Nassau County Comptroller Howard S. Weitzman warned that the county's fiscal recovery is not yet complete and that, beyond 2005, it will once again enter a period of major budget deficits unless actions are taken to bring revenues in line with expenses.

"The county executive is justifiably proud of turning around the fiscal mess he inherited in 2002," Mr. Weitzman said. "Certainly we have made enormous progress. We have had three years in a row of budget surpluses, without increasing property taxes in 2004 or in the proposed 2005 budget. The county has achieved reasonable labor agreements and become leaner and more efficient. The rating agencies have given Nassau a series of upgrades. These are impressive accomplishments. "However, I continue to be very concerned for 2006 and beyond. State-mandated expenses we cannot control --- primarily Medicaid, pensions, and health insurance --- will out-run revenues, which are expected to remain stagnant."

"We project this structural deficit at over $260 million in 2006, and nearly $360 million in 2007. This means that, unless there is a fundamental change in the financial demands of the state, Nassau will have to either cut services or raise more revenues.

"The major contributors to the structural deficit are: unrelenting double-digit increases in the county's share of Medicaid costs; large increases in the county's contribution to state pension system; and double-digit increases in health insurance costs for county employees. "All of these cry out for assistance from a state government in Albany that, to date, has not been able to address these problems.

"I continue to have another major concern, one that Nassau can and should do more to solve on its own. The county needs to move faster to reduce its liability for property tax refunds. After 2005, most of this amount --- more than $100 million a year --- can no longer be paid for by borrowing the money, according to rules mandated by the Nassau Interim Finance Authority. It will have to be funded through the operating budget, adding even more pressure to county budget.

"The bottom line is that we have come far, but this is no time to be complacent. We are not out of the woods, and our biggest challenges may lie ahead."