Suffolk’s finances were wobbly even before the pandemic hit. When Bellone took office in 2012, after the last recession, he faced a deficit of about $150 million.
Revenue growth in Suffolk failed to keep pace with rising costs of employee compensation and social services, resulting in budget deficits. Suffolk spent almost 60% of its revenue on salaries and benefits in 2018, a bigger share than any other county, according to the state comptroller’s office.
“Even small variances in the revenues, if the sales taxes are coming in below estimate, or if overtime costs run a little higher, there’s just not a lot of wiggle room there,” said Tiffany Tribbitt, an S&P analyst.
Instead of making politically difficult choices to raise property taxes above the 2% state cap or cut spending enough to close persistent deficits, county officials relied on maneuvers like deferring a portion of the government’s pension payments, property sales and borrowing more than $170 million from the sewer fund.
Bellone has also cut costs, reducing the county’s workforce by 13% to 8,914, saving $100 million annually. Last year, the county required all employees to pay 2% of their salary for health care, rising to 2.5% by 2025, for a projected savings of $40 million. In 2019, Suffolk stopped deferring payments to the state pension.
Since Bellone took office in 2012, he hasn’t submitted a budget that pierced a state property-tax cap that limits levy increases to 2% or the rate of inflation. A municipality can override the cap with a 60% vote of the governing board. The average Suffolk homeowner pays about $10,000 in property taxes, the fifth highest among New York’s 57 counties, but about $2,000 less than its Long Island neighbor to the west, Nassau, according to Attom Data Solutions.
“In the Tri-state region, property taxes are a difficult topic,” said Tribbitt. “It’s politically sensitive.”
Over eight years, Fitch and S&P downgraded Suffolk County’s $1.6 billion general-obligation debt four levels. Suffolk is the most fiscally stressed county in New York, according to the state comptroller.
But Suffolk has avoided the fate of its even richer neighbor Nassau, which has had a state financial oversight board since 2000. The Nassau County Interim Finance Authority, which can take control of the county’s finances if its deficit exceeds 1%, has taken an active role, rejecting the county’s financial plans when it believes revenue estimates are optimistic or spending cuts insufficient.
This article was provided by Bloomberg News.