Nassau proposals include raises totaling more than 13%

Proposed deals to lift a three-year wage freeze for almost all of Nassau's union workforce would provide a series of cost-of-living raises totaling more than 13 percent. Some employees would get six different increases by September 2015, including step raises.

A Newsday analysis shows that the agreements with the Police Benevolent Association, Detectives Association Inc., Superior Officers Association and the Civil Service Employees Association would institute "cost of living" hikes totaling 13.4 percent for each union between April 1, 2014, and July 1, 2017. More than half of the total, 7.25 percent, would come in the deals' first 18 months.

Eligible employees would also receive numerous speeded-up "step" increases, which are contractual raises based on length of service, and had also been frozen in recent years.

Backers say the deals, which were negotiated by the unions, County Executive Edward Mangano and Nassau's financial control board, contain many short- and long-term savings, and aren't likely to exceed $129 million in costs through 2017.

Those costs, they say, are expected to be covered by concessions such as health care contributions by future employees and projected revenue including fines from new speed cameras outside schools and sales tax receipts that the county hopes will continue to rise.

"These concession agreements save taxpayers hundreds of millions of dollars over the present contracts," Mangano said in a statement on Friday.

But the proposals, which still need legislative approval, lack many cost details, and several financial experts say those costs, including overtime and other pay escalators, could ultimately be more than $250 million. They note that the cost-of-living increases are three times the current New York area inflation rate of 1.1 percent.

The experts said it could take years before employees hired under the deals' new salary scales outnumber current workers, and they questioned whether Nassau has the money to cover the costs in the meantime. The county faces a $122 million shortfall in 2014, according to the Nassau Interim Finance Authority control board.

"If these deals go through it's a win for the unions and a loss for taxpayers," said E.J. McMahon, president of the Empire Center for New York State Policy, an Albany think tank that promotes free market principles. "And it will mean that the latest Nassau control period was just an enormous blown opportunity to reform and restructure county government."

No detailed breakdowns

Neither Mangano's administration, the Nassau Interim Finance Authority nor the Nassau County Legislature have released detailed breakdowns of the deals' proposed costs. The county legislature and NIFA are both expected to vote on the agreements on March 31.

Leaders of the four unions -- a deal has yet to be reached with a fifth, the Correction Officers Benevolent Association -- say the agreements don't fully cover the wages they lost during the freeze, which NIFA imposed in 2011. Each union also is forgoing a 3.5 percent raise that was to come in 2013.

"Without winning a lawsuit, this still leaves us short," said PBA president James Carver.

But he and other union heads are urging members to ratify the deals, because continuing to rely on lawsuits challenging the freeze and seeking lost pay may require years of appeals.

Superior Officers Association president Brian Hoesl said the deals represented "the only way we were getting out of the wage freeze. We really didn't have much of a choice."

In the PBA, SOA and detectives agreement, employees will receive a 3.5 percent cost-of-living adjustment in April 2014, 3.75 percent in Sept. 2015, 3.5 percent in Sept. 2016 and 2 percent in January 2017. CSEA workers would get their cost-of-living raises on a slightly different timetable, all by July 2017.

The step increases come in April and September of 2014, and on two or three other occasions between 2015 and 2017, depending on the union. For police, the first two cost-of-living raises and the four step increases all occur by September 2015.

By 2017, base pay of PBA members at the top step would be more than $122,000, up from the current $108,000, and for top-step detectives it would exceed $137,000, rising from $121,000. CSEA members, ranging from janitors to physicians at Nassau University Medical Center, would get between $36,000 to $197,000 at top step, up from $32,000 to $174,000 now. Salary figures for SOA members were not available.

None of the figures include overtime and other items that boost base pay and pensions.

For police officers, total compensation often increases by 25 to 40 percent, or more, with overtime, night differential, holiday pay and uniform stipends.

James Parrott, the Manhattan-based chief economist of the Fiscal Policy Institute, a think tank with offices in Albany and Manhattan that seeks to improve "economic and social conditions," said the deals reflect an improving economy.

"I would think that from the point of view of the county workforce, that it's reasonable for them to expect that they be made whole," Parrott said.

Wage freeze was legal

The deals in Nassau come on the heels of a New York State Supreme Court ruling that the wage freeze was legal. Credit analysts cheered the decision.

"Costly employee contracts have contributed to Nassau County's financial deterioration," Moody's Investor Services said in a report released before the new agreements were finalized. It noted that the ruling saves the county about $230 million in back wages.

Moody's and other ratings agencies that monitor Nassau's credit said they wouldn't comment on the new agreements until the deals are official.

Mangano spokesman Brian Nevin said the new agreements save money with new salary scales for future hires and requirements that those hires, in some cases, pay 15 percent of their health care premiums.

The deals stipulate that new hires contribute 15 percent of their premiums only if they chose the most expensive plan. Nassau would continue to pay full premiums for other plans if they are less than 85 percent of the cost of the top health plan.

NIFA chairman Jon Kaiman has asked Nassau to cover contract costs by setting aside $129 million in new revenue over the next four years from the speed cameras and increased sales taxes and mortgage recording fees, if concessions don't generate enough savings.

Former NIFA board member George Marlin wrote in a recent blog entry that the agreements' costs could be closer to $250 million considering overtime and the fact that Nassau likely is "double counting" savings from employee attrition.

"The means to pay for these deals? Nobody's yet sure -- they're taking the county's word for it now," Marlin wrote.

But Nevin said Nassau can afford the deals, noting that the county likely will end up with more sales tax receipts each year than it budgets, and that will help pay for the wage increases. Historically, Nevin said, Nassau has been "extremely conservative" in projecting its annual sales tax growth.

Last year, Nassau saw 6.3 percent growth over 2012, but budgeted a 2 percent rise in 2014.

"The question is whether or not the revised forecasts in sales tax growth will provide adequate coverage," for the union increases, said Fred Pollert, who was a top financial deputy to both Suffolk County Executive Steve Bellone and his predecessor, Steve Levy.

Downstate counties such as Nassau are seeing sales tax revenue spike as they emerge from the recession -- and have longtime systems in place to estimate them, Pollert said. Other new revenue that Nassau is counting on, such as that from the speed cameras, has been less tested. "Speed cameras are a relatively new technology," Pollert said.

Savings may take years

The biggest savings in Nassau's deals, like those in Suffolk, may not come for years.

In police union contracts approved in Suffolk since 2012, new hires were subject to salary scales that increased the time they needed to reach top step. They also became responsible, for the first time, for making health care contributions.

But Suffolk budget analysts have said existing workers still would outnumber less-expensive hires for at least as long as those agreements stretched.

Mangano said he hopes to start bringing on less-expensive officers by hiring a police class of 160-170 members right after the deals are approved. McMahon called the deals a "significant departure" from what NIFA found acceptable, before Gov. Andrew M. Cuomo appointed Kaiman to replace board chairman Ronald Stack, who had criticized how Mangano handled county finances.

"I don't know how they possibly can justify this," McMahon said. "Nothing is different now. There's been a mild economic bump up, part of which is due to Sandy . . . But it is creating just enough breathing room in their short-term cash flow situation so they can say, 'Clearly, everything's getting better.' "

Parrott said that while recovery has been slow, he expects steady growth. "There's a reasonable expectation that Nassau County and Suffolk County are facing steady, reasonably solid economic growth over the next few years," he said.

With Celeste Hadrick