Nassau County is relying on overly "optimistic" revenue sources to pay for new labor contracts that would lift a three-year wage freeze on county employees, according to a report by the county's independent fiscal watchdog.
Nassau's GOP-controlled legislature will vote Monday on the four contracts, which would cost the county at least $120 million if expected savings and revenue sources, including speed cameras in school zones, fail to materialize, the Office of Legislative Budget Review found.
The contracts, with the Police Benevolent Association, Civil Service Employees Association, Detectives Association and Superior Officers Association, run through 2017. The correction officers union has yet to reach a deal.
The report is skeptical that revenue sources proposed by the county will be enough to pay for the labor contracts.
The budget review office said Nassau overstated the potential revenue that can be earned from the installation of speed cameras in 56 school districts. And predicted savings, including the civilianization of uniformed law enforcement, are contingent on management enforcement, the office said.
"The costs associated with the proposed agreements are hard costs which should be offset with corresponding revenues," the report states. "Unfortunately, the revenues and saving offsets are optimistic and the additional cost will require the county to address a stagnant revenue base."
Figures mirror NIFA report
The figures produced in the 34-page report are similar to analyses performed by Nassau Comptroller George Maragos and by the Nassau Interim Finance Authority, a state monitoring board that imposed the wage freeze in March 2011.
NIFA member Chris Wright, who opposes the labor deals, said the report proves that Nassau does not have the revenue to pay for the contracts. "The report is credible, objective and hopefully sobering for those people who are high on the fumes of short-term political gain," Wright said.
But CSEA president Jerry Laricchiuta insists the contract has concrete savings, such as a provision that allows the county to replace full-time crossing guards receiving health insurance benefits with part-time guards without health benefits. "I am confident that the savings are real and are not smoke and mirrors," Laricchiuta said.
Brian Nevin, a spokesman for County Executive Edward Mangano, said the administration is reviewing the report.
NIFA chairman Jon Kaiman did not respond to requests for comment on the report.
New hires, new savings
The report said the $378 million cost of the contracts can optimistically be reduced to $223 million through long-term structural savings, such as a requirement that new hires pay 15 percent toward their health insurance and pension plans.
The county expects to save another $103.3 million through the voluntary departure of higher-paid senior employees, but savings from normal attrition are already committed in the budget for items such as escalating police overtime costs, the report said.
If the county ends up saving the $103 million, then the cost of the deal would go down to $119.7 million, the budget review office says in its report, cautioning that it is dubious that other revenue sources needed to fund the remaining costs of the contracts will emerge.
Mangano anticipates that Nassau will raise $25 million to $72 million from the speed cameras. Nassau anticipates the cameras will generate 200 violations per day for 180 school days, each with a $50 fine and a $30 administrative fee.
But, the report said a more conservative estimate is $12 million annually -- or $36 million from 2015 to 2017, plus any revenue collected if the cameras are active in 2014.
Camera revenue optimistic
And, installation of the cameras is not a sure thing.
State lawmakers failed to include the devices in the recently-approved state budget but said they would consider them in a separate bill later this month -- after the county legislature votes on the contracts. NIFA has said it will not consider the contracts until the speed cameras are approved.
The remainder of the contracts' costs would be paid through increased sales tax receipts and mortgage recording fees, which the county hopes will be fueled by increased home sales and refinancing.
The county legislature's presiding officer, Norma Gonsalves (R-East Meadow), said she will "ask the right questions" during Monday's legislative hearing to determine the "financial feasibility of the contracts."
"Now that the cost has been estimated it is really up to the administration to demonstrate how they will pay for it," said Legis. Judy Jacobs (D-Woodbury).
Labor leaders said the contracts are more than fair and do not cover all of the wages members lost during the freeze. Each union is forgoing a 3.5 percent raise that was to come in 2013 -- even if they are successful in court in challenging NIFA's authority to impose the freeze.
"These agreements represent a good-faith effort on our part," said Superior Officers Association president Brian Hoesl. "They are not win-win for the unions by any means. Once again, the unions have agreed to give the county cost savings measures to insure their fiscal health going forward."If all of the projected savings materialize, OLBR said the deals limit the county's flexibility to address underfunded budget items in the future, including hundreds of millions of dollars owed in tax refunds to home and business owners.
The agreements also prevent NIFA from imposing another wage freeze during the life of the contract.