Fiscal Problems and Planning for the Future: A CPA’s Role
Journal Interview with Nassau County Comptroller Howard S. Weitzman
- New York’s Nassau County Comptroller Howard S. Weitzman
was first elected in 2001 and reelected to a second term in 2005.
In his first term, Weitzman worked with County Executive Tom Suozzi
to bring Nassau County back from the brink of bankruptcy. Together,
they achieved a historic financial turnaround, turning deficits
into surpluses and providing balanced budgets without a tax increase
for three consecutive years. Weitzman is a CPA and a former mayor
of Great Neck Estates, N.Y., where he lives. He was recently appointed
chair of the taxation and finance committee of the New York State
Association of Counties and is a former national healthcare partner
met with CPA Journal Editor-in-Chief Mary-Jo Kranacher
to discuss the inner workings of the County Comptroller’s
office, how the county addressed recent pension fund issues, and
the Roslyn school district’s accounting scandal. They also
discussed short- and long-term plans for the county’s financial
future, and the role of CPAs in government service.
For those who may not be familiar with the responsibilities of
the Nassau County Comptroller, tell us briefly about your position
and which government agencies fall within your jurisdiction.
Weitzman: The Comptroller is considered the financial
watchdog for Nassau County, and the position reports directly
to the taxpayers. As an elected official, I don’t report
to the Nassau County Executive or to the Nassau Legislature. I
provide financial oversight for the county’s $2.5 billion
budget. The responsibility for preparing and implementing the
budget fall within the jurisdiction of the County Executive and
the legislature. The Office of the Nassau County Comptroller is
responsible for the audit of any government agency that receives
Nassau County funding. In addition, we review all Nassau County
government payrolls before they are issued. We have an online
interactive payroll system, as most governments have, but all
adjustments are reviewed before the payrolls are actually processed.
My office has 15 auditors who check the adjustments that are made
to the payroll for vacation or sick time or other paid time off.
my office reviews all contracts that are entered into by the county.
Any invoices that are paid against those contracts must receive
final approval before they go to the County Treasurer for payment.
One issue on which I ran my election campaign was that the Comptroller
should do more than simply sign off on contracts as a perfunctory
measure. The technical language in the County Charter says that
I’m approving payment with funds that have been encumbered
and are available for encumbrance. In fact, the signature block
on the contact says that “I hereby certify that the funds
are encumbered.” We took the position—and we had state
law to back us up on this—that the Comptroller could withhold
his signature on any contract he deemed not in the best interest
of the county. That position greatly expanded our oversight role
with respect to contracts. We’ve looked closely at the county’s
major contracts and requested changes to them as we deemed appropriate.
We are also
responsible for the healthcare benefits of Nassau County’s
10,000 active and 11,000 retired employees. We don’t set
policy, but we are responsible for the delivery of those services.
We have an
online, real-time financial system and we prepare the closing
entries at the end of the year for the outside auditors to review.
We also prepare the county’s financial statements.
When you were first elected in 2001, what was the most pressing
item on your agenda? Have you achieved what you set out to do
in this regard?
Weitzman: In 2001, the most pressing issue was the
financial near-collapse of Nassau County, which is one of the
wealthiest counties in America. The county found itself on the
verge of insolvency because of horrendous mismanagement in the
1990s, a period of tremendous prosperity for governments throughout
the country. We were rated as the worst-run county in America.
I set, and the issue that I ran on, was a very simple one: working
to restore Nassau County’s fiscal integrity. And I think
we’ve succeeded. It’s not just me saying that, it’s
a fact that outside rating agencies have given Nassau County 11
bond upgrades over the past four years. That serves as independent
validation of the work that the County Executive, the legislature,
and I did to restore the county’s financial health.
A news release on your website said the proposed 2007 budget for
Nassau County attempted to “balance” the budget by
using prior years’ reserves, which were expected to be depleted
shortly, to pay for recurring expenses. What measures would you
recommend to close this gap for the short term and the long term?
Weitzman: We said that the 2007 budget was less
conservative than those of the past. Since 2002, the county had
extremely conservative budgets, which gave rise to rather large
surpluses. As a result, we have been able to return those surpluses
to taxpayers by not having to raise taxes in the subsequent years.
were established from those surpluses to meet specific expense
requirements. For example, we set aside $80 million under state
law to transition into a period of higher pension payments. Former
New York State Comptroller [Alan] Hevesi specifically authored
a law that deferred an $80 million payment and gave Nassau County
the ability to set that money aside. So we were spending that
money for its intended use. And although spending down the reserves
is not necessarily a bad thing, unfortunately it left us with
a $100 million structural gap.
You can look
at this in many different ways, but closing the structural gap
is really very simple—you either raise more revenue or reduce
expenses. Nassau County is one of the few governments in the country
that is required to have a four-year plan, because we are under
the oversight of the Nassau County Interim Finance Authority [NIFA].
Our four-year plan calls for substantial amounts of new revenue
in 2008 to close that gap. Potential new revenue may come from
a tax on tobacco, inflationary increases in property taxes, or
a tax on home heating oil. We
need to reduce our expenses to eliminate the need for some or
all of those additional revenues. We will need some increase,
in revenue anyway, because our expenses generally increase every
year. The challenge is to minimize those tax increases, because
Nassau County currently has the second-highest tax rate in the
As CPAs, we know that the alternative to increasing revenues is
decreasing expenses. What is being done to reduce expenses to
close the budget gap?
Weitzman: My office plays a significant role there.
Our audits have focused on the areas of the highest spending because
they have the greatest potential for saving money. There are areas
where “civilian-ization” of uniformed positions—whether
in corrections, probation, or police services—can save tens
of millions of dollars for the county, and the county is aggressively
moving to accomplish that through union negotiations. Because
of my background in healthcare, I tend to focus on healthcare
issues and will continually look at the county’s healthcare
package for ways to save money without reducing benefits. Going
forward, the county needs to look at additional ways to restrain
the growth of its costs for healthcare benefits. For governments
and private industry, healthcare is a major factor in cost increases.
Given your background in healthcare, how does the financial condition
of the Nassau University Medical Center affect the county’s
Weitzman: Nassau County subsidizes the medical center
to the tune of approximately $25 million to $30 million a year,
and the county is prepared to continue to do that because it provides
a much-needed safety net for people who, unfortunately, don’t
have satisfactory health insurance. Nassau County has also guaranteed
approximately $300 million in outstanding county hospital bonds.
If the hospital fails, county taxpayers would have to continue
the payments for the bonds.
plans for the hospital were unrealistic and doomed to fail, and
didn’t really establish the proper role for that hospital
and its community. I have spent a lot of time working to bring
about a financial turnaround for the hospital. As a result, major
changes have taken place with respect to the hospital’s
administration and mission. We’ve also been successful in
bringing additional state revenue to the institution, and as a
result I’m much more optimistic about its future. Under
the direction of the County Executive’s minority healthcare
council, the hospital will fulfill its role to serve the community
surrounding the hospital.
In 2004, a one-time modification to the New York State pension
system moved the 2004 pension contribution into 2005. Can you
explain how that change affected subsequent years’ pension
contributions? And how did that affect the 2005 and 2006 financials?
Weitzman: That was pretty controversial, and many
accountants were split on what the proper treatment was, since
on a purely accrual basis, you would think that moving the payment
date wouldn’t necessarily impact when the expense should
be recorded. There’s an exception with respect to pensions
because pension contributions are set by state legislation. The
state may legislate any level of contribution or no contribution
at all. Governments generally recognize the expense when the state
legislates the level and timing of the contribution.
an extraordinary impact on Nassau County in 2004 because we were
able to defer an $80 million payment and put that money aside.
Some local governments spent the money, denying their taxpayers
the benefit of legislation that was supposed to help them transition
to higher pension costs. Nassau County was able to shield its
taxpayers from the immediate shock of higher pension costs by
setting aside a reserve and using it as needed to supplement the
So was the pension contribution for 2005 also due and payable
Weitzman: The pension contribution that was due
and payable in 2005 was the deferred 2004 contribution. The taxpayer
expense for this contribution was reduced by $30 million because
of reserves that we applied in 2005, 2006, and 2007. The reserves
will be exhausted by the end of 2007. This was a permanent deferral
of a taxpayer obligation, and we used it to the advantage of county
What’s the current status of the funding obligation of Nassau
County’s pension system? Is the county caught up to where
it should be?
Weitzman: The good news is: Similar to other governments
in New York State, the county doesn’t have its own pension
system. Because Nassau County is part of the state pension system,
we never had an opportunity to mismanage pension money. The New
York State pension system is one of the most fully funded systems
in the country. The county has always been current on its pension
obligations to the state. That’s good news for taxpayers.
GASB recently announced plans to address pension disclosure requirements
for governments, and to bring them in line with those recently
required for other post-employment benefits [OPEB]. Do you anticipate
that these changes will uncover any unexpected surprises for Nassau
County employees or taxpayers?
Weitzman: We estimate that our GASB 45 liability
for 2007 will be approximately $4 billion. It’s not a surprise
to those in government, who know that government employees have
always received very generous postretirement healthcare benefits.
The level of benefits that government employees receive will probably
come as a shock to taxpayers who are accustomed to private-sector
The new disclosure
requirements won’t have a financial impact on county taxpayers
because governmental entities provide for their own postretirement
healthcare benefits and account for them on a cash basis for budgetary
purposes. However, public disclosure of this issue may generate
interest from taxpayer groups in putting pressure on the level
of public employee benefits.
What’s being done to end wasteful spending on excess health
insurance for duplicate health benefits for Nassau County employees?
Weitzman: Ninety percent of Nassau County employees
are unionized, and to change this policy with respect to the unionized
workforce would require new contract negotiations. Our largest
union accepted a modification of this in their last contract,
and we just passed legislation in Nassau County that stopped this
practice for our nonunion workforce. We’re very hopeful
that in the next round of negotiations with our uniform service
workers, they’ll adopt the same position.
to the school districts, we brought this issue to their attention
and we’re meeting with school district board members on
an ongoing basis to talk about how they could possibly implement
this countywide. It took us 100 years to get to this point, so
we don’t expect to fix it overnight, but we are addressing
Raising Tax Revenues
For taxpayers who experienced a large increase in their property
taxes recently, there is a concern that homeowner taxes may continue
to rise, to offset the growing structural deficit. Is this a legitimate
Weitzman: Absolutely, it’s a valid concern.
Nassau is a mature county in one of the first mature suburbs in
America, and we are writing the book on what happens when a county
that relies on property taxes stops growing. It’s clear
that Nassau County has limited options to grow because of a lack
of space. We’re basically “built out,” which
means we don’t have any new people spending money, so our
sales tax revenue increases only by the rate of inflation. Our
building fees normally are based on redevelopment of existing
properties, as opposed to new property development. Therefore,
revenue stays generally static, other than raising property taxes,
which contributes to the problem. On the other hand, our expenses
continue to rise.
What is the likelihood that Nassau County officials will look
for other sources of revenue in the future, rather than relying
so heavily on property taxes to balance the budget?
Weitzman: There has been some discussion about looking
at an income tax, which is fairer because it has a closer relationship
to a taxpayer’s ability to pay. Because of the rise in property
values in Nassau County, house values no longer reflect a taxpayer’s
ability to pay. But many questions need to be answered about an
income tax. Based on our analysis, the only municipalities that
levy income taxes in this country are those that have consolidated
school districts, because the bulk of the income tax money goes
to pay for schools. Nassau County doesn’t have consolidated
school districts, and there would be a large resistance to any
attempt to consolidate. So the question is: How would the taxes
be allocated? To put the tax money back into the districts from
which it was generated would simply add to the imbalance we already
have in some of our school districts.
Nassau competes with surrounding counties, and if we implement
an income tax and they don’t, then entrepreneurs who are
looking for a location to start up or move their business will
choose a lower-tax area, preferring not to pay income taxes. One
plan that I reviewed for a local property tax in Nassau County
indicated that 250 families would bear virtually half of the total
tax burden. But what happens if those families move? So, while
I believe that income taxes are fairer, we still need a lot of
answers on the local level as to how an income tax would actually
work on a countywide basis.
There are local income taxes in New York City.
Weitzman: But New York City has a consolidated school
district system, and 55% of New York City’s taxes go to
Learning from Roslyn
In the wake of the recently revealed accounting problems at the
Roslyn school district, what new controls have been implemented
to prevent such scandals from happening again?
Weitzman: The biggest control is an increase in
oversight. As we learned from the Roslyn case, the New York State
Comptroller’s Office hadn’t audited the school districts
for 20 years. As a result, the legislation that was adopted by
the New York State Legislature gave additional funding to the
New York State Comptroller so that every school district in the
state will now be audited at least once every three years.
rules were put into place for the formation of audit committees
to provide local levels of oversight and for training of school
board members and financial managers. Unfortunately, many school
board members, who are extremely interested in the education of
the children in the community, don’t necessarily have the
financial skills to manage $100 million or $150 million budgets.
There’s also legislation to increase the minimum qualifications
for school business-office administrators, to ensure that they
have adequate financial training to manage these budgets.
What types of controls are being put into place for county agencies
other than the school districts?
Weitzman: Nassau County probably has more oversight
than any county government in the country because of our previous
history of mismanagement. We have oversight by an office of legislative
budget review, an office of management and budget, this office,
and the Nassau County Interim Finance Authority. That’s
all in addition to the normal oversight by the New York State
Comptroller’s office, which reviews the financial practices
of the county.
after taking office I established an independent citizens’
audit committee made up of professional businesspeople in Nassau
County with financial training, to provide high-level oversight
of the county’s financial practices. I’ve given them
access to reports generated about Nassau County and the ability
to speak to people about why certain practices exist and what
corrective steps are being taken, when necessary. This committee’s
annual report is a public document and it gives them the ability
to have a say in county polices involving financial practices.
and other news releases from my office are online [see www.nassaucountyny.gov/agencies/Comptroller/index.html].
I believe very strongly in transparency, so the county budget
is online and county audit reports are also online. Anyone who
wants to be put on an
e-mail distribution list can give us their e-mail address through
the website and receive periodic updates about what’s happening
in Nassau County.
What is the greatest threat to the quality of life in Nassau County?
Weitzman: Higher taxes and the higher cost of living
are a concern. For retirees who are looking for areas with a lower
cost of living, we compete with other regions of the country.
We can never compete with lower-cost areas in the South and rural
areas, but our primary concern is being able to compete with other
areas surrounding major cities. Nassau County is next to New York
City, which is a tremendous advantage for us, but that proximity
is also the cause of many of our high cost centers. Our cost structure
is really no different than in northern New Jersey, lower Connecticut,
or Westchester County—which in fact has higher taxes than
Nassau County. So we have to make sure that the cost of living
in Nassau County is at least competitive with those areas.
we have people who moved out here 40 or 50 years ago when housing
costs were much lower and who are finding it very difficult to
pay their tax burden even though their houses have increased tremendously
in value. We need creative solutions to these issues so that people
are not displaced from their homes and communities because they
can’t afford to stay.
Even young people who grew up in Nassau County and consider it
their home are unable to afford to live here.
Weitzman: We in Nassau County are beginning to look
more closely at housing options. One of the most striking statistics
is that we have the lowest percentage of rental units of any inner
suburb in the country. The average percentage of rental units
for suburbs adjacent to a major city is about 40%. Nassau County’s
housing market consists of 20% rental units, which translates
into a lack of starter opportunities for young families and individuals.
Seniors, who don’t need to live in large single-family homes,
also have limited opportunities to move into smaller units within
their communities. We need to think creatively about how we can
fill that gap.
Has your office come up with any possible alternatives in that
Weitzman: We’re working with the Long Island
Regional Planning Board, on which we sit as nonvoting members.
We take a very active role with the board, which is addressing
these issues head-on, because this not only impacts taxpayers,
it also impacts employers, who are finding it increasingly difficult
to hire employees in Nassau County because of the high cost of
Service and Politics
What percentage of your job is politics, and what percentage is
Weitzman: That’s a great question. When I
was first elected I thought that 90% of my job would be strictly
managerial/financial, and 10% would be politics. That was based
on the assumption of a 50-hour work week. In reality my work week
is 60 to 70 hours, with probably 50% of my time spent on financial/managerial
issues and 50% political. Of course, you can make the argument
that because anything having to do with public policy involves
politics, my managerial time is political in one way or another.
The ability to work with the Nassau County Legislature and the
County Executive is extremely important in order to function effectively.
During campaign season, you said that you were out campaigning
22/7, if not 24/7. During that time, who was minding the store?
Weitzman: During the 2001 campaign I wasn’t
in office. The second time I ran, in 2005, I was very fortunate
in having the staff I had been able to assemble. I have a highly
professional, nonpolitical staff that is fully capable of managing
an office of our size. During the campaign season, I came into
the office for at least some part of the day, every day, to make
sure that the office was continuing to function smoothly. But
campaigning did require an enormous amount of time.
Did you enjoy campaigning?
Weitzman: I was exhausted, but no one should go
into politics if they don’t like talking to people and helping
people. On the other hand, to run a successful campaign you have
to raise large sums of money. I am in favor of public financing
of elections, which we don’t currently have. Candidates
are forced to call their friends and associates and ask them for
money, which is not the most pleasant part of the job. But if
you want to be elected or reelected, it’s necessary.
As a CPA, do you worry about potential conflicts of interest and
those who might try to exert pressure through campaign donations?
Weitzman: My position has always been that if you’re
contributing to my campaign because you think I’m doing
a good job, I’m more than happy to accept your contribution.
If you’re contributing because you think you’re going
to influence a decision that I’m going to make, you should
save your money, because I won’t be influenced.
Obviously, financial compensation isn’t what drives people
to enter the political arena. What are the benefits of your job?
Weitzman: There’s the personal satisfaction
of doing an important job and doing it well. I’m clearly
not in this for the money; I don’t think anybody enters
the government sector for the money. That’s why I tell other
accounting professionals that government service is a perfect
way to end your career because, hopefully, by that point you have
sufficient financial resources to supplement your government service
Thank you for your time today. Is there anything else you’d
like to address?
Weitzman: I would like to emphasize again the point
that it is beneficial to society to bring CPAs into elected office.
I understand the sacrifice involved, and it is a sacrifice. That’s
why I don’t recommend it for young CPAs, although I think
it can be very helpful for young CPAs to go into government work—not
elected office, but appointed government work. But I think we
can use more gray-haired CPAs in elected office. I think they
bring an understanding to the issues that you just don’t
typically get among elected officials, and as a result, taxpayers