A Nassau County legislative committee approved a measure allowing PSEG to pay $1.4 million less in property taxes than initially billed to the utility company by local municipalities.

In a party-line vote, the legislature's Republican majority Rules Committee voted 4-3 to approve the reduced tax payment. The vote follows a dispute between PSEG, the Town of Hempstead, North Hempstead and Oyster Bay and the cities of Long Beach and Glen Cove over property tax rate increases.

The Long Island Power Authority, which still owns power facilities operated by PSEG Long Island, previously directed PSEG to limit tax-bill increases to 2 percent annually on LIPA properties, citing the state approved Long Island Power Authority Reform Act of 2013, which caps tax hikes to 2 percent annually on LIPA properties effective last January.

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Though Nassau's three towns billed PSEG $30 million in property taxes, the company paid the municipalities nearly $2 million less when payments were due in August, citing the 2 percent cap.

Tax receivers for the three towns rejected PSEGs reduced payments because county law prohibits partial payment of property taxes. When PSEG did not return a corrected payment, along with a 2 percent penalty fee by Aug. 31, the towns withheld the $30 million in taxes due to Nassau because the county treasurer is responsible for collecting overdue bills after that date, town officials said.

Chief Deputy Nassau County Attorney Lisa LoCurto told lawmakers during a finance committee hearing on the issue that accepting the reduced payment would allow cash-strapped Nassau County to receive PSEG's $28.6 million payment and would avoid a lengthy legal battle.

"In terms of balancing the lesser of two evils . . . it's better to collect $28.6 million and not litigate the $1.4 million which ultimately, in our opinion, we would not be successful at litigating," LoCurto said.

Legis. Richard Nicolello (R-New Hyde Park), chairman of the legislature's finance committee, said he thought accepting PSEG's reduced payment was the choice that was "better for the county" because it allowed the county to collect money sooner.

"We get the funds in [and] we could at least make partially whole the special taxing districts and towns that much of this money is owed to," he said.

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Minority Leader Kevan Abrahams (D-Freeport) said Democrats were voting again the reduction because taxpayers would probably absorb the costs.

"The $1.4 million is going to be absorbed by the other rate payers, primarily residential rate payers," Abrahams said.

PSEG and LIPA officials were not at the meeting but LIPA's spokesman has previously said the agency is following state law.

The full legislature will vote on the measure at its Sept. 21 meeting in Mineola.