On Thursday, April 26, 2018, United States District Judge Joanna Seybert upheld the Nassau Interim Finance Authority’s (NIFA) 2011 resolution to impose a wage freeze on all County employees.
Seven years have passed since I cast my vote as a NIFA director in favor of the freeze and I never doubted for a minute our decision was legal and just.
In case readers have lost track of this matter, here is the history in a nutshell.
After numerous warnings in 2010 to then-County Executive Ed Mangano to address the County’s budgetary deficit — which was estimated at $126 million — were ignored, NIFA directors voted unanimously in January 2011, to declare a financial control period.
According to the state law that created NIFA, directors were required to impose a control period when “a major operating funds deficit of 1 percent or more … assuming all revenues and expenditures are reported in accordance with generally accepted accounting principles.”
Although I was an active supporter of Mangano’s 2009 candidacy for the office of Nassau County Executive (a decision I regret) I was compelled to vote for the control period.
At the Jan. 26, 2011 NIFA board meeting, I stated I supported the motion for these reasons:
• “the County has not adequately addressed the fiscal deficit it inherited;
• The County has failed to declare a fiscal emergency and to implement a plan of shared sacrifice, and;
• The County’s 2011 budget is built on a foundation of sand.”
Rejecting the county’s revised financial plan in March 2011 as grossly unbalanced, NIFA decided to take further actions to help the County get on the road to fiscal sanity.
At its March 25, 2011 meeting, NIFA, “finding a wage freeze is essential to the adoption and maintenance of a fiscal year 2011 budget for Nassau County is in compliance with government legislation,” approved Resolution No. 11-333.
That same day, NIFA also passed Resolution No. 11-334 which declared a fiscal crisis and ordered a one-year wage freeze that suspended any increases in salary or wages of any County employee effective after March 24, 2011.
The freeze, which was renewed in 2012, 2013 and 2014 saved taxpayers approximately $250 million.
Outraged public employee unions filed suits in April 2011 claiming that “NIFA’s authority to impose a wage freeze was limited to the interim finance period” back in 2000, not during a subsequent “control period.”
After the New York’s Supreme Court and Appellate divisions dismissed the union’s arguments and ruled that NIFA did have the statutory authority to impose a wage freeze during a “control period,” they turned to the Federal courts for relief.
Public employee union lawyers now argued that the contracts clause found in Article 1 Sec. 10 of the U.S. Constitution which provides “no state shall … pass any … Law impairing the obligations of contracts” was violated by NIFA’s actions.
In her analysis, Judge Seybert pointed out that the contract clause prohibition “is aimed at the legislative power of the state” and that “there is nothing in the record to indicate that NIFA is itself a legislative body.”
She also discerned that NIFA “did not hold hearings, promulgate a law or ordinance, or create new legal standards when it acted.” NIFA merely “exercised authority delegated to it by the Legislature in 2000.”
Based on that reasoning, the judge made this ruling:
“NIFA was exercising authority granted to it by the state legislature. This exercise was administrative, not legislative, and thus cannot form the basis of a contracts clause claim. As the NIFA Act, the enabling statute was passed into law prior to the affected union contracts, there can be no contracts claim on that basis either. Accordingly, defendants’ motions for summary judgment are grated, and all Plaintiffs’ cross-motions are denied.”
At long last, NIFA was vindicated.
Looking back, I’m very proud of then NIFA Chairman Ronald Stack and my fellow directors. They had the character and fortitude to stand up and reject the bluster of Nassau’s political class.
It is my hope that the new county executive, Laura Curran, follows in their footsteps.
If she refuses to pander to special interest groups and responsibly balances the budget, I have no doubt NIFA’s board will be pleased to end the control period.