Nassau could owe $230M in back pay, benefits if court rejects wage freeze
Nassau could be on the hook for more than $230 million in back pay and benefits if an appeals court rejects a three-year wage freeze for the county's union workers, a legislative budget office said Tuesday.
The county legislature's independent office of budget review calculated that the wage freeze, imposed by Nassau's financial control board in March 2011, will save the county $180.7 million in salaries through 2013 and another $51.7 million in pension contributions, federal payroll taxes and other benefits.
The total tab would increase by $10 million to $22 million if Nassau had to borrow to repay county employees, the office said.
The Nassau Interim Finance Authority has appealed a decision by U.S. District Court Judge Leonard Wexler, who ruled last month that the control board had lost its power to suspend pay hikes and annual step increases in 2008. Wexler delayed execution of his decision to allow NIFA and the county to take the case to the U.S. Court of Appeals.
The NIFA board last week extended the wage freeze through March 2014 and declined all comment during the appeals process.
NIFA took control of the county's finances and imposed the wage freeze after calculating that Nassau was running a $176 million deficit. Last month, the county reported to NIFA that it expects to close this year with an $11.6 million cash surplus.
County Comptroller George Maragos has estimated that the wage freeze will save Nassau $195 million through this year. Although Wexler's decision applied to a lawsuit filed by county police unions, it is expected to cover all union workers.
"This situation could have been avoided if NIFA was willing to sit down and be part of the solution rather than part of the problem," said James Carver, president of the Police Benevolent Association.
Before Wexler's ruling, Carver unsuccessfully pressed county and NIFA officials to approve a renegotiated PBA contract. Carver also said the frozen wages "have already been paid for by concessions by all the unions" when they renegotiated contracts in 2009.
Asked for comment about the budget review office report, Republican County Executive Edward Mangano, who had requested the wage freeze, said, "In addition to the elimination of these expenses, my administration has saved taxpayers over $240 million by reducing the workforce."
But Legis. Wayne Wink Jr. (D-Roslyn), who is running for county comptroller this fall, said, "This enormous sum could decimate the county's budget and yet we've still not heard a single thought or idea from Mr. Mangano on how he plans to address this."
A state appellate court panel dealt another possible blow to the county last month when it ruled that Nassau could not shift the cost of property tax refunds next year to schools, towns and other taxing districts. The decision could cost the county about $80 million a year.
The panel ruled that Nassau did not have the power to repeal the so-called "county guaranty," which was enacted by the State Legislature and made the county liable for all tax refunds resulting from erroneous property tax assessments. The county has filed an appeal.