Editorial: NIFA should know Nassau can't afford new labor deals
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With so many questions unanswered, the Nassau County Legislature's approval of union contract extensions on Monday for about 7,000 county employees, including police officers, was disheartening and even embarrassing. It was not, however, particularly important. The legislature and the county executive are under tremendous pressure from public-sector unions. Once again, they buckled to that pressure, as Nassau's elected officials have done for decades.
What is important is that the board members of the Nassau Interim Finance Authority do not make the same mistake. NIFA has a fiduciary responsibility to the county's bondholders and its taxpayers. Its members must remain immune from the pressure to do the politically expedient thing in an election year. That means NIFA must not approve these deals without better answers to these questions:
Where's the money? The legislature's own independent budget review staff says as much as $250 million of the cost of lifting NIFA's wage freeze and extending contracts in the next four years isn't funded. This is true even taking into account County Executive Edward Mangano's plans to raise money from speed cameras in school zones and from anticipated increases in sales and mortgage tax revenue.
But Albany failed to approve the cameras last month and if they ever are OK'd, squeezing revenue out of them won't happen overnight. Increased tax revenues aren't guaranteed. And funding labor deals shouldn't suck up every new dollar of revenue that comes to the county.
What about attrition? Cheerleaders for lifting the wage freeze base much of their assumed savings on lower-paid cops replacing retiring, higher-paid ones. It's often fiscal pixie dust. And the Office of Legislative Budget Review points out that these savings are traditionally used to cover expenses like unbudgeted overtime and severance pay. To now commit that money elsewhere is a real risk.
What about pensions? The deals between the county and the unions say that post-wage freeze employees hired after the contracts are extended will be part of the state's new, cheaper pension tier. But state law seems to say that only new employees hired under new contracts inked after Tier 6 went into effect in 2012 go into that plan, not new employees under extended contracts. And any new hire already in the state pension plan, such as New York City or town cops coming to the county force, will stay in his or her current tier. So how much savings will the new tier actually create, if it can even be enforced?
Is it legal? These deals call for NIFA to agree that once the wage freeze is lifted, there cannot be another freeze during the span of these contracts. But NIFA may not have the ability to relinquish a power given to it by the State Legislature.
Where's the promised "safety valve"? The draft proposal said Nassau wouldn't be responsible for scheduled raises in 2016 and 2017 if the county did not meet certain revenue criteria. It has since disappeared.
With these legal and financial concerns unsatisfied, approval by Mangano was irresponsible. Approval by the legislature was unjustifiable. And approval by NIFA, the final word on whether the new contracts can go into effect, should be unthinkable.