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Levy: Use 'rainy day' fund to pay for pension hike

Suffolk County Executive Steve Levy is proposing to take $30 million of the county's tax stabilization fund to pay next year's expected spike in state pension costs.

But a legislative critic said his plan could largely deplete $100 million in the "rainy day" fund over the next three years and limit lawmakers' flexibility in dealing with budget woes.

The legislature's budget committee approved a resolution 3-0, with Legis. Edward Romaine (R-Center Moriches) abstaining, that would set a public hearing on Levy's proposal Aug. 4. It would permit a transfer of $30 million, the general fund increase in pension costs to the pension reserve fund. Under state law, a transfer to the pension fund is permitted without the 2.5 percent increase in property taxes normally required when a county taps the rainy day fund.

But Romaine says the increases in pension costs are expected to last three years. He is concerned that if the county uses the one shot next year, the county will have to keep using the rainy day fund for the next two years. "And unless we have an overarching strategy, we could deplete the fund in the next three years."

Romaine asked Levy budget aides for a memo explaining their proposal and their long-term strategy for dealing with the pension problem.

Connie Corso, deputy county executive for finance, called the pension spike "a perfect opportunity to use the fund." She said it will allow the county to get through the immediate hike and allow time for sales tax revenue to rebound.

Suffolk's pension problem is part of a dilemma facing counties across the state because the Wall Street meltdown hurt pension fund investments and forced local governments to pay a larger share of the cost. Suffolk's annual pension costs will rise to $142 million next year, from $92 million. In addition to the general fund hike in pension cost, Levy aides also expect a $20-million pension rise in the police district, but they hope the state will also permit counties to borrow to pay for the pension spike.

Legis. Louis D'Amaro (D-North Babylon), a Levy ally, said Levy will need legislative approval to use the rainy day funds.

Romaine said Levy wants the money now so he can include it in his proposed 2011 budget, which would limit how lawmakers use the tax stabilization fund.

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