Suffolk County, N.Y., armed with a new executive and stung by adverse rating actions, has formed a task force to review its operating budget.
Its first order of business: determine the size of the eastern Long Island county’s budget deficit.
New County Executive Steve Bellone underscored the crisis in his inaugural address. His blue-ribbon panel is scheduled to hold its first meeting Tuesday.
Bellone, a former Babylon town supervisor who took office last week, expects a report by around mid-February.
“The bottom line is that we need to assess the true state of the county’s finances and do it in an honest and transparent manner,” deputy executive Jon Schneider said in an interview.
Bellone’s two-term predecessor, Steve Levy, said the budget was balanced, but Schneider said it could be at least $100 million out of balance, and dependent on “one-shots,” or stop-gap measures. The county Legislature only funded the budget through June, though the county government’s fiscal year runs through the end of the calendar year.
“Look, we know there’s a mess,” Schneider said. “The question is, what’s the size of the mess?”
The six-member task force includes Richard Halverson, former New York City deputy comptroller and former assistant deputy director of the New York City Financial Control Board, which oversaw the city’s budget during its 1970s fiscal crisis, and Michael Solomon, a managing director in the public finance department at Ramirez & Co.
“I’m thrilled to be in a position to help the county. We’re eager to roll up our sleeves and get started,” said Solomon, who served three years ago on the New York State Commission on Property Tax Relief.
Others on the panel are Nathan Leventhal, who chairs New York City Mayor Michael Bloomberg’s committee on appointments and has also served mayors John Lindsay, Ed Koch and David Dinkins; Stuart Klein, former first deputy director of the city’s Office of Management and Budget; Charles Stein, retired vice president of business and financial affairs at Suffolk County Community College; and Edward Moneypenny, an advisor of 7-Eleven Inc. since 2005.
Fitch Ratings in late November assigned a negative outlook to Suffolk County’s general obligation public improvement bonds and tax anticipation notes, while affirming its AA-minus rating for the county.
“The county’s overall financial flexibility and cushion have weakened, reflected in a significantly lower general fund balance and a reduction in the tax-stabilization reserve fund, increasing the credit risk associated with the county’s high reliance on economically sensitive sales tax revenue,” Fitch wrote in its report.
Two weeks later, Moody’s Investors Service downgraded to MIG-2 from MIG-1 the county’s $120 million of Series I 2011 tax anticipation notes. Moody’s also placed Suffolk’s Aa2 long-term GO rating under review for possible downgrade, affecting $1.3 billion of long-term debt.
“The county’s financial operations will be challenged by its narrowed cash position,” Moody’s wrote. The agency said it will concentrate its review on budget cuts, structural balance, and liquidity restoration, and complete it by mid-March.
“Long term, our hope is that the rating agencies will look at the fact that we now have a county executive who is focused on real solutions,” Schneider said.
Bellone said the new state property tax cap, which he supports, will force local governments to be more efficient.