suffolk county executive steve bellone's 2013 proposed budget

RECOMMENDED OPERATING BUDGET NARRATIVE AND APPROPRIATIONS COUNTY OF SUFFOLK, NYVOLUMENO. 1

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2013 SUFFOLK COUNTY OPERATING BUDGETSuffolk County Executive Steve Bellone

Suffolk County LegislatureWilliam J. Lindsay, Presiding Officer

Suffolk County ExecutiveSteve Bellone, Suffolk County Executive Regina Calcaterra, Chief Deputy County Executive Thomas Melito, Deputy County Executive for Administration Jon Schneider, Deputy County Executive for Administration Joanne Minieri, Deputy County Executive Budget & Management

District 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Edward P. Romaine Jay H. Schneiderman Kate M. Browning Tom Muratore Kara Hahn Sarah S. Anker Robert Calarco William J. Lindsay Ricardo Montano Thomas Cilmi Thomas F. Barraga John M. Kennedy, Jr. Lynne C. Nowick Wayne R. Horsley DuWayne Gregory Steven H. Stern Louis D'Amaro William Spencer

Frederick Pollert, Deputy County Executive for Financial Affairs Connie R. Corso, Budget Director James P. Burt, Assistant Budget Director Kim G. Brandeau, Chief Budget Examiner Beth A. Reynolds, Chief Executive Analyst Stephanie Rubino, Chief Executive Analyst Neil J. Toomb, Intergovernmental Relations Coordinator Debra A. Kolyer, Principal Financial Analyst Theresa M. Lollo, Principal Financial Analyst Suzanne L. Martin, Senior Budget Analyst Tricia Saunders, Senior Research Analyst Christina Blake, Payroll Supervisor Nicholas E. Paglia Jr., Assistant Executive Analyst Colleen Capece, Accountant Loreen Cleary, Principal Account Clerk Jacqueline Mall, Budget Technician Deborah A. Colonna, Budget Assistant Victoria M. Canestro, Principal Clerk Laila P. Peters, Senior Clerk Typist Kelly A. Tinn, Senior Clerk Typist

Grants Management - Federal & State Aid Claims Unit Evelyn Creen, Senior Federal & State Aid Claims Examiner Angela Kohl, Senior Accountant Gwen A. Hulse, Auditor Howard Ryan, Accountant Diane M. Brown, Federal & State Aid Claims Technician Executive Technology Unit Jeff Houghtalen, Office Systems Analyst IV Todd Gray, Office Systems Analyst I

Budget Emeritus Carmine A. Chiusano, Consultant Tim Laube, Clerk of the Legislature

2013

RECOMMENDED OPERATING BUDGET

VOLUME I -NARRATIVE AND APPROPRIATIONSRECOMMENDED OPERATING BUDGET VOLUME I - NARRATIVE AND APPROPRIATIONS2013

TABLE OF CONTENTS

COUNTY EXECUTIVE NARRATIVE: BUDGET MESSAGE AND CHARTS RESOLVED CLAUSES STATUS OF FUNDSFUND 001 GENERAL FUND 115 POLICE DISTRICT

1 39

49 99 264 272 279 288 301 304 309 314 336 343 384 391 395 455 463 484 618 633

DEPARTMENTAL BUDGETSAUDIT AND CONTROL BOARD OF ELECTIONS CIVIL SERVICE/HUMAN RESOURCES COUNTY CLERK CONSUMER AFFAIRS COUNTY ETHICS COMMISSION DEBT REDEMPTION DISTRICT ATTORNEY ECONOMIC DEVELOPMENT AND WORKFORCE HOUSING ECONOMIC DEVELOPMENT AND PLANNING EMPLOYEE BENEFITS ENVIRONMENT AND ENERGY EXECUTIVE FINANCE AND TAXATION FIRE, RESCUE AND EMERGENCY SERVICES HEALTH SERVICES INFORMATION TECHNOLOGY SERVICES INTERFUND TRANSFERS

TABLE OF CONTENTS

LABOR, LICENSING AND CONSUMERAFFAIRS LAW LEGAL AID SOCIETY LEGISLATURE MEDICAL EXAMINER MISCELLANEOUS AND AUTHORIZED AGENCIES PARKS PLANNING POLICE PROBATION PUBLIC ADMINISTRATOR PUBLIC WORKS REAL PROPERTY TAX SERVICE SHERIFF SOCIAL SERVICES SOIL AND WATER CONSERVATION DISTRICT TRAFFFIC VIOLATIONS BUREAU VANDERBILT MUSEUM AND PLANETARIUM CONTRACT AGENCY INDEX BY AGENCY (PSEUDO NAME) CONTRACT AGENCY INDEX BY PSEUDO CODE CONTRACT AGENCY INDEX BY DEPARTMENT

648 672 682 694 704 723 730 751 759 796 849 855 930 936 967 1016 1022 1027 1034 1065 1100

COUNTY OF SUFFOLK

OFFICE OF THE COUNTY EXECUTIVE STEVEN BELLONE September 21, 2012 Presiding Officer William Lindsay Suffolk County Legislators William Rogers Legislative Building 725 Veterans Memorial Highway Smithtown, New York 11787 Dear Presiding Officer Lindsay & Suffolk County Legislators: Less than nine months ago, I took office as Suffolk County Executive, with a mission to restore balanced budgeting, reinvigorate our local economy and transform County government to be more efficient, accessible and responsive. Partnering with the Legislature, my Administration has worked tirelessly towards achieving these goals, while operating in a fiscal environment marked by reduced revenues and fiscal uncertainty. Just six months ago, we received a report stating that Suffolk County faced a projected three-year budget shortfall of more than half a billion dollars and learned from the Comptroller that last year's deficit was more than $60 million. The fiscal challenges we have collectively confronted since the beginning of the year have been significant. Both the Executive and Legislative branches of government have made painful but necessary decisions to keep County finances afloat and preserve essential services. This budget continues those efforts. Together, we are making difficult decisions, including reducing the size of County government with 658 fewer County employees on the payroll than the day before I took office. Those difficult decisions, along with recommendations in this

operating budget, allow us to offer a balanced budget while staying below the State Tax Cap, and does not contain any additional layoffs. When I met with rating agencies this Spring, I laid out the budget philosophy of my Administration: budgets cannot be balanced by over-reliance on non-recurring revenues; recurring expenditure savings must be implemented; revenue projections must be reliable; new and recurring revenue sources must be created; and cooperative actions with the Suffolk County Legislature and the State are essential to a successful resolution of budget problems. As I pledged, this budget is in compliance with all caps, including the State Tax Cap, and County Spending Caps. There are no additional layoffs recommended, and General Fund expenditures have increased by less than one percent, which is remarkable considering rising health care, pension costs and other mandates on County government. Some may consider a budget to be a purely fiscal document - I believe that a Recommended Operating Budget is much more than that, it is a policy document, laying out the path which leads to an ongoing balanced budget, providing the resources necessary to meet defined goals and setting the tone for how government will operate in the coming year. In the pages that follow, I provide information regarding the recommendations contained in this budget: major policy recommendations are detailed, economic forecasts are provided and program operations are described. The 2013 Recommended Budget is tight, but balanced. If the Legislature returns this budget to me intact, I will be able to manage it. Deviating from the fiscally responsible path we have charted offers severe consequences. Having seen this occur to other municipalities, we know the catastrophic impact it can have on families, individuals, workers and the local economy. We are poised at a critical juncture in the Countys economic recovery: adopting a balanced and sound 2013 Operating Budget will enable the County to weather the fiscal challenges awaiting us in 2014. I look forward to working with the Legislature to adopt this budget. My staff and I stand ready to provide whatever information you need. Sincerely,

Steven Bellone Suffolk County Executive

SUFFOLK COUNTY 2013 RECOMMENDED BUDGET - EXECUTIVE BUDGET HIGHLIGHTS

PROJECTED BUDGET SHORTFALL

The 2013 Recommended Operating Budget is the culmination of a budget process which began in January of 2012. When I first took office, my Administration knew there were fiscal challenges ahead, but no one understood how significant those challenges would be. The 2012 Operating Budget as adopted was flawed, with under budgeted expenditures and overly optimistic revenue projections. I immediately convened a Fiscal Analysis Task Force comprised of six municipal finance experts who analyzed the Countys operating budget to determine the size of the problem we were facing. In March of 2012, the Task Force reported to the Executive & Legislative branches that the three-year projected budget shortfall exceeded half a billion dollars. This estimate was slightly more conservative than the approximate $410 million budget shortfall projected by the Executive Budget Office and the Legislatures Budget Review Office. The projected budget short-fall was exacerbated shortly thereafter by the Suffolk County Comptroller certifying a 2011 negative ending fund balance of $60 million, double what was originally projected, the Countys largest budget deficit in more than 20 years.

BUDGET MITIGATION MEASURES

The first step I took was to declare a Fiscal Emergency, authorizing the Executive Budget Office to embargo up to 10% of budgeted appropriations. I then worked collaboratively with my colleagues in the Suffolk County Legislature to adopt a series of budget mitigation measures to reduce expenditures and create new and recurring sources of revenue. Mitigation measures adopted include:Res. 374-12, Adopting an Omnibus County Economic Savings Plan for Fiscal 2012 Unanimously Adopted, May 8, 2012:

Creation of Traffic and Parking Violations Bureau. Red Light Safety Program doubled to add 50 new intersections. Phased down Living Wage subsidy. Reduced workers compensation medical costs through competitive procurement. Removed non-core program funding of $550,000 for Health Smart program. Federally Qualified Health Center Status implemented for Elsie Owens Health Center and extended to another health center.


Other Budget Mitigation Measures Adopted Include:

Authorizing pension amortization in 2013 (Res. 374-12, adopted 5/8/12). Authorizing suspension of the 5-25-5 Law, reducing pressure on operating funds use for capitaleligible items and projects (Res. 371-12 adopted 5/8/12). Authorizing purchase of public safety vehicles with capital funds, easing pressure on operating funds (Res. 420-12, adopted 5/8/12). Implementing a lag payroll for management, confidential and Board of Elections employees (Res. 412012, Res. 42-2012, adopted 2/7/12). Authorizing retirement incentive programs to reduce full time salary costs (Res. 506-12, adopted 6/8/12, Memorandums of Understanding with the Association of Municipal Employees and PBA). Amending the Operating Budget to Restore Certain County Positions, which mitigated the number of employee layoffs in the adopted budget by restoring highly aided positions. Over 300 employees were laid off (Res. 271-2012 adopted 4/24/12). Authorizing the County Executive to Execute Agreements for the Sale of the John J. Foley Skilled Nursing Facility (Res. 823-12, Adopted 9/13/12). Authorizing the County Executive to Execute Agreements for the Sale of vacant land at Yaphank County Center, assuring that 2012 revenues of $20 million will be realized (Res. 851-12, Adopted 9/13/12). In addition to these measures, changing economic factors helped reduce the overall budget shortfall, including an increase in sales tax collections, reduced electrical costs, and the repeal of a cap on sales tax for gasoline which the Legislature enacted effective March 1, 2012. NEW YORK STATE COLLABORATIVE EFFORTS My Administration worked diligently this year to repair the broken relationship with New York State which we inherited. The results were one of the most important, successful and historic State Legislative Sessions for Suffolk County. We are grateful to Governor Cuomo and Suffolk Countys State delegation which provided a number of measures to assist with the Countys budget mitigation efforts, including: Approval to Expand the Electronic Traffic Monitoring Program - Expansion of our current and


successful red light camera program from 50 intersections to 100 intersections helping to improve safe traverse on roadways. Approval of Off Track Betting Bankruptcy Legislation - Allows Suffolk County Off Track Betting (OTB) to enter into Chapter 9 bankruptcy protection and to use their capital reserve fund for corporate expenses, providing Suffolk County with the ability to restructure OTB and restore profitability to the corporation, saving more than 220 jobs at no additional cost to Suffolk County taxpayers. Authorization for Suffolk County to regulate taxicabs, limousines, and livery vehicles - Allows Suffolk County to enact and enhance a local law that was approved in December 2005 but which required state authorization for implementation. Authorization to Establish a Traffic & Parking Violations Agency in Suffolk County - Assists District Court in the administration and disposition of traffic and parking infractions, reducing the backlog of unanswered and unpaid traffic and parking summonses issued in Suffolk County, assuring speedy and equitable disposition of charges for traffic and parking violations and to generate new and recurring revenue for the County. Governors Local Mandate relief: Pension reform, Tier VI: creation of a new tier in the state pension system will save the County millions of dollars in future pension costs. Medicaid Relief: Takeover by the State of growth in the local share of Medicaid expenses will save Suffolk County over $30 million over five years. Working collaboratively with the New York State Commission of Corrections (COC), Suffolk County was able to regain and keep our correctional facility housing variances, avoiding millions of dollars a year in inmate transportation and housing costs. The COC also approved a phased opening of the new expanded correctional facility in Yaphank to alleviate operating budget pressures and modification to the staffing levels in the jail medical unit provides additional budget savings.

Administrative Actions:

The New York State Department of Health approved a $17 million HEAL grant for debt reduction


associated with the Foley Nursing Home, which provides additional budget savings. PERSONNEL COSTS Salary and benefit costs represent 55% of all costs in the 2012 Adopted Budget (46% of all discretionary expenditures and 16% of all mandated expenditures). It was therefore critical that any budget mitigation plan address employee related costs. The following actions were taken to reduce staff costs this year: Two rounds of employee layoffs took place, in February of 2012 and July of 2012. Over 300 employees were ultimately laid off. Several Early Retirement Incentives were offered, including two opportunities for AME staff, one for Management staff and one for Law Enforcement unions. 269 employees took advantage of the incentives. Strict hiring and position control throughout the year combined with employee layoffs and retirement incentives decreased the Countys head count by 658 employees between December of 2011 and September of 2012. Concerns regarding increased overtime due to staff reductions were alleviated by the implementation of a new Overtime Policy which improved management and implemented a culture change, emphasizing using overtime as a last resort. Department heads are required to submit overtime requests seven days in advance to the Budget Office and are not permitted to submit requests for routine meetings or projects. To date, overtime costs in Executive departments have been reduced by an estimated $9 million in 2012 as compared to 2011 actual costs, even with the Countys workforce being reduced by 658 employees. Because of the actions taken to reduce the projected budget shortfall and the actions taken in this 2013 Recommended Budget, no additional employee layoffs are included in the 2013 Recommended Budget.1

1

Note that the 2012 Adopted Budget abolished all positions at the John J. Foley Skilled Nursing Home, and employees continue working there through the creation of interim positions which expire at the end of this year. Pursuant to Resolution 823-12 adopted by the Legislature on September 13, 2012, ownership of the facility will be transferred to a private operator, and all current nursing home employees will be offered jobs with the new owner.


SALES TAX

Sales tax is the largest revenue source for Suffolk County, accounting for 55.5% of total General Fund revenues and 47.4% of overall County revenues. The County Executives Budget Office carefully tracks, monitors and analyzes sales tax receipts, updating budget forecasts and plans in response to changes in sales tax collections. Forecasting sales tax is challenging under the best of circumstances. It is a volatile revenue affected by consumer confidence, employment rates, inflation, growth in wages, interest rates, geopolitical events and even the weather. Forecasts are further complicated by the method which New York State distributes the revenues. Sales taxes are remitted directly to the State by vendors, merchants and those required to charge and collect sales tax. The State distributes sales tax to counties twenty-seven times per year based upon estimates of revenues earned using a State distribution formula. Because the payments are estimated, the State performs reconciliation of the revenues through a quarterly adjustment (quarterly distribution). There can be a great deal of volatility in the quarterly distributions which can result in the County receiving additional revenues, or owing money to the State. Suffolk County budgets for sales tax revenue on an accrual basis, which means that revenues are credited to the period in which they were generated rather than when they were received. Sales tax revenues included in the 2013 Recommended Budget reflect projections for what will be received between March of 2013 and March of 2014, assuring that the sales tax recognized is consistent with taxable purchases made during calendar year 2013. Although there are only three remaining months in fiscal 2012, the 2012 sales tax estimate represents more than five months of additional sales tax disbursements from New York State. Likewise, 2013 sales tax estimates cover sales tax revenues that will first be received six months later and will conclude more than eighteen months after budget estimates for 2013 were finalized. Pure economic forecasts that are the basis for sales tax projections must be moderated by the over-arching budget reality that there is little margin for forecast error and that there are potentially catastrophic effects of overestimating sales tax revenues: if estimates are overly optimistic and budgeted revenues are not realized,


revenue losses will necessitate deeper budget cuts resulting in layoffs and/or significant reduction in services the County provides. I have therefore included conservative sales tax revenues in the 2013 Recommended Budget as follows: For 2012, we forecast a 3.85% growth in sales tax. For 2013 we are forecasting a 3.75% growth in sales tax. These forecasts are based upon the following economic indicators and analysis: To date, sales tax receipts have grown by 3.7% from what was received in 2011. The 2012 Adopted Budget was predicated upon sales tax growth of 3.95%, but based on reduced receipts in 2011, total growth of 4.61% was needed from 2011 actual receipts to meet the 2012 budgeted amount. While sales tax growth has remained flat since the first quarter of 2012, local economic indicators suggest that sales tax receipts will show improvement in the third quarter: hotel and motel occupancy rates were up 11% between January and June of 2012; the County Clerk and the Real Property Tax Service Agency have both shown increased real estate filing activity, and signs of life in the housing market indicate spending on home improvements, appliances, furniture and automobiles are on the horizon. Nationally, new vehicle sales increased during the third quarter of 2012 suggesting that a corresponding uptick in sales tax revenue should be seen in the Countys third quarterly sales tax distribution. The Budget Office also has anecdotal information that many large automobile dealerships have had much higher year-to-date sales than reflected in our sales tax disbursements from New York State. Based upon analysis of prior year trends, and in conjunction with the Executives independent economic consultant, we believe that the next quarterly distribution for 2012 will show significant improvement. Historically, the third quarter is the largest sales tax quarter of the year. Since the third quarter reconciliation will not be received until October 12, 2012, it is not available to refine the sales tax growth rate for 2012 or 2013 Executive budget projections.


At this point in time, the economic outlook for 2013 is uncertain, but there are some positive signs: The Federal Reserve has embarked upon a plan to maintain mortgage interest rates at historic lows through mid-20152. Median home sale prices have increased.3 Local building starts and building permits have increased. Given that 2012 is a Presidential election year, uncertainty exists at this time as to how national economic issues will be addressed. Rising gasoline and food prices as well as increasing energy costs will decrease consumers disposable income and will divert spending from discretionary items subject to sales tax to lowtax or non-taxable items (i.e. food). There is pent up demand for consumer goods, but the question remains how consumers will increase spending given stagnant income growth, lower formation of households, low interest rates negatively effecting savers and retiree income, and continued economic uncertainty restricting job and economic growth. The Budget Offices projection of a 2013 sales tax revenue increase of 3.75% from 2012 estimated receipts is reasonable and reverses the trend of the previous years trends of overly optimistic sales tax forecasts. Rating agencies have identified overly optimistic sales tax forecasts as a negative factor impacting the Countys bond ratings. The 2012 estimated and 2013 Recommended forecasts reverse that trend and provides for a conservative and achievable level of sales tax revenues. NEW, ENHANCED, RECURRING REVENUES Critical to returning the County to a balanced budget is creating new and recurring revenue sources. The 2013 Recommended Budget includes initiatives to generate new and enhanced recurring revenues including: The 2013 Recommended Budget is $1.4 million below the New York State Property Tax Cap and freezes General Fund property taxes. The Legislature increased 2012 Adopted Police District property taxes by $12.4 million. The 2013 Recommended Budget includes a similar increase in the Police District as permitted by the State Tax2 3

Federal Reserve Press Release, September 13, 2012. Median Home Sales Prices Up on Long Island, Newsday, August 10, 2012


Cap. Adjustments to the Health Department fee schedule are Recommended, which may be implemented by the Health Commissioner, bringing our fees more in line with those charged by neighboring counties helping to defray the costs of providing services. An additional $1 million in new, recurring revenues from these fee changes has been included in the 2013 Recommended Budget. Revenues related to Consumer Affairs have been increased by 10% in 2013 ($500,000) to reflect the merging of the Departments of Labor & Consumer Affairs into the new Department of Labor, Licensing & Consumer Affairs with enhanced inspection and enforcement services. An initiative in the Department of Probation to provide remote credit card payments for probationers will generate an additional $100,000 annually. Funding has been included in the Department of Health and the Real Property Tax Service Agency to enhance revenue collections. Administrative fees for the Traffic Violations Bureau are proposed to offset the costs of administering the Red Light Safety Program and adjudication of traffic tickets. The administrative fee for Red Light Camera Citations is proposed at $30 for red light tickets and a $50 fee is proposed for traffic related violations. A new program launched by the Suffolk County Legislature this year to require registration of Health Department expediters will generate new revenues which have been included in the 2013 Recommended Budget. Pursuant to Local Law 35-1999, which created the Suffolk County Assessment Stabilization Reserve Fund (ASRF), each sewer district must raise their rates 3% annually in order to be able to tap into the ASRF. The 2013 Recommended Budget includes these increases.


DEPARTMENTAL CHANGES TO INCREASE EFFICIENCIESAND

The 2013 Recommended Budget includes a number of new departments and recommended mergers to promote efficiencies and maximize the use of existing County resources. New departments included in the recommended budget are: 1. Traffic Violations Bureau A Traffic Violations Bureau has been created as a new department, which will be headed by an Executive Director appointed by the County Executive and confirmed by the Legislature. The Bureau will adjudicate traffic tickets. The Red Light Safety Program is transferred from the County Attorneys Office to the Traffic Violations Bureau to provide centralized adjudication and coordination of efforts. 2. Medical Examiner Pursuant to Resolution 736-12, adopted 8-21-12, an independent department for the Medical Examiner is established. The 2013 Recommended Budget moves the Medical Examiner from the Health Department to a separate department. Importantly, the Recommended Budget provides the Medical Examiner with the funding required to successfully operate independently. Funds have been included for a new Chief Deputy Medical Examiner, a full-time Quality Assurance post (Forensic Scientist IV), a Senior Budget Analyst to provide budget/finance expertise, and increases to other-than-personnel expenditures lines have been made to meet critical departmental needs. 3. Department of Labor, Licensing and Consumer Affairs The Departments of Labor and Consumer Affairs have been merged into a new Department of Labor, Licensing and Consumer Affairs. This merger will provide a coordinated approach to labor and industry, promoting the health, safety and economic well-being of both the business community and public. Quality job training, job development, placement and supportive services for the unemployed, underemployed and public assistance population of Suffolk County will be provided. The business community will be supported with labor market data, recruitment services and hiring incentives.

ACCOUNTABILITY


Industry and the consumer will be served by promoting high standards of integrity and ensuring equity in the marketplace with occupational licensing and local law regulations and enforcement. Funds have been added to increase the ability of consumer affairs inspections to take place and to coordinate the hearing process with Labor Department expertise this will increase Consumer Affairs related revenues by 10%, or $500,000, in 2013. 4. County Board of Ethics Resolution 56-2011 established a new County Board of Ethics as an independent department. The 2013 Recommended Operating Budget provides the resources required to administer the Board, including funding an Executive Director and an Assistant to the Director. Funding has also been provided to hire a training consultant to develop a curriculum on issues pertaining to conflicts of interest, privacy and other ethical issues. The 2013 Recommended Budget also includes the following departmental changes to improve efficiencies and accountability: 1. Streamlining Information Technology to Improve Coordination and Efficiency: The 2013 Recommended Budget transfers 42 information technology positions from various County Departments to the County Department of Information Technology to create a federated approach to Information Services. While Information Technology staff will for the most part remain stationed at their current workstations, planning, policy and certain work activities will be coordinated through central IT, which will result in identification of technological synergies, maximization of staff resources and provision of a streamlined approach to IT. 2. Moving the Division of Risk Management from Civil Service to Department of Law The Division of Risk Management is transferred to the Department of Law in the Recommended Budget as the County Attorneys Office is well-versed in the Worker's Compensation process creating an opportunity for better oversight and direction in numerous areas where legal processes are involved. 3. Creating a New Performance Management Unit in the Executives Office: A new Performance Management Team has been created in the County Executives Office to make


Suffolk County Government more accessible and constituent-friendly, delivering cost effective, high quality and timely services. The core staff of the Performance Management Team is located in the Executives Office and report directly to the County Executive. Other Performance Management team members are located within major County departments, so they can gain firsthand knowledge of departmental operations and develop innovative approaches to improving program delivery and reducing costs. A new appropriation has been created in the County Executives Office for Performance Management which consolidates staffing costs and other initiative related costs to provide accountability. LABOR AGREEMENTS The largest discretionary components in the Countys Operating Budget are for salary and benefit costs. It has therefore been important to achieve reasonable labor contracts with recurring savings and efficiencies. Two labor agreements have recently been reached, an agreement with the PBA and an agreement related to the Employee Medical Health Plan. For the first time in more than 20 years, the County negotiated a contract with the PBA, breaking the cycle of arbitration which resulted in spiraling costs and elected officials being able to avoid direct responsibility for salary increases. The eight-year agreement provides major budget relief by obtaining zero percent increases for 2011, 2012 and the first half of 2013 saving over $43 million in retroactive costs. The contract for the first time creates two salary schedules one for existing employees and one for new employees. The salary schedule for new employees more than doubles the amount of time that it will take an officer to reach top step pay. New officers will be required to pay 15% of their health care costs as active employees and retirees in perpetuity and the agreement further provides that the PBA will also provide its portion of the $17 million of EMHP savings.

PBA AGREEMENT


The PBA agreement includes a contract reopener provision (#17) that is triggered if any other Suffolk County law enforcement union receives higher benefits or lesser concessions. The fiscal impact statement for the PBA agreement states this provision of the agreement effectively caps the benefits that can be negotiated with other law enforcement bargaining units. Based on this provision of the PBA agreement, the 2013 Recommended Operating Budget does not include any retroactive salary adjustments for any unions for the first two years beyond current contract terms. Recommended amounts for salaries and salary related costs such as holiday pay, night differential, overtime, etc. have been adjusted accordingly for all County unions. The PBA membership and the Legislature need to approve the negotiated PBA agreement. Even in the event that the agreement was not approved, it is still reasonable to include no salary increases for 2011 and 2012: if the County and the PBA were to proceed to arbitration, there would be no salary settlement in 2013. Contract negotiations are currently underway with other law enforcement unions. EMPLOYEE MEDICAL HEALTH PLAN AGREEMENT Suffolk County left the NYS Health Insurance Program (NYSHIP) in 1992 and became self-insured for major medical, hospital claims and behavioral health claims. Expenditures of the Countys Employee Medical Health Program (EMHP) are accounted for in Fund 039, Employee Medical Health Plan. Revenues to support the EMHP expenses are generated through a chargeback to each of the Countys funds which have employees. The chargeback is based on the number of covered employees and their respective coverage (individual, family or HMO). An agreement has been reached with the 11 County employee unions to reduce the Countys Employee Medical Health Plan (EMHP) Costs, which must be ratified by the Legislature. The agreement covers the period of 1/1/2013 through 12/31/2020 regarding health insurance and pharmacy benefits and new employee health benefit contributions. The agreement states that there will be a $17 million recurring savings from the average historical growth rate of pharmaceutical costs. In addition new employees will be required to contribute 15% of their health


plan costs. Recommended EMHP 2013 total expenditures are $1.388 million less than 2012 estimated expenses. Recommended expenditures are based on adjusting the amount requested to be budgeted by the Plans actuary. Requested expenditures were made prior to the union agreement and did not incorporate the savings included in the agreement. Requested pharmacy costs were reduced to reflect a 7.5% historical growth rate and then reduced by $17 million. Further adjustments were made in EMHP total costs to reflect lower 2013 staffing levels related to the sale of the nursing home and continued normal employee staff turnover. Adjustments to reduce the recommended 2013 IBNR reserve reflect the following actions: The average of accruals for the period 2009 to 2011 were included in the 2013 Recommended Budget for IBNR. $2 million was included to account for any delays in implementing the pharmaceutical initiatives. The 2013 Recommended Budget does not reduce EMHP expenses to reflect the projected savings of $7 million from the Medicare Part D Employer Group Waiver Plan (EGWP) Wrap Plan. These savings have not yet been approved by the EMHP Committee. These savings will therefore serve as a further safety net for any delays in implementing plan design changes in the pharmaceutical program needed to generate the agreed upon savings. The 2013 Recommended Budget will require both union and management to realize the agreed upon EMHP savings. Plan design and spend rates must be carefully monitored on an on-going basis to ensure that EMHP costs do not exceed amounts included in the budget. The County will need to offset unanticipated cost increases in EMHP through reductions elsewhere in the budget. The unions must be mindful that the largest area of non-statutory expenses are for personnel. It would be unfortunate if an unintended consequence of EMHP cost over-runs was employee layoffs.


CORRECTION OFFICERS ARBITRATION AWARD

On September 12, 2012 the New York State Public Employment Relations Board (PERB) issued an arbitration award for the Suffolk County Correction Officer Association (SCCOA) for the period January 1, 2008 through December 31, 2010. The primary budget impact of the award relates to increases granted in officers base salaries. Base salary increases directly affect related costs for overtime, holiday pay, night differential, rotating shift differentials as well as Social Security and NYS retirement costs. The Budget Office estimates that the cost of the retroactive award will be $35.6 million which will be paid in 2013. Failure to negotiate settlements or proceed to arbitration in a timely fashion provided the previous administration with the illusion of containing personnel costs while deferring the costs to future years. Using a simple example of an annual salary award of $1,000 per Correction Officer for the period of 2008 through 2010, each officers annual salary would have increased by $3,000 over the period, but the County would need to budget and payout $12,000 in total retroactive salary costs per Correction Officer. The adjacent graph illustrates this example, showing the deferred budget savings from 2008, 2009 & 2010 resulting in a retroactive payment of $12,000 in 2012, and an additional annual budget cost of $3,000.


In reality, the budget impact of the actual arbitration award is much higher than in the simple example above because the arbitrator granted percentage increases in salaries, effectively compounding the award. Suffolk is now faced with having to make a $35.6 million retroactive award while coping with the largest cumulative three year budget shortfall in our history: there are no good options for dealing with this large unbudgeted cost in 2012: The Tax Stabilization Reserve Fund (TSRF) cannot be used to pay for the award since maintaining the TSRF at current levels provides essential liquidity for the County to meet payroll, debt, Medicaid and other obligations. In February 2012 the Treasurer began cash flow borrowings from the TSRF, by May nearly all available funds in the Reserve Fund had been borrowed. Funding the award through layoffs would require more than 450 employees to be terminated when loss of aid, unemployment insurance payments and a 60 day layoff provision are factored in. This is also not a viable option since laying off employees is a long term solution to a short term 2012 budget problem. Having the union defer payments to a future time, such as at retirement, when their salaries may be more than 20% or higher, needlessly compounds the cost of this arbitrated award. I will work with the Correction Officers Union to determine if there are less expensive alternatives but my 2013 Recommended Budget deals with the issue definitively without kicking the can down the road. The Budget includes revenues from a short-term borrowing (five years) to pay for the retroactive arbitrated settlement. New York State Local Finance Law permits borrowings for these situations, a fact that our bond counsel has confirmed. REALIGNING & PRIORITIZING HEALTH SERVICES The Suffolk County Health Departments service model has undergone a significant change in scope over the last few years, before my Administration took office. The loss of Article 6 State Aid last year coupled with a reduction in positions from employee layoffs included in the 2012 budget necessitated a refocusing of resources to provide core public health functions. The major changes which have taken place in the Health Department include the following:


1. John J. Foley Skilled Nursing Facility Resolution 823-12, adopted 9/13/12, transfers ownership of the John J. Foley Skilled Nursing Facility to private nursing home operators. The decision to sell this facility was not made lightly. As promised, I started this year with an open mind regarding the best outcome for the facility and for County taxpayers. I took time to review all options for the facility, and explored a variety of alternative options for the facility, including a Legislative RFP for a Public-Private Partnership, Executive RFP for Sale, discussions with North Shore LIJ and Stony Brook University Medical Center and discussion with the non-profit group Easter Seals. The contract for sale which the Legislature approved contains the following protections for facility residents and employees: All residents will stay at the nursing home; All employees will be offered a job by the new owner; A Patient Advocate Unit was created pursuant to Resolution 859-12, adopted 9/13/12, to assist vulnerable populations locate skilled nursing homes and other levels of care, assuring that Suffolk County residents are connected to the health care resources they need.

The sale as approved provides not just revenue from the initial proceeds of $23 million, but also provides recurring savings by ending the need for a County taxpayer funded subsidy of $8 million to $10 million annually. Continued operation of the facility is unsustainable to County taxpayers given the ever widening gap between Medicaid reimbursements and operating costs. The 2012 estimated facility loss exceeds $14 million and the 2011 loss was over $11 million. If the Legislature had not made the decision to sell the nursing home, this Recommended Budget would have looked much different. I would have recommended that the facility be closed effective January 1, 2013, with the following impacts: All residents would have been displaced to other nursing facilities. Employees would no longer be employed at the facility. The building would be either shuttered or available for other County purposes.


This Recommended Operating Budget would have contained draconian cuts, as the loss of revenues from the sale coupled with the continuing operating losses would have resulted in four hundred layoffs in other County departments and $6 million in contract agency reductions.

The decision to sell the nursing home was difficult for both branches of government, who have been faced with a budget shortfall exceeding half a billion dollars and who have had to make difficult choices, such as the layoff of over 300 employees across County departments this year. It is important to stress that the decision was not made in haste, but rather has been painstakingly debated for decades, undergone three unsuccessful recent RFPs, ending in the sale to a reputable nursing home operator. The facility transfer is expected to take place by 1/1/2013. 2. Transition of Health Center Operations - FQHC During 2012, the operations of the Elsie Owens Health Center in Coram were transitioned to Hudson River HealthCare (HRH, Inc.), pursuant to Resolution 59-2012. HRH is obtaining Federally Qualified Health Center (FQHC) status and is continuing health center operations providing enhanced services to the residents of Suffolk County. The FQHC model shifts the costs for medical malpractice from the County to the Federal government. In return, the Federal government sets productivity standards for health centers which must be met, such as the number of doctor-patient visits, and requires ancillary services such as dental care. The County has been unable to provide these types of services and standards due to staffing and budget limitations. Additional County health centers will be transitioning to FQHC operational models, assuring that enhanced services will continue to be provided but at a lower County cost. 3. Medical Examiner: Pursuant to Legislative resolution adopted this year, the Medical Examiner is transferred from a division of the Health Department to an independent department. The Health Department is working closely with the Medical Examiners staff to assure a smooth transition of administrative functions. It is important that we as policy makers allow the Health Department the flexibility to evolve with the


changing health care environment and shift resources to the most needed programs. The changes to Health Department operations reflected in this Recommended Budget allow it to focus better on its core public health missions in an era of limited resources. MAJOR 2013 BUDGET INITIATIVE SALE-LEASE BACK Earlier this year, employee unions, contract agencies and some Legislators advocated for the sale-lease back of County assets to avoid employee layoffs and program reductions. A sale-lease back involves an agreement whereby ownership of a County asset is transferred for an agreed-upon price, the County continues to use and occupy the asset, and reimburse the new owner for capital costs through lease payments. If we had enacted such a proposal earlier this year, it would have been difficult to achieve no salary increases in union contracts: our Police Department expenses would have been in excess of $40 million higher and we would not have been able to balance the Police District fund even if we transferred the maximum amount of sales tax revenue. The Legislature would right now be facing the choice of either laying off police officers or securing a supermajority vote of the Legislature to exceed the State Tax Cap. The 2013 Recommended Budget includes $70 million in revenues from a sale-lease back of County facilities such as the H. Lee Dennison Building next year. To effectuate this, the County will require authorization from New York State to enter into a sale of selected County facilities through the Judicial Facilities Authority (JFA). The JFA is currently authorized to issue debt on behalf of Suffolk County for court and correctional facilities. To proceed with a sale-lease back of the facilities such as the Dennison Building, I will ask the State to grant the JFA authority to issue debt for other county facilities. Over the past few decades, Suffolk County has entered into a variety of financial arrangements with the JFA similar in nature to the current sale-lease back proposal, including the following: Suffolk County provided the financing for the NYS Office Building in Hauppauge. New York State made lease payments to the County which defeased the debt the County had issued for the building. When the debt was paid off, the State took title to the building. Suffolk County sold the assets of the Southwest Sewer District to the Suffolk County Industrial Agency (IDA), after a number of years of making lease payments, the County then repurchased the asset from the IDA.


The NYS Dormitory Authority constructed and financed the Cohalan Court complex. The County made lease payments to the Dormitory Authority defeasing the majority of the debt. The JFA then purchased the Cohalan Court Complex from the Dormitory Authority and leased it to the County. At the expiration of the lease, the County took title to the Court Complex. Arranging a sale-lease back through the JFA is the best, lowest cost option for pursuing sale lease back of County facilities. It has the following advantages over seeking proposals from the private sector: The JFA will not make a profit on the transaction unlike private purchasers. The transaction will not increase the current costs of the JFA. The cost of capital for the JFA is significantly lower than that available from the private sector since the JFA can issue tax exempt debt at a comparable interest rate available to Suffolk County. The County buildings that are sold and leased back from the JFA remain under government ownership and control with the County taking ownership at the expiration of the lease. While sale-lease back is the best alternative available to address our outstanding budget problem, it is still an option of last resort. I will explore other options to reduce costs and lower the amount of a sale-lease back arrangement below the $70 million included in the 2013 Recommended Operating Budget. SEWER DISTRICT OPERATIONS Municipal governments around the country have privatized sewer operations as a mechanism to raise revenues and expand the ability to build and upgrade sewer systems. Nassau County recently announced plans to seek a public-private partnership to help eliminate debt and improve its sewer treatment plants, which are in a state of disrepair. Suffolk County is currently exploring options for sewer district operations which will enhance the capital expansion of the sewer systems, which is very expensive, but critical to economic development initiatives. Among the options the County is exploring is a collaborative relationship with the Suffolk County Water Authority (SCWA) for sewer district operations. There is a natural nexus between the County and the SCWA the SCWA is an independent public-benefit corporation serving 1.2 million residents in Suffolk County, with a mission to provide pure, safe and constantly tested drinking water at the lowest possible cost. Suffolk


County government serves the same population and is committed to farmland preservation, open space preservation and drinking water protection in fact, Suffolk County has spent over $800 million on various land acquisition programs since 1976. The SCWAs commitment to preserving the Countys groundwater resources provides an environmental background which will assure that future sewer district expansions do not impact Countys groundwater resources. In the 1970s, the County only had two major sewer districts: Port Jefferson & Southwest Sewer District. Over the years, the County took over additional sewage treatment plans that developers did not wish to maintain or that were not meeting standards. In addition to acquiring sewer districts, the County consolidated sewage treatment plants where possible through the addition of pumping stations. The Countys sewer district inventory has grown to 21 sewer districts with an annual budget exceeding $100 million. The 2012 estimated budget includes funding in the County Executives Office for a professional services contract related to fully exploring cost savings and operational trade-offs from pursuing a change in sewer district operations. I will be working closely with the Legislature on this issue any proposal, sale, or memorandum of understanding related to a change in sewer operations will have a full public vetting and will require Legislative authorization. If this process results in a reduction in expenditures, the amount of funds Recommended for the sale-lease back may be reduced.


BUS TRANSPORTATION

The net cost to the County for operating the Suffolk County Bus system has increased from $15 million in 2005 to $28 million in the 2013 Recommended Budget. This increase in cost has not been accompanied by a like increase in service. Good bus transportation is essential to economic development and expansion. Investments in North-South mass transit connections are a centerpiece to my Connect Long Island plan, which lays the groundwork for long-term economic growth in Suffolk County as well as the Long Island Region. North-South transit connections provide untapped potential to drive economic growth in Suffolk County. At the current cost of providing services, these improvements are not feasible. There are a number of alternatives to our current transportation delivery system which may be explored, including: Renegotiation of the existing contracts; Restructuring current routes to meet highest demand; Examining alternative methods of service delivery, like Nassau County. I am charging my Budget Office, Executive Administrative staff and Department of Economic Development & Planning to work collaboratively with the Department of Public Works Transportation Division on drafting recommendations to reduce our bus transportation costs while increasing services provided. If this analysis results in a reduction in expenditures, the amount of funds Recommended for the sale-lease back may be reduced.


CONCLUDING STATEMENT

2012 has been a difficult year for County policy makers, County employees and our taxpayers. Starting my first year as County Executive confronting a half-billion dollar three-year budget shortfall, including inheriting a $60 million deficit, has been a daunting challenge at best. Working collaboratively with my colleagues on the Suffolk County Legislature, Governor Cuomo, and the State Delegation we reduced the projected shortfall. Throughout 2012, we made the difficult decisions needed to address the structural problems with the budget. The 2013 Recommended Budget as proposed does what many thought would be impossible it does not exceed the State Property Tax Cap, it does not layoff additional employees and it returns the County to a balanced budget. The challenges that await us in 2014 are great as well, with rising pension costs, termination of tobacco settlement payments and cash flow needs which may necessitate issuance of another Revenue Anticipation Note, not to mention continued economic uncertainty. We must remain committed to the efforts, begun this year, to make County government more efficient so that we can deliver core services at the lowest possible cost to taxpayers. I look forward to continuing the collaborative working relationship we have forged this year and keeping the County on track for honest, balanced budgeting.

SUFFOLK COUNTY RECOMMENDED OPERATING BUDGET 2013(Includes all funds)

...WHERE IT COMES FROM...

...WHERE IT GOES...

Interfund Revenue, $650,707,583, 18% Departmental Income, $182,593,070, 5% State Aid, $278,988,607, 8%

Other, $310,740,650 , 9% Non- Property Taxes , $18,043,491 , 1%

Public Safety, $639,394,029 , 23%

Employee Benefits, $541,317,754 , 20%

Federal Aid, $267,623,124, 7% Sales Tax, Sales Tax, $1,255,006,645, $1,255,006,645 35% , 35%

Economic Assist., $666,132,161 , 24%

Debt, $132,460,408 , 5% Health, $89,520,334 , 3% Transportation, $116,862,097 , 4% Home & Contract Community Agencies, Services inc. $96,364,730 , 3% Sanitation, $58,027,178 , 2% Recreation/Servi ces, $18,799,280, 1% Education, $168,456,196 , 6%

Property taxes, $605,620,249, 17%

Staff/General Gov't, $242,312,024 , 9%

RECOMMENDEDNote: Revenues include interfund transfers, appropriations are a net of interfund transfers

Suffolk County Tax Warrant 2011-2012Erroneous Town Assessment, 2.45% County Sewer Districts , 1.13% Police District & District Court , 9.21% County General & Community College, 1.11%

School Districts, 68.72%

Towns & Villages, 17.38%

The County Portion of the tax warrant has been reduced from the previous year. The General & SCCC percentage has gone from 1.13% to 1.11% and the Police & District Court percentage from 9.34% to 9.21%. In the aggregate, the total warrant declined by .15% from 10.47% to 10.32%.

27Average Homeowner Tax Bill

Based on the 2012 Adopted Operating Budget using consistent information from year to year there will be no change in 2013 County General Fund taxes in each of the ten towns. There will be an increase in the Police District Property Tax \lVarrant for each of the 5 western towns. There will be no change in the taxes charged for the Community College and there wiii be a decrease in taxes charged for the District Court. Homeowners wi!! once again see a separate !ine on their tax bm dedicated to the New York State mandated MTA tax. The Police District Property Tax increase is !ess than the New York State Tax Cap and betow ailowabie amounts under the Suffolk County Tax Levy Cap.

PROPERTY TAX IMPACT - 2013 RECOMMENDED OPERATING BUDGET2012 PROPERTY TAX 2013 PROPERTY TAX

DIFFERENCE BETWEENTHE 2013 WARRANT AND THE 2012 WARRANT

TAXING DISTRICT

WARRANT$49~037,038

WARRANT

$49,031!038$89.22

'$0

$89.22

$0.00

$5,250,46'7AVERAGE HOMEOWNER TAX BiU

$5#250,467$9.55$1,081.63...

$0

$9.55

POLICE DtsTRiCT

. . . . .......

$1,053.93

..

...

$0.00 $27.70-$1.00

AVERAGE HOMEOWNER TAX BILL

DISTRICT COURT

AVERAGE HOMEOWNER TAX BIU

$15.69$972.83

$13.98 $994.03

TOTAL COUNTYAVERAGE HOMEOWNER TAX BILL

$21.20

DESCRIPTION OF FUNDSA fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Suffolk County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. All of the funds of Suffolk County can be divided into three categories: governmental funds (which include special revenue funds), proprietary funds, and fiduciary funds. GOVERNMENTAL FUNDS ACCOUNT FOR MOST GOVERNMENTAL FUNCTIONS: The General Fund accounts for all financial resources except those required to be accounted for in another fund. Special Revenue Funds account for the proceeds of specific revenue sources that are legally restricted to expenditures for a specific purpose. Capital Projects Funds account for financial resources to be used for the acquisition or construction of major capital facilities (It is a distinct category of funds that are adopted in a separate budget cycle). Debt Service Funds account for the accumulation of resources for, and the payment of, general long term debt principal and interest.

PROPRIETARY FUNDS ACCOUNT FOR A GOVERNMENT'S ONGOING ACTIVITIES THAT ARE SIMILAR TO THOSE FOUND IN THE PRIVATE SECTOR. Enterprise Funds account for operations (a) that are financed and operated in a manner similar to private business where the intent of the governing body is that the cost (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed and recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The Countys enterprise funds include the Suffolk County Ballpark, Francis S. Gabreski Airport and the John J. Foley Skilled Nursing Facility. FIDUCIARY FUNDS ACCOUNT FOR ASSETS HELD BY A GOVERNMENTAL UNIT IN A TRUSTEE OR AGENT CAPACITY SUCH AS TRUST AND AGENCY ACCOUNTS FOR BAIL. Fiduciary funds are not reflected in the operating budget because resources of those funds are not available to support Suffolk Countys own programs. The 2013 Recommended Budget includes 53 funds. The major operating funds are the General Fund and the Police District Fund (a special revenue fund).

DESCRIPTION OF FUNDSTAXING FUNDS: There are four major funds that are supported in whole or in part by property tax revenues: General Fund (001): The general fund is the largest of the county funds and represents the largest portion of the operating budget. The general fund includes expenditures and revenues for all major county departments with the exception of the Police Department services to the western towns and villages who do not have their own Police Departments. Major revenue sources include real property taxes, sales tax, state and federal aid, users fees, etc. Police District Fund (115): The police district fund is a special revenue fund. Special revenue funds include revenues from specific taxes or other earmarked revenue, which are required by law or regulation to be accounted for in a special fund. The police district fund includes revenues and expenditures related to police services for the five western towns and villages that do not have their own Police Departments. Revenues consist primarily of Police District property tax collections, sales tax and various fines and state aid. District Court Fund (133): The District Court Fund supports the maintenance and operation of the district court system and related debt service. Revenues are comprised of Property Taxes and Fines and Forfeited bail. Suffolk County Community College (818/819): The Suffolk County Community College was formed in 1959 by the State University of New York and provides educational services under New York State Education Law. The college submits annual operating and capital budgets for approval, as such expenditures related to the college are not included in the Countys Annual Operating Budget. SEWER DISTRICTS: INTERNAL SERVICE FUNDS: Sewer districts that have ad valorem revenues also receive user fees. Interdepartment Operation and Service Fund (016): The Interdepartment Operation and Service Fund provides funding for support services for all county departments. These services include information technology, telecommunications and vehicles. Funding is derived primarily through interfund chargebacks to the departments in all funds.

Suffolk County has three major Internal Self Insurance Fund (038): The County is self-insured for liability and workers compensation. The Self Service Funds that Insurance Fund includes expenses and revenues for general liability and workers compensation insurance. Funding support the operations is derived primarily through interfund transfers and insurance recoveries. of all County Departments. As Employee Medical Health Plan (EMHP) Fund (039): The County has been self-insured for employee health such, fiscal oversight benefits since 1992. The Employee Medical Health Plan includes expenses for Major Medical, Hospitalization, focuses on the balance Pharmaceuticals and Mental Hygiene Services. Funding is derived mostly from interfund transfers. Revenues include of expenses and monies from Medicare Part D and pharmaceutical manufacturer rebates. revenues in these funds.

DESCRIPTION OF FUNDSRESERVE FUNDS: Suffolk County has three major reserve funds: Tax Stabilization Reserve Fund (403): Current Suffolk County Charter Law requires that a minimum of 25% of the prior years discretionary fund balance be transferred to the Tax Stabilization Reserve Fund or Debt Service Reserve Fund. Resolution 923-2006 amends the Charter to no longer require contributions to the Tax Stabilization Reserve Fund or Debt Service Reserve Fund once the balance of the Tax Stabilization Reserve Fund is projected to have a balance of $49.161 million as of December 31, 2013. Assessment Stabilization Reserve Fund (404): The Suffolk County Sewer Assessment Stabilization Fund was created in 1999 to provide long-term assessment stabilization in the sewer districts located within the County. It is funded through a share of revenues generated by the quarter cent sales tax. Sewer districts must increase rates by a minimum of three percent before they may access reserve funds to stabilize sewer taxes/usage fees in a district. Debt Stabilization Reserve Fund (425): The Debt Stabilization Reserve Fund may be used whenever an increase for the upcoming budget in debt service or the amount adopted and approved in the current year budget is projected.

BUDGET PROCESSAn Adopted Operating Budget represents the spending plan for the County's operation during a specific fiscal year. The budget process consists of preparing the budget, adopting the budget and monitoring the budget. Once a budget is adopted, it must be monitored to compare actual expenses and revenues with the projected estimate contained in the budget. Where variance occurs, corrective action may be required. In addition, the budget must be reviewed in terms of revisions in County policies, changes in service demands, revisions in federal and state funding, and shifts in the fiscal environment. In Suffolk County three separate budgets are prepared and adopted each year: 1. The Operating Budget details the expenditures for the County's day-to-day operation. It is financed through revenues, such as state aid, user fees, property tax and sales tax receipts received during that fiscal year. 2. The Capital Budget provides the capital program and presents a multi-year spending plan for major physical improvements or construction. Capital projects are financed through long term borrowings, such as the issuance of serial bonds, and state or federal aid. The payment of interest and the repayment of principal for these borrowings are contained as an expense in the County's Operating Budget. 3. The Community College Budget details the expenditures for the day-to-day operations of the Community College. The College is financed primarily from student tuition, state aid, and the County. The cost of the County's support is included in the County's Operating Budget. Reference is made to the Capital and Community College Budgets as the County's yearly financial support for these Budgets is included in the Operating Budget. Article IV of the Suffolk County Charter and Suffolk County Administrative Code establishes the policies and procedures which governs the preparation, submission, and adoption of the County Operating Budget.

BUDGET TERMINOLOGY TERM(A) Abolished Accrual Basis of Accounting

DEFINITIONA currently authorized position deleted from the budget. A basis of accounting in which expenditures and revenues are recorded at the time they are incurred or are available, as opposed to when cash is actually received or spent. The budget for operating expenditures and revenues associated with County departments and programs, distinct from those expenditures and revenues described in the Capital budget and program that has been approved by the County Legislature. A specific amount of funding authorized for the purchase of goods and services. A budget is balanced when the amount of budgeted expenditures equals the amount of budgeted revenues and other funding sources. A debt instrument used to acquire capital assets, repaid with interest which is determined by a percentage of the amount being borrowed. The amount bonded, called the principal, must be repaid in its entirety by a certain date called the date of maturity; incremental payments of interest are also made at specific times. The interest payments combined with the payments of principal is what constitutes debt service. Suffolk County uses the services of the nations three primary bond rating services: Moodys Investors Service, Standard & Poors, and Fitch Ratings, which perform credit analyses to determine the probability of an issuer of debt defaulting partly or fully. Suffolk Countys rating has improved from above-average credit worthiness in 2003 to the current rating of very strong creditworthiness. This is significant because the better an entitys bond rating is, the lower the interest rate and the less expensive it is for the entity to obtain and pay for bond insurance. An appropriation of funds to cover unforeseen events that may occur during the fiscal year. Legislative approval is required to use contingency funds.

Adopted Operating Budget

Appropriation Balanced Budget

Bond

Bond Rating

Contingency Fund

BUDGET TERMINOLOGY TERMCounty Share Debt Debt Service Discretionary Budget

DEFINITIONThe amount of support required from general county resources (e.g., property or sales taxes) after all other revenue sources attributed to the operations of a department or division are subtracted from total appropriations or expenditures. A payment obligation resulting from borrowing, purchasing, or contracting for services. The Countys obligation to pay the principal and interest on all bonds and other debt obligations according to a predetermined payment schedule. The portion of the Operating Budget which details all the expenditures and associated revenues which are not mandated as defined by Local Law 21-1983. This budget includes such expenditures as the cost of Social Services staff, Police services, and most Health Services programs. This fund includes the revenue and expenditures for the building maintenance and operation for the district courts located in the five western towns and the administrative court located in the Cohalan Court Complex. These costs are largely offset by the receipt of fines and State aid. A vacant position for which the title has been changed, after the Operating Budget has been adopted to reflect a change in the needs of the department. Earmarked positions are changed to budgeted positions in the next budget. A reservation of funds in an appropriation that is related to a payment that is anticipated, but has not yet been dispersed. A self-supporting governmental fund in which the services provided are financed and operated similarly to those of a private business, with user charges providing the majority of the revenue necessary to support operations. A special revenue fund for appropriations and revenues associated with the operation of the Enhanced 911 Emergency Telephone System. The E-911 Fund is part of the Operating Budget and is considered an operating fund. The re-estimation which reflects any changes in anticipated expenditures and/or revenues for that fiscal year. This is shown in the Recommended Budget.

District Court Fund (Fund 133)

(E) Earmark Encumbrance

Enterprise Fund

E-911 Fund (Fund 102) Estimated Budget

BUDGET TERMINOLOGY TERMEstimated Revenue Fiscal Year Fund

DEFINITIONThe amount of anticipated revenue from various sources recorded in the budget; this is shown in the Recommended Budget. In Suffolk County, the fiscal year is the same as the calendar year - from January 1 through December 31. A grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. An annual accounting of the difference between the revenues and other funding and the expenditures and other payments. The main fund of the County through which the majority of the revenues and expenditures for most of the County Departments and functions are processed. The reapportioning of funding from one budgetary fund to another, interfund transfers are based upon services provided to interfunds. This Law established a 4% limit on increases in discretionary (non-mandated) expenditures in the annual County Operating Budget. Increases above the 4% level require fourteen votes from the County Legislature for approval. This Law imposed a 4% limit on the rate of increase in actual countywide tax payments for discretionary (nonmandated) general county and Police District purposes. Increases above this level require fourteen votes from the County Legislature for approval. This Law requires the County Executive to summit two separate documents detailing the expense budget: one outlining expenditures or outlays statutorily required; the other outlining those expenditures, programs or services to be provided by the County which are not statutorily required.

Fund Balance General Fund

Interfund transfer

Local Law 21-1983 (Expenditure Cap Law)

Local Law 38-89 (Tax Levy Cap Law)

Local Law 29-95 (Dual Budgetary Process)

BUDGET TERMINOLOGY TERMMandate

DEFINITIONDefined by local law as any responsibility, action, or procedure that is imposed by one level of government onto another through legislative, executive, or judicial actions that is not legally able to be declined and therefore must be carried out, whether or not the imposing government will be contributing to the funding required for the mandate. The portion of the Operating Budget which represents expenditure or outlay required by state or federal law and the cost of repayment of debt service, as defined by local law. This budget includes such expenditures as the cost of Medicaid and operation of the County Correctional Facility. A basis of accounting in which expenditures are accrued but revenues are accounted for when they become measurable and available. This accounting technique is a combination of cash and accrual accounting, since expenditures are immediately incurred as a liability while revenues are not recorded until they are actually received or are measurable and available for expenditure. Since this type of accounting basis is a conservative financial approach, it is recommended as the standard for most governmental funds. All County funds except the Enterprise Fund use the modified accrual basis of accounting. A new position being added to the budget. The County utilizes these types of notes to facilitate timely payment of obligations, while anticipating the referenced funding: Bond Anticipation Notes (BANs) notes issued annually in anticipation of receipt of bond income Tax Anticipation Notes (TANs) notes issued in anticipation of receipt of property tax collections A category of expense, such as supplies, personal services or utilities. Objects of expense may be broken down into subcategories called sub objects. Suffolk County utilizes main object classifications to organize its budget appropriations and as an accounting tool in conformance with the State Comptrollers uniform system of accounts. An expense will be classified as a specific number within these four categories, grouped by thousands. These include the following: Personal Services are denoted in the 1000s (e.g.: 1100 denotes Permanent Salaries, 1120 denotes Overtime Pay, etc.); Equipment is denoted in the 2000s; Supplies are denoted in the 3000s; Contractual Expenses are denoted in the 4000s; etc.

Mandated Budget

Modified Accrual Accounting

Basis

of

(N) New Position

Notes

Object Object Classification

BUDGET TERMINOLOGY TERMOperating Budget Other Than Personal Services (OTPS)

DEFINITIONThe budgets, expenditures and revenues related to the annual program and spending plan for County operations, services and normal maintenance. The expenditures for all non-personal services. contractual services, utilities, rentals and repairs. Includes goods and services such as supplies, equipment,

Police District Fund (Fund 115)

This Fund includes the revenues and expenditures for that portion of the Police Department which provides services to the Police District. The Police District covers the five western townships of Babylon, Brookhaven, Huntington, Islip and Smithtown, excluding those incorporated villages which have elected to maintain their own police force. A change in the title of a filled position to reflect the actual duties performed by the incumbent. Reclassifications are the result of a review conducted by the Department of Civil Service/Human Resources. The County Executives budget, submitted to the County Legislature for approval. It is comprised of proposed recommendations for operating expenditures and revenues associated with County departments and programs, distinct from those expenditures and revenues described in the Capital Budget and Program that have been developed by the County Executive and County Departments. The budget plan for the upcoming year submitted by a department to the County Executive for consideration in developing the Recommended Budget. The funds which are accumulated, held, and set aside for future use or the payment of some future obligation. Funds held in reserve may be restricted to particular uses or they may be unrestricted. The funds that the County receives as income, including tax payments, services fees, receipts from other governments, fines, forfeitures, grants, interest income, etc. The budgets and expenditures in the twenty one sewer district funds related to the annual program and spending plan for sewer facility operations, services and normal maintenance. Sewer districts are self-supporting entities with a separate authority to levy real property taxes. The Sewer Fund is included in the annual budget documents because of the need for the legislative authorization, but it is not a part of the Operating budget nor is it considered an operating fund.

(R) Reclassification

Recommended Budget

Requested Budget Reserve Revenue

Sewer District Funds

BUDGET TERMINOLOGY TERMSub-Object Tax Levy Tax Warrant (T) Transfer Turnover Savings

DEFINITIONA subcategory of expense, such as office supplies, postage, and printing, within an object of expense (supplies, material, and other expenses). The total amount of real property tax revenue to be levied by the County in a single fiscal period. The total amount of revenue needed to be raised by the County in a single fiscal period. This is comprised of the Tax Levy plus or minus the fund balance/deficit. A currently authorized position and/or job title in a department which is transferred to another department or to another division within the department. Anticipated savings in salary expenses resulting from temporary job vacancies created by employee turnover. This amount is subtracted from the amount budgeted for salaries.

BUDGET CALENDARMONTHJanuary

EVENTS/ACTIONS

February

County fiscal year begins January 1. Capital Budget and Program instructions are sent to the departments. Budget Office loads budget into the County's computerized financial system (IFMS.) Budget Office analyzes impact of Governors proposed State Budget and assists in the preparation of the Countys NYS Agenda Departments submit Capital Budget and Program requests to the County Executive. Budget Office reviews the Departmental Capital Budget and Program requests. Suffolk Countys New York State Agenda is sent to State Legislators. Budget Office assists independent auditor in closing books. County Executive submits the Recommended Capital Budget and Program to the County Legislature. Operating Budget instructions are sent to departments. County Executives Office of Budget and Management review impact of Governors State Budget. Suffolk County Community College budget is due to the County Executive. Budget Office assists Comptroller in spring borrowing for Capital needs. County Executive submits the Recommended Suffolk County Community Budget to the County Legislature. County Legislature hold public hearings on the Capital Budget and Program. The County Legislature adopts the Capital Budget and Program. Departments submit Operating Budget requests to the County Executive. County Executive and Budget Office review department Operating Budget requests and prepare recommendations. Departmental Operating Budget Hearings commence.

March April

May June

July August

County Executive and Budget Office review department Operating Budget requests and prepare recommendations. Budget Office prepares mid-year fiscal projections. County Legislature adopts Suffolk County Community College Budget. County Executive holds two Operating Budget Public Hearings, one in Western Suffolk and one on the East End. Budget Office requests Operating Budget updates from Departments. Suffolk County Community College fiscal year begins. County Executive submits Recommended Operating Budget to the County Legislature. Budget Office assists Comptroller in fall borrowing for Capital needs. County Legislature holds two Operating Budget Public Hearings, one in Western Suffolk and one on the East End. County Legislature and the Office of Legislature Budget Review analyze the County Executives Recommended Operating Budget. Operating Budget is adopted. County Legislature adopts real property tax levies and warrants. Tax bills are sent to taxpayers by the towns. Budget Office closes fiscal year, prepares grant roll overs, covers negative balances, reconciles interfund transfers.

September

October November December

intra. Res No. ~2012 laid on Table Introduced by Presiding Officer, on request of the County Executive

I

/2012

RESOLUTION NO. 2012 ADOPTING THE 2013 OPERATING BUDGET AND PRIORITIZING DELIVERY OF SERVICES WHILE STABILIZING TAXES FOR SUFFOLK COUNTY RESIDENTS IN FISCAL YEAR 2013 (DISCRETIONARY) WHEREAS, the 2013 Recommended Operating Budget and the 2013 Adopted Budget must comply with Local Law Nos. 21-1983 and 29~1985; and WHEREAS, Local Law No. 29-1995 established the simplified dual budgetary process requiring that separate mandated and discretionary portions of the budget be adopted; and WHEREAS, the County desires to prioritize the delivery of services in 2013 so as to minimize disruption to County residents, while remaining within the framework of no increase in the general fund property tax; and WHEREAS, enabling State Legislation has been passed amending the General Municipal Law authorizing the County to establish a Traffic and Parking Violations Agency ("Agency") as of April 1, 2013; and

39

WHEREAS, it is in the best interest of the County to establish such Agency to assist the Suffolk County District Court in the administration and disposition of traffic and parking violations; and WHEREAS, as a result of the establishment of such Agency, it is anticipated that the County will realize increased revenues without unduly burdening taxpayers with an increase in general real property taxes; and WHEREAS, the County will realize efficiencies and savings through the consolidation of the Department of Labor and the Department of Consumer Affairs, and the merging of the Division of Risk Management within the Department of Law; and WHEREAS, recent State legislative amendments to the General Municipal Law and the Vehicle and Traffic Law permit the County to create a Taxi and Limousine Commission within the newly formed Department of labor, Licensing and Consumer Affairs; and WHEREAS, it is anticipated that oversight of the taxi and limousine industry will provide additional revenue to the County in 2013 of approximately $250,000, without unduly burdening taxpayers with an increase in general real property taxes; and WHEREAS, pursuant to New York State Educational Law Section 6305, Suffolk County has been paying all non-resident fees charged to it by local sponsors of out-ofcommunity college for Suffolk County residents, including all such fees for the Fashion Institute of Technology (FIT) notwithstanding the fact that unlike any other community college, FIT offers 4-year and advanced degrees; and WHEREAS, Legislative Resolution No. 807-2011 limits reimbursement to FIT for costs associated with Suffolk residents to

2-year education programs; and WHEREAS, on September 12, 2012, the County received notice that an opinion and compulsory interest award had been issued with respect to an arbitrated dispute between the County and Suffolk County Corrections Officers Association and such award includes retroactive compensation of approximately $37 million; and WHEREAS, this expenditure may properly be bonded and amortized over a maximum five year period pursuant to Section 11 of the Local Finance Law ; and WHEREAS, the County anticipates significant revenue if State legislation is adopted authorizing the Suffolk County Judicial Facility Agency to purchase and lease back to the County for governmental purposes the H. Lee Dennison Building, the North County Complex, and other County buildings, and WHEREAS, the County desires to continue the responsible administration of government; now therefore let it be 1st RESOLVED, that the proposed 2013 Suffolk County Discretionary Expense Budget is hereby adopted, pursuant to Section 4-8(A) of the SUFFOLK COUNTY CHARTER; Local Law 38-1989, "Charter Law to Establish Consolidated Tax Levy Cap for County of Suffolk"; and Local Law 29-1995, "Charter Law to Establish a Simplified Dual Budgetary Process" containing the following Appropriations, Revenues, Positions, Reserve Funds, Line Items, Transfer of Funds, and Clauses as set forth in this document and made a part hereof; and be it further TAX STABILIZATION RESERVE

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2nd RESOlVED, that the Contingency and Tax Stabilization Reserve Fund, heretofore established pursuant to Section 6-e of the NEW YORK GENERAL MUNICIPAL LAW, Article II of Chapter 719 of the SUFFOLK COUNTY CODE and Section C4~10(F)(2) of the SUFFOLK COUNTY CHARTER, is hereby reaffirmed and extended for the purpose of accumulating and providing moneys to be used for those lawful purposes enumerated in law, and is hereby reestablished for fiscal year 2013 and for each and every subsequent fiscal year, if necessary, subject to the permissive referendum requirements of Sections 101-103 of the NEW YORK COUNTY lAW, the substantive effect of which shall be to moderate and stabilize real property taxes in Suffolk County; and be it further 3rd RESOLVED, that the Clerk of the County Legislature is hereby authorized, empowered, and directed, pursuant to Section 101 (1) of the NEW YORK COUNTY LAW to cause a notice to be published at least once in the official newspapers of the County of Suffolk, containing the number, date of adoption, and true copy of the 2nd and 4th RESOLVED clauses of this proposed budget (together with Reserve Fund line items, if any) and a statement that such provision is subject to a permissive referendum; and be it further 4th RESOLVED, that the 2nd RESOLVED clause of this proposed budget shall not take effect until forty-five (45) days after its adoption nor unless it is approved by the affirmative vote of a majority of the qualified electors of the County voting on a proposition therefore, if within forty~five (45) days after its adoption there be filed with the Clerk of the County Legislature a petition signed by qualified electors of the County in number of not less than ten

(1 0) percent of the total vote cast for Governor in Suffolk County at the last general election held for the election of state officers; and be it further RETIREMENT CONTRIBUTION RESERVE FUND 5th RESOLVED, that a Retirement Contribution Reserve Fund is hereby reaffirmed and extended pursuant to section 6~r of the New York General Municipal Law and Suffolk County Legislative Resolution No. 1020~2004, for the purpose of financing future payments of retirement contributions, and is hereby reestablished for fiscal year 2013; and be it further

6th

RESOLVED, subject to the provisions of Section 6-r of the General Municipal Law, and pursuant to Suffolk County Legislative Resolution 625-2011, the County Treasurer is authorized, directed and empowered to transfer $8,472,741 from the Assessment Stabilization Reserve Fund to the Retirement Contribution Reserve Fund pursuant thereto; and be it further RESERVE FUND FOR PAYMENT OF BONDED INDEBTEDNESS

7th RESOLVED, that a Reserve Fund for Payment of Bonded Indebtedness is hereby reaffirmed and extended pursuant to Section 6-h of the NEW YORK GENERAL MUNICIPAL LAW for the purpose of accumulating and providing moneys to be used for those lawful purposes enumerated in law, for fiscal year 2013 and for each and every subsequent fiscal year, if necessary, the substantive effect of which shall be to moderate and stabilize real property taxes in Suffolk County; and be it furtherCONSOLIDATION OF FUNCTIONS

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8th RESOLVED, that in order to create efficiencies in the enforcement of laws, the Department of Labor and the Department of Consumer Affairs are consolidated to form a new department to be known as the Department of Labor, Licensing and Consumer Affairs, if subsequently approved by a duly adopted amendment to the Laws of Suffolk County; and be it further 9th RESOLVED, that the County desires to maximize efficiencies related to oversight of the taxi and limousine industry for the benefit of the residents of the County; and it being further 10th RESOLVED, that there be a new Suffolk County Taxi and Limousine Commission within the Department of Labor, Licensing and Consumer Affairs, if subsequently approved by a duly adopted amendment to the Laws of Suffolk County; and be it further11th RESOLVED, that in order to impose more efficiencies, controls and accountability, the Division of Risk Management within the County Department of Civil Service/Human Resources is merged within the Department of Law, if subsequently approved by a duly adopted amendment to the Laws of Suffolk County; and be it further TRAFFIC AND PARKING VIOLATIONS AGENCY 12th RESOLVED, that it is in the best interest of the County to establish a Traffic and Parking Violations Agency to assist the Suffolk County District Court in the administration and disposition of traffic and parking violations; and be it further

13th

RESOLVED, that there be a new Suffolk County Department known as the Suffolk County Traffic and Parking Violations Agency, if subsequently approved by a duly adopted amendment to the Laws of Suffolk County; and be it furtherRECURRING REVENUE

RESOLVED, that if there is created by local law a new Suffolk County Department known as the Suffolk County Traffic and Parking Violations Agency pursuant to New York General Municipal Law Article Fourteen-B. said Agency is authorized, directed and empowered pursuant to the authority of Municipal Home Rule Law Section 10(a)(9-a) to impose an administrative fee to defray the cost of operations as follows: 14th(i} in the sum of $30 for each notice of violation processed by the Agency which has been issued pursuant to Vehicle and Traffic Law Section 1111-b, and

(ii) in the sum of $50 for each infraction of traffic and parking laws, ordinances,rules and regulations processed by the Agency authorized under General Municipal Law Section 371 other than a notice of violation which has been issu

suffolk county executive steve bellone's 2013 proposed budget

Documents

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county finances

size of county government

fewer county employees

budget message

chief executive analyst

budget assistant victoria

budget technician deborah