Federal judge nixes N.Y.'s Nassau County wage freeze

Thu Feb 14, 2013 6:48pm EST

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Feb 14 (Reuters) - A New York federal judge ruled on Thursday that a state financial oversight board did not have the authority to freeze Nassau County police officers' wages, a decision that could cost the cash-strapped Long Island county at least $20 million.

U.S. District Court Judge Leonard Wexler found that the Nassau County Interim Finance Authority (NIFA) froze wages more than two years after its authority over the contracts expired.

County Attorney John Ciampoli said in a statement that the county, which can appeal the ruling, is reviewing the decision.

The state board was created in 2000 in response to Nassau County's near insolvency at the time.

Under state law, such oversight boards have broad early powers to control local budgets and issue bonds during a so-called interim finance period.

But that period of stricter oversight expired in 2008. Judge Wexler found that the board was wrong to freeze police wages in 2010 after that period of greater state control expired.

If the ruling stands, the county could have to pay back wages totaling at least $20 million, according to James Carver, president of the Nassau County Police Benevolent Association.

"We did try to settle this thing," Carver said. "It would be ridiculous to give NIFA or any other oversight board the authority for a 30-year period to be able to freeze (wages) whenever they please."

The law allows the board to monitor the county until 2030 or when NIFA's bonds mature.

The ruling didn't apply to two other county police unions, meaning that the total amount due could rise. The county's fiscal year began on Jan. 1.

The county has estimated that altogether, the wage freeze could save it $30 million annually, according to a report on Thursday by Fitch Ratings.

NIFA's oversight "has had some positive effects on the county's financial operations, such as instilling increased budgeting discipline and imposing the wage freeze. But NIFA's oversight also has added a layer of complexity to decision-making," Fitch said.

The county is scheduled to sell about $163 million of general improvement bonds and $187 million of bond anticipation notes next week.

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