reason for a deficit of $220 million more than originally expected, according to Suozzi's analysis, is that expenses are greater than originally believed.

The prior administration's proposed four-year plan assumed labor contract increases of zero percent in 2003, 2004, and 2005 for the Police Benevolent Association (PBA) and CSEA. The revised estimate projects increases based on historic levels granted in past arbitration awards. Additionally, New York State estimates applicable health insurance rate increases of 13 percent.

Another area that figures to play a part in estimated 2005 budget deficit is tax certiorari expenses. The prior administration's proposed four-year plan accounted for $20 million in pay-as-you-go tax certiorari judgements. Revised estimates say $70 million in 2005 is more realistic, based on New York City's refund experience as a ratio of total property tax.

In addition, the prior administration's proposed four-year plan projected average annual growth of 6.2 percent, yielding $354.8 million in 2002 in Medicaid expenses. Using revised growth rates of 8 to 10 percent per year based on the proposed Health Care Reform Act (HCRA) results in $371.4 million in total.

Suozzi expects the county to end the 2002 fiscal year with a $30 million deficit. That number is expected to jump to $428 million in 2005, based on the county executive's analysis. Although Suozzi's projections tend to be conservative, they do still reflect the enormity of the county's fiscal problems. Suozzi has been directed by the Nassau Interim Finance Authority (NIFA) to have a new four-year plan in 60 days. Suozzi said he will focus on key areas such as tax certioraris, labor contracts, outsourcing/contracting, business process re-engineering, real estate, debt, revenue initiatives, federal/state assistant and other county entities as well as towns and villages. "Now that we know that's wrong, we can begin preparing the solution," he said.