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April 17, 2013

DiNapoli Concerned With Rockland County Budget

Rockland County’s 2013 budget contains unreasonable revenue and spending projections that could increase the county’s deficit, warned State Comptroller Thomas P. DiNapoli in a budget review issued today.

“Rockland County officials are working hard to address fiscal stress in their municipality, but more needs to be done to bring the county’s budget into balance,” said DiNapoli. “Clearly, the county faces difficult budgeting choices. But the path to more accurate and realistic budgeting begins with an honest conversation about the numbers.

“The challenges in Rockland demonstrate the need for local governments to take corrective actions before a full financial crisis develops. My office recently finalized an early warning monitoring system that will identify local governments facing significant fiscal stress and present a realistic picture of their financial condition and identify the economic and budgetary challenges they face. This system will make available an objective analysis that taxpayers can use to better participate in local financial decision-making.”

For 2013, Rockland County’s budget is $751 million, an increase of 2.5 percent from the 2012 adopted budget. In addition, the 2013 tax levy of $96 million is an increase of approximately $14.9 million, or 18.4 percent, compared to the 2012 tax levy.

The review also found:

  • County officials budgeted $175 million in revenue from sales and use tax in the 2013 fiscal year, which is an increase of approximately $6.8 million or 4 percent over the actual amount received in the 2012 fiscal year. DiNapoli found the amount budgeted for tax revenues may be too optimistic and is not supported by any specific analysis;
  • The county budgeted for the issuance of $5 million in serial bonds to cover the costs of tax certiorari claims. DiNapoli cautioned that the continued practice of using debt to pay for operating costs is imprudent. Tax certiorari claims are a routine cost of doing business and should be paid from annual appropriations;
  • The county has not made an allowance for uncollectible taxes in 2013. However, the average annual amount allocated to uncollected taxes from fiscal years 2008 through 2011 was $2.2 million; and
  • The 2013 budget appropriation of $158 million for personal services appears to be insufficient. County officials have consistently underestimated personal services costs in the past and then over-expended the budgeted amounts, with the largest over-expended amounts in the general and hospital funds.

DiNapoli’s report found from 2001 through 2011, Rockland County’s total revenues grew by just 2.7 percent on average annually, slower than the total for all counties in the state (3.5 percent annually), and slower than its own expenditures grew during that same time (3.3 percent)

During that same time, property tax growth averaged about 5.5 percent per year, which was faster than the 4.4 percent average annual growth for counties statewide and the 3.9 percent average annual growth for counties downstate. The county also experienced slower than average increases in sales and use taxes.

Notably, in June 2012, Standard and Poor's Ratings Services lowered the county’s long-term general obligation bond rating to 'BBB-' from 'BBB+' and rated the management practices as ‘vulnerable’ based on overly optimistic budgeting. In December 2012, Moody’s Investors Services maintained the county’s bond rating at Baa3, and gave it a negative outlook.

DiNapoli encouraged county officials to develop and implement a long-range financial plan. He also recommended county officials:

  • Use a more conservative growth rate to project sales tax revenue for 2013;
  • Review the appropriation of tax certiorari refunds and consider adjusting it;
  • Consider adjusting the budget to include a reasonable amount for uncollected taxes;
  • Reassess personal service costs and take necessary action to ensure that costs will be in line with appropriations; and
  • Closely monitor the early retirement incentive and take necessary actions to reduce other appropriations if it does not achieve the $4.3 million in estimated savings.

The Rockland County Legislature is required to prepare a plan of action that addresses DiNapoli’s recommendations within 90 days.

For a copy of the report visit: http://www.osc.state.ny.us/localgov/audits/counties/2013/rocklandco_br.htm

For more detailed information about Comptroller DiNapoli’s fiscal stress monitoring system and to view reports related to local government fiscal stress visit:
www.osc.state.ny.us/localgov/fiscalmonitoring/index.htm



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