A state appeals court ruling allowing Nassau County, N.Y.'s fiscal control board to keep a three-year wage freeze for county employees is a credit positive for the large Long Island government, according to Moody's Investors Service.
The unanimous decision Wednesday by New York's 2nd Department Appellate Division stated that the Nassau Interim Finance Authority was within its rights when it enacted a three-year wage freeze for county employees beginning in March 2011. It upheld a previous ruling issued by the State Supreme Court. The New York State Court of Appeals would have to give its permission for labor unions to further appeal the wage freeze.
"The court's ruling is credit positive for Nassau County because it precludes the possibility that the county would have to return approximately $101 million in wage and benefit savings to the unions challenging the freeze," said Moody's analyst Cristin Jacoby in a Sept. 19 report. "The $101 million sum is sizeable relative to the county's available general fund balance of $75.5 million at year-end 2015."
The wage freeze was implemented to control county spending after years of budget imbalance that resulted in negative fund balances and cash levels. The freeze was lifted in 2014 after unions agreed to new contracts with concessions.
NIFA, which has controlled Nassau's finances since 2011, reviews county budgets and approves debt issuance. The state-run monitoring board mandated quarterly reviews tracking revenue and spending levels last year when approving Nassau's $2.95 billion 2016 budget. Moody's rates the county's bonds at A2.
"The county continues to struggle to maintain balanced operations, especially given its heavy reliance on economically sensitive sales tax revenue, although recent growth in its tax base is a credit strength," said Jacoby. "The presence of NIFA is a credit strength for the county, and maintaining its ability to implement policies such as the wage freeze is key to its ability to control future spending."
