October 6, 2011
The proposed 2012 budget submitted by the County Executive protects our hard pressed taxpayers since it contains NO property tax increase. This budget has severe cuts across the board and includes demands for significant labor concessions. NIFA’s cooperation is necessary to help the County get through this lingering national recession and our County’s fiscal crisis.
The proposed $2.64 billion budget does contain $293.8 million in risk. However, the budget continues to steer the County towards fiscal responsibility by significantly reducing the structural deficit by approximately 69% from the prior Administration’s 2009 peak of about $252 million and cuts spending from 10% over revenues in 2009 to about 3%.
The major factor which has affected the County budget has been the economy which resulted in significantly lower sales tax revenues. Sales tax is the biggest source of County revenues accounting for 40% of total revenues. If the sales tax revenues had merely continued to increase at the historic average of 3.5% from 2007 to 2012, the County would have received approximately $640 million in additional revenues. This would have more than offset the growth in major County expenses.
This $293.8 million in budgetary risk will present considerable challenges for the Administration. More than 90% of this risk is dependent on the difficult to achieve contractual concessions, rescinding of NIFA mandates, continuation of the wage and step freeze by NIFA, and dramatic administrative actions.
Even if all of the budgetary gap closing opportunities could be achieved, the budget would still have a remaining risk of $117.6 million.
The Administration has identified $305 million in contingencies if the initiatives in the budget are not realized. Most of these contingencies also come with risk and may NOT produce adequate revenue or expense reductions to mitigate the remaining budgetary risk. At best we project approximately $50 million in contingent savings.
In order to alleviate the budgetary risks and end in budgetary balance, it is imperative that NIFA, the Administration and the Legislature (both Republicans and Democrats) work together as active partners to implement all of the gap closing opportunities.
We also urge a fundamental re-thinking of government through the 2012 budget in order to develop additional bi-partisan initiatives to slim down County Government to operate within the means of our taxpayers. This can be achieved by focusing on a significant reduction in non-payroll cost, demanding higher efficiency from revenue centers, consolidation of non-essential services and achieving better County-Labor cooperation. NIFA’s active participation and leadership in the restructuring of County government is essential.
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