Moody's Investors Service said that a recent ruling on Nassau County, N.Y. wage freeze was a credit positive for the county.
In 2011 the Nassau County Interim Finance Authority (NIFA) imposed a wage freeze on police employees of Nassau County. This was appealed to the New York State Supreme Court and the court found on March 12 that the freeze was legal.
The ruling allows the county to avoid reimbursing the employees with $230 million (9.2% of the budget) for lost wage increases, Moody's analyst Valentina Gomez said.
"Costly employer contracts have contributed to Nassau County's financial deterioration, along with aggressive budgeting of economically sensitive sales tax," Gomez said.
The wage freeze contributed to the county's operating surplus in 2012. It also helped it improved its net cash position, though this position remains negative.
If the county had lost the ruling it would probably have sold a bond to make the payment, which would have increased the county's already high debt service ratios, Gomez said.
Moody's rates Nassau County A2. Nassau County is on Long Island and had about 1.35 million residents in 2012.
