For the record: back and forth over Westchester budget, related issues

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In case you’re interested, here are the back and forth press releases regarding Westchester’s 2011 budget reconciliation and financial statements. This line, in chronological order, starts with an announcement of the closing of the books on the 2011 budget and goes on from there:

FOR IMMEDIATE RELEASE:  July 18, 2012 

WESTCHESTER “CLOSES THE BOOKS” ON 2011 BUDGET

Astorino says timely action positions the county to save $1 million in bond refinancings next week

            Westchester County has officially “closed the books” on its 2011 budget and issued its 2011 Financial Statements, which for the first time in a decade showed a decrease in the county’s tax levy.

“The 2 percent cut in the 2011 tax levy signaled the beginning of our efforts to reverse the bad habits of tax and spend that landed Westchester County in the dubious position of being the highest taxed county in the United States,” said County Executive Robert P. Astorino. “We have followed 2011 with a 2012 budget with no tax increase and a commitment not to raise taxes in 2013. We have to make Westchester more affordable and the 2011 tax cut was our down payment on that goal.”

With fully audited financial statements in hand for 2011, the county can now go into the 2012 bond market. The county hopes to save about $1 million in interest payments when it goes into the bond market on July 25 to refinance about $20.7 million in existing debt.

“Thanks to the diligence of our Budget and Finance departments in closing the books, the county can now take advantage of record low interest rates, as well as our three triple A credit ratings, which also lower borrowing costs,” said Astorino. “These savings are critical because expenses, particularly unfunded mandates such as Medicaid and pensions, and other areas like health care, continue to soar.”

The county’s expenses of $1.76 billion in 2011 exceeded its revenues by $8.5 million. To make up the difference and balance the books, which is required by law, the county had to move money out of its fund balance or so called “rainy day” fund, which is designed to offset budgetary imbalances. Originally, it looked like as much as $40 million would be needed to balance the 2011 books. But tighter management, coupled with cost savings like retirement incentives, narrowed the gap.

Astorino said it was important to minimize use of the reserve fund because drawing it down too low could jeopardize the county’s triple A credit ratings.

The year-end, unrestricted fund balance for 2011 was $137.6 million, which represents 7.8 percent of county operations. The median level for a similarly sized triple-A-rated county is 12.7 percent.  At 7.8 percent,  Westchester is on the low end of the scale.

“Losing our triple A ratings would be the equivalent of a tax increase because it would increase our cost to run county government,” said Astorino. “The way we protect our triple A ratings is to keep the reserve fund strong. While it is tempting to think there is a lot of money in it, the reserve fund is at a low level and needs to be used only as a last resort, not as an ATM for normal operating expenses.”

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FOR IMMEDIATE RELEASE: July 19, 2012

2011 County Budget Report Validates Board of Legislators’ Overrides

2.2% Tax Levy Cut by Board of Legislators “Right for Westchester”

White Plains, NY – The Democratic members of the Westchester County Board of Legislators (BOL) sharply criticized County Executive Robert P. Astorino for continuing to play politics and offering misleading statements about the County’s fiscal health, this time in the just-released Comprehensive Annual Financial Report (CAFR) for 2011.

The Comprehensive Annual Financial Report confirms that the 2011 Budget, as finally adopted by the BOL, was a fiscally responsible document that allowed the County to end a year of operation with a strong financial foundation. Included in this budget was available funding sufficient to be reserved for all unsettled labor contracts that are being negotiated by the County Executive.

County Executive Astorino declines to mention in the CAFR that the BOL crafted and adopted a 2011 Budget that included the historic 2.2% cut in the County tax levy—more than double the 1% cut that he proposed while eliminating hundreds of jobs, most of them restored by the BOL.

In the 2011 County Budget, interestingly, the Administration printed the wrong number for the County tax levy. Historically, no other Budget Director had ever intentionally printed the wrong number for the tax levy in the final budget—which is what occurred after the BOL adopted a lower tax levy rate of 2.2% than the proposed 1%.

Astorino also neglects to mention that he vetoed the BOL’s 2.2% cut in the County tax levy, and called the BOL’s 2011 Budget “flawed…from both a financial and legal standpoint.” The BOL overrode Astorino’s veto and the 2011 Budget was approved and adopted.

Now, Astorino refers to the BOL’s historic tax levy cut as “the beginning of our efforts to reverse the bad habits of tax and spend…”

“It is truly unfortunate that County Executive cannot even give credit where it is due regarding the 2011 Budget,” said BOL Vice Chair Lyndon Williams (D-Mount Vernon). “He knows the Board of Legislators was responsible for the historic tax cut in 2011, he vetoed that budget, and now he takes full credit for it. Westchester County is in an excellent position because of our collective efforts.”

County Executive Astorino’s proposed 2011 Budget statement noted that the County was “tackling a $166 million projected deficit for 2011…” The deficit was later “readjusted” to several much lower figures—and then the County ended up returning over $67 million to fund balance at the year’s end. If the Astorino Administration had not chosen to pay out a lump $18 million to the New York State Retirement System at the end of 2011 instead of amortizing the costs (as was budgeted), the County would have notched $11 million in surplus instead of having to “balance the books” with $8.5 million from reserves.

“Sadly, County Executive Astorino and his financial team do not have a handle on the numbers,” said Legislator Judy Myers (D-Larchmont). “Whether it involves imaginary deficits or figures thrown around to justify his program cuts for our seniors, working mothers and disadvantaged youth, the factual information that our residents deserve too often is lacking from this Administration, which is a shame.”

Despite a $18 million dollar unbudgeted and unauthorized retirement expense, Westchester County closed 2011 with a general fund balance of $151.5 million and an increase in Total Governmental Fund balance of $120 million more than year end 2010.

In other words, 2011 ended quite well for Westchester.

Cost of living adjustments (COLAs) were covered, and all bills paid—as the County increased its fund balance. As a result, the BOL is ready to transfer money in departments where there were surpluses in order to pay for some programs that Astorino has cut, like the after-school programs paid for by New York State grants.

“The good news is Westchester County remains in very good financial shape, and so it doesn’t make sense to eliminate funding for important programs, whether they are mandated or not, halfway through the year,” said Legislator Alfreda Williams (D-Greenburgh), chair of the BOL’s Community Services Committee. “The best idea is for the Administration and Board of Legislators to work together to ‘protect the neediest’ among us and ‘preserve essential services,’ as the County Executive suggested in 2010 were his ‘overarching goals’ in his proposed budget.”

The Democratic members of the BOL noted that legislation is pending before them to allocate funds to ensure the County’s continued fiscal stability and AAA bond rating.

County Executive Astorino’s concern about the County’s ‘triple A’ bond rating in his 2011 budget report focuses on fund balance figures, but he fails to mention that the County Budget Director Lawrence Soule’s erroneous comments to a bond rating agency about using tens of millions of dollars from the fund balance led to a poor forecast from Moody’s. Astorino’s incessant ‘doom and gloom’ comments regarding the County’s fiscal health simply contribute to the perception that Westchester is in bad financial shape when the truth of the matter is entirely different.

“Our residents deserve an apology from County Executive Astorino for his misstatements and fear-mongering about Westchester’s fiscal health,” said BOL Chairman Ken Jenkins (D-Yonkers). “The Board of Legislators has led Westchester prudently, finding smart savings and lowering spending, in order to reduce taxes while protecting important services during one of the most financially challenging times in our nation’s history. As 2012 progresses, the Board of Legislators is looking forward to the second quarter forecast and accompanying transfers, which will align appropriations with projected expenditures. Most importantly, we need to work together to do what’s right for Westchester, both financially and in terms of our standard of living.”

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For Immediate Release: July 24, 2012

Republican Legislators Call on Democrats to Stop Misleading the Public Through Partisan Attacks

The Republican members of the Westchester County Board of Legislators (BoL) are expressing serious concerns over the continued inaccurate and inflammatory statements from the Democrats on the BoL. A press release that was distributed by the Democrats on Thursday, July 19 was full of misrepresentations and unfounded accusations. The Republicans would like to correct the public record.

Minority Leader James Maisano (R-New Rochelle), a consistent advocate for more cooperation and compromise between the Democrats and County Executive Astorino, expressed frustration at the latest round of attacks from the Democrats. He stated, “Last week’s press release by the Democrats was wrong on the facts. No one wants to see this type of hyper-partisan, false information from government.” Maisano continued, “It is an outrage that legislators are spreading false information about Westchester County’s financial situation. It is time for the Democrats to quit attacking the County Executive, and his administration, and accept that under his fiscal leadership and with the cooperation from a bipartisan BoL, we have made real progress toward getting spending under control here in Westchester County. This is not a time to be playing partisan games with the County’s finances – when other large counties, such as Erie, Nassau and Rockland, are confronting serious financial crises. We must continue to do better than that in Westchester and place the priority on properly managing county tax dollars.”

Legislator John G. Testa (R-Peekskill) served as a City Councilman and Mayor of Peekskill prior to his election to the BoL. In those positions, Legislator Testa has helped shape more than a dozen municipal and county budgets. Legislator Testa said, “In my years as Mayor and as a member of the Legislature, I have never witnessed such obstructive and partisan behavior from any group of lawmakers as I have seen from the Democrats during this budget year.” Testa added, “We delivered a balanced, bipartisan budget with a decrease in the tax levy, but the Democrats can’t seem to tolerate any level of cooperation. The Democrat’s habit of trying to twist the past budget numbers into some tortured version that supports their attacks on the County Executive are a colossal waste of time and a disservice to the people of Westchester County. The Democrat’s unwillingness or inability to comprehend the effect that their use of the County’s fund balance has had on our Moody’s rating outlook is stunning to me. The fact that they would choose to be politically partisan and exploitative of the difficult economic challenges we are trying to navigate is absolutely irresponsible.” Testa concluded, “We will begin to craft a new county budget in the next few months, and it will be another very difficult spending plan. I encourage my Democrat colleagues to take this opportunity to stop the incessant political attacks and attempts to subvert the efforts of the Budget Director. I urge my Democrat colleagues to join us in doing the hard work that we were sent here to do. Let’s start working together to create the best and most responsible spending plan that we can for next year.”

Setting the Record Straight

The Democrat’s assertion that the 2011 Adopted Budget was a “financially responsible document” is misleading. The lack of validity in such a statement is evidenced by the fact that the County used $8.5 million of General Fund balance in order to pay for its operations in 2011. This is the fifth consecutive year that the County has had to use General Fund balance in order to pay for its operations. Five years in a row constitutes a trend of structural, not cyclical, imbalance. The continual use of fund balance to correct structural imbalances is hardly “financially responsible.”

In December 2011, the Democrats took many actions over the objections of both the Republican Legislators and the County Executive. Had the Democrats not erroneously deleted $10 million of appropriations for the unsettled labor contracts of the County’s Correction and Police Officers, the County would have finished 2011 with a structurally balanced budget for the first time since 2006.

In order to justify their $30 million spending spree through 2011 Budget Additions, the Democrats continued their practice of overestimating revenues, and placed unrealistic revenue projections in the 2011 Adopted Budget. Just a sampling of their baseless revenue projections include:

• Labs & Research revenues were $3.1 million less than BoL Democrat projections

• Parks revenues were $4.6 million less than BoL Democrat projections.

• Sales Tax collections were $6.3 million less than BoL Democrat projections

Just these three items total $14 million.. That’s $14 million of expenditures added to the Budget by the Democrats with no revenue to pay for them.

The Democrats are absolutely correct that the All Governmental Funds balance increased by $120 million. However, they fail to tell the whole story. The All Governmental Funds balance is not actual cash. In 2011, the County issued bonds in order to eliminate the $126 million deficit that was in the Capital Projects Fund at the end of 2010. That fund is simply now back to zero rather than having a $126 million deficit. The important number to focus on is the $8.5 million reduction in the General Fund balance. This is the account from which the County funds its annual operations. The unrestricted General Fund balance now stands at only 7.8% of county operations. This is far below the 12.7% average of other similarly sized triple A rated counties.

The Democrats continuous personal attacks on County Budget Director Lawrence Soule must come to an end. He is a first rate professional and the county is lucky to have him on our team. The BoL Democrats will stop at nothing, including the release of false information, to discredit Budget Director Soule. Contrary to BoL Democrat statements, the County Real Property Tax Levy printed in the Budget is accurate. While the 2011 Tax Warrants effectuated by Act 22 of 2011 were in the amount of $548,423,468, the County Real Property Tax Levy contained in the 2011 Adopted Budget was in fact $555,053,491 as adopted by Act 419 of 2010, and is accurately reflected as such in the County’s 2011 Adopted Budget and 2011 Comprehensive Annual Financial Report (2011 CAFR).

Budget Director Lawrence Soule’s comments to Moody’s Investor Service in 2011 were not the impetus for the rating agency to place the County on “negative outlook.” The County’s five consecutive structurally imbalanced budgets are to blame as evidenced by the excerpts from the Moody’s Investor Service reports below:

From the July 2011 Moody’s Report:

The negative outlook reflects the county’s ongoing structural imbalance that has driven reserves declines which may limit the county’s financial flexibility and ability to respond to mid-year revenue or expenditure fluctuations. In the event of additional future draws on reserves, the county’s financial flexibility could become out of line with similarly rated counties that rely on economically sensitive revenues.

From the July 2012 Moody’s Report

The negative outlook reflects the county’s structural imbalance in prior years that has driven reserves declines which may limit the county’s financial flexibility and ability to respond to mid-year revenue or expenditure fluctuations. In the event of additional future draws on reserves, the county’s financial flexibility could become out of line with similarly rated counties that rely on economically sensitive revenues.

Moody’s point is quite clear above – it had the exact same opinion when basing their rating on Mr. Soule’s projections for 2011, and when basing their rating on the audited figures in the 2011 CAFR. The County is currently in a strong financial position, but we all must be vigilant to ensure that the County’s financial position does not degrade further. If our finances are not prudently managed, Westchester County could be in the same position as Erie, Nassau or Rockland or Nassau, and the Republican legislators will not allow that to happen on our watch.

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FOR IMMEDIATE RELEASE: July 24, 2012

Facts Elude Republican Legislators

White Plains, NY – It took the Republican legislators nearly a week to respond to a press release criticizing County Executive Robert P. Astorino for continuing to play politics and offering misleading statements and numbers about the County’s fiscal health, this time in the just-released Comprehensive Annual Financial Report (CAFR) for 2011.

But instead of disputing the major elements of the BOL Democrats’ criticism—Astorino’s assuming credit (repeatedly and disingenuously) for the historic 2.2% decrease in the tax levy, which he initially vetoed; or the raid on fund balance after making an unbudgeted and unauthorized $18 million retirement payment; or the “doom and gloom” pronouncements of deficits built on fabricated and false figures; or Budget Director Lawrence Soule’s loose talk with Moody’s about fund balance use resulting in the County’s negative outlook—the Republicans threw out a bunch of misleading numbers of their own.

If the Republicans had bothered to look at the 2011 County Budget, they would see that the BOL added $1.5 million in revenue for Labs & Research, not $3.1 million “less than BoL Democrat projection”—that was based a fee-enhanced business plan. But this was in the 2011 Adopted Budget, where none of the numbers are “projected”—they are budgeted.

The press release goes on to state that Parks revenue was $4.6 million less than Democrat “projections” (sic). Although this is true, the figure has no relation to the revenues that the BOL added in 2011. Those adds were as follows: $100,000 for Playland pool revenue (Astorino wanted the pool closed but the BOL voted to keep it open); and a $150,000 addition that was recommended by the County’s outside auditors.

As for the $6.3 million less in Sales Tax collections for 2011 that the Republican legislators mention in their press release, the number in the 2011 Adopted Budget (on pages A-12 and A-13) was actually $2.285 million added, reflecting a 0.5% increase in gross sales tax. For the record, on December 10, 2010 every sitting Republican legislator voted to approve this budget (which can be found on pages A-50 and A-51 of the Adopted 2011 Budget).

All the above numbers are revenue numbers, not “expenditures,” as referred to by the BOL Republicans. Though these numbers are reflected in the 2011 CAFR, they are not reflective of the BOL’s additions as outlined above. There is a big difference, which the Republican legislators should try to grasp. By the way.

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3 Comments

  1. Sanity Rules on

    Cant trust Republican press releases. Rs are packing the puppet Budget Office with hacks and ex state legislative aids who have no basis in crafting the budget for a County such as Westchester.

  2. Sanitation Rules on

    Pack the halls with enough hacks and puppets to prevent the profligate Dems from bankrupting the people.

  3. HABIBHAASAN-An American Storyteller on

    …..Picking up on a COUNTY EXECUTIVE because he is a Republican?
    HABIBHASAN-An American Storyteller