The New York Racing Association lost nearly $20 million last year, in part due to government fines and other expenses to cope with ongoing legal problems. But the association expects to greatly reduce the deficit in 2004.NYRA chief financial officer William Byrne told The Blood-Horse the 2003 deficit topped $19 million. Of that amount, $1.5 million came from paying the federal government half of a $3-million fine NYRA was slapped with last year for its role in a widespread financial fraud investigation. NYRA is operating under a so-called deferred prosecution after a 2003 indictment.NYRA, which holds the franchise to operate Aqueduct, Belmont Park, and Saratoga, also spent $1 million for six months worth of work by Safir Rosetti, a security consultant whose principles include Howard Safir, the former New York City police commissioner. Another $1 million was spent on Davis, Polk & Wardell, a high-powered Manhattan law firm hired by NYRA to help steer it through its legal problems.Also included in the $19-million deficit is a $5-million, non-cash expense that NYRA had to post against the year-end numbers to cover pension liabilities for its workers. Byrne said interest rate changes and actuarial estimates caused the pension change.Another $5 million came from what Byrne said were inflationary pressures on health insurance costs, payroll, and other expenses. The $19-million deficit came on top of a $7-million deficit the previous year. NYRA revenues for 2003 were largely unchanged, Byrne said.The expenses don't include the costs of Getnick & Getnick, the Manhattan firm appointed by a federal judge to serve, at NYRA's expense, as a monitor during an oversight period as part of an agreement to defer prosecution following a probe by the United States Attorney's office. The firm, which has been doing extensive monitoring work at NYRA tracks, came on in March and has not yet billed NYRA.Byrne, who joined NYRA in September, said he is already well on his way to shaving the deficit for 2004. He said cutbacks in overtime, payroll, and other expenses will slice at least $10 million off the deficit.The release of the numbers to The Blood-Horse came after years of NYRA carefully guarding its financial picture. "One of my charges, other than to make NYRA more transparent and more compliant, was to also make NYRA more profitable," Byrne said.Byrne said "prudent cuts" would make the financial picture better in 2004, though he said NYRA would have the added expense of a full year of having to pay Safir Rosetti and the federal monitor."We are going to absorb those incremental expenses and still improve our bottom line by $10 million," Byrne said. "NYRA is making a huge step in 2004 to bring itself into compliance and bring its expenses under control."Byrne also said some NYRA officials have been replaced. He said that move has helped cut payroll "but also helps us understand what our numbers are, and helps us identify our numbers of excess and waste. We're going to take $10 million out of this company next year, and we're not finished."