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Pension costs key to Suffolk's big deficit

Suffolk County Executive Steven Bellone at Farmingdale State

Suffolk County Executive Steven Bellone at Farmingdale State College. (Jan. 20, 2012) Credit: Steve Pfost

In projecting a $530 million deficit for Suffolk County by 2013, budget analysts presented the problem plainly: government costs, led by ballooning pension obligations, are rising far too fast for revenue to keep pace.

Last year, Suffolk contributed $102 million to the state retirement system; it will be $192 million in 2013 -- an 88 percent spike.

In addition, employee salaries and benefits are pegged to rise 14 percent from 2011, while social services bills could be up 12 percent. Sales taxes, on the other hand, nearly half the county's proceeds, are predicted to climb barely 5 percent.

While Suffolk's total revenue is projected to increase by $37 million from 2011 to 2013, expenses are estimated to rise by nearly tenfold, or $353 million, over the same period, according to the findings of an independent task force named by County Executive Steve Bellone.

"How can anyone expect or contemplate that kind of dramatic increase?" Bellone said last week. "That's just unsustainable in every way."

It comes as Gov. Andrew M. Cuomo and state labor unions battle over pension reform. Cuomo's proposal would give future government employees the option of a traditional, though less-generous, defined benefits plan or a 401(k)-style package.

Increased state pension contributions by municipalities are needed to compensate for stock market losses that the plans suffered during the economic crisis of 2008 and 2009.

"What's going on in Suffolk shows the individual taxpayers what the costs are," said Mitchell Pally, the Long Island Builders Institute head who has three decades of experience in government affairs. "Most people don't know much about their school or library budgets, but they know about the county, and this makes the issue predominant in people's minds."

Bellone, a Democrat, supports Cuomo's pension reform, but knows it won't help him in the near-term. That's why he's already saying the county must "fundamentally restructure the way we provide services," a reference to cutbacks that could claim many more than just the 464 county positions that will be losing funding in July.

Last week, he began talks with labor unions that may lead to concession requests.

"Everybody understands the gravity of the situation," Bellone said. "We're all in this together, and if this ship sinks, it impacts everybody."

Growing employee pension contributions aren't Suffolk's only dilemma. Bellone's budget task force projected that payments to reduce long-term debt would rise more than 20 percent, from $89 million to $108 million, from 2011 to 2013, and that social services costs would jump 12 percent, to more than $500 million, as state aid decreases and the lingering effects of the recession put more families in need of public assistance.

"We'd be surprised if it didn't increase at least that much," Social Services Commissioner Gregory Blass said, adding that in the last two years, spending on temporary assistance programs rose by 26 percent. "There's no scientific methodology to possibly forecast, with precision, how many more people will come to us."

Last year, as a way of temporarily restoring contract agency aid and hundreds of jobs that former County Executive Steve Levy had eliminated, lawmakers tapped reserve funds. The fund, which sat at more than $120 million in 2008, now holds less than $50 million.

Members of both parties now agree such "one-shot" revenue sources are drying up.

"That can be good, in a way," said Legis. DuWayne Gregory (D-Amityville), "because not relying on them makes you develop a budget that's more structured for the long term."

Legis. Tom Cilmi (R-Bay Shore), said the task force's naming of the national economy as the main source of Suffolk's woes was more productive than looking at past administrations or legislature actions. "We can either look for blame," he said, "or we can accept the situation that we're in, understand how we got here, and finally start confronting the reality that government cannot be all things to all people."

After the gloomy projections of last week, Bellone acknowledged things may still get worse. The task force considered projecting no growth in sales tax revenue, which would have increased the deficit estimate by more than $20 million, as well as higher social services costs.

"This is not a 'worst-case scenario,' " Bellone said. "There are scenarios that can make this deficit worse -- and that's what's scary."

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