Moody's: Nassau union deals are a 'credit negative'
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A major Wall Street ratings agency Friday reported that Nassau's new union deals, which lifted a three-year wage freeze, are a "credit negative" for the county.
Moody's Investors Service said the county's approach to paying for the labor contracts "is negative because it will rely on growth in volatile and new, untested revenue sources."
Oversight by the county's financial control board, the Nassau Interim Finance Authority, "mitigates those risks," Moody's wrote in its "Weekly Outlook for Public Finance."
"However, NIFA relinquished its ability to freeze wages for the duration of the contracts," which run through 2017, it noted.
Moody's did not change Nassau's A2 credit rating or stable outlook.
NIFA last Saturday approved new contracts for four of the county's five major unions -- the Civil Service Employees Association, the Police Benevolent Association, the Detectives Association and the Superior Officers Association. The correction officers union is still negotiating a new deal.
Moody's noted that NIFA estimated the cost of the contracts at $130 million over four years, while the legislature's budget review office said the deals could cost between $120 million and $292 million.
County Executive Edward Mangano's deputy for finance, Tim Sullivan, said the agreements "will save taxpayers millions of dollars over the existing contracts as new employees will for the first time in history pay toward their health insurance, police will now contribute to their pensions, and employees will take longer to earn top pay."
But Moody's said the county, to offset contract costs, "will rely on growth in highly variable revenue streams, including fines for traffic violations and fee increases." It noted that Nassau's financial position "is already weak," with expenses expected to exceed revenue even before the wage freeze was lifted.
Meanwhile, Nassau's consumer affairs office last week sent letters to various county businesses, informing them that new licensing fees adopted by the county legislature in 2012 are now being enforced, with $5,000 penalties if ignored.
Deputy County Executive Ed Ward said collection of the new fees was delayed while the county established internal guidelines for licensing such businesses as scrap metal and precious metal dealers, auto dismantlers, home service contractors and junk dealers.
He said the fees are intended to cover the cost of police investigations of those operations, not to pay for the union deals.
But Legis. David Denenberg (D-Merrick), called the new fees adopted by the legislature's Republican majority "nothng more than new taxes on hard-pressed small businesses." He contended enforcement was delayed because of last year's county elections, "but as yet another budget deficit looms, the administration is implementing these tax increases."