March 10, 2011
Nassau County Comptroller George Maragos released the County’s 2010 year end unaudited fiscal results today and reported a surplus of $17.2 million. Comptroller Maragos also reported that fiscal year 2010 saw a 48% reduction in the structural deficit, from $251.6 million to $131.6 million.
"This is a remarkable achievement by the Mangano Administration which inherited a budgetary deficit of $133.2 million based on overly optimistic revenue projections and costly labor agreements and deferred raises. The Mangano Administration was able to deliver the surplus by slashing departmental costs, controlling expenses and by imposing a hiring freeze,” Comptroller Maragos said. “The improved economy also helped by boosting sales tax revenue by $20.4 million over budget.”
"We’ve begun to turn Nassau’s finances around by cutting millions in spending, reducing the number of employees and by cutting government waste,” said County Executive Edward P. Mangano. “Despite inheriting a $133.2 million deficit and putting money back into taxpayers’ pockets by eliminating the home energy tax, we still managed to end the year with a healthy budget surplus.”
Exhibit 1 summarizes the major budget variances ending in a surplus. The budgeted revenue fell short by $56.1 million, primarily due to optimistic projections by the prior administration which failed to materialize in areas such as the cigarette tax, the budget surplus from the prior year, and the Red Light Camera expansion.
At the same time, expenses during 2010 were lower by $60.2 million than budgeted (excluding real property tax refunds) from two main areas, reduced Payroll and Fringe Benefits costs, and reduced Contractual, Equipment and General Expenses.
The $60.2 million in lower expenses offset the lower revenues of $56.1 million resulting in a $4.1 million surplus for 2010. However, after a policy change in the method of paying for real property tax refunds, effective October 31, 2010, the surplus increased by $13.1 million to $17.2 million. The Mangano Administration changed policy to pay future tax certiorari settlements from bond proceeds rather than operating revenues, including the balance of the 2010 payments.
The Mangano Administration was also successful in reducing the structural deficit from $251.6 million in 2009 to $131.6 million in 2010, a 48% improvement over the prior year. This is the first reduction in the structural deficit in the past five years (See Exhibit 2). The structural deficit is the difference between recurring revenues and expenses, excluding “one-shots,” and traditionally has been an important indicator of the County’s long term fiscal health.
The year end surplus will help increase the County Fund Balance from $64.2 million to $81.4 million, which is the first increase since 2006 (See Exhibit 3).
Comptroller George Maragos concluded that, “continuing these fundamental improvements is a major challenge for the County going forward. The County will have to confront acute challenges from anticipated double digit increases in costs for pensions and health benefits, plus continuing increases in contractual labor costs. At the same time the County will be facing reductions in federal and state aid revenues for mandated programs.”