Two Valley Stream school districts are to return to court next month in a lawsuit prompted by tax breaks granted to the Green Acres Mall, as a deadline to set their tax levies approaches.

The lawsuit hinges on how districts treat properties off the tax rolls in their funding formulas. Valley Stream School District 24 is withholding about $1.4 million in taxes from the central high school district following a dispute about the mall’s tax breaks, known as payments in lieu of taxes, or PILOTs.

District 24 is one of three elementary districts that forward a portion of their tax levy to the high school district. In May, District 24 refused to hand over part of its levy because it said PILOTs should be counted as tax revenue in the funding formulas.

In June, the high school district sued to recoup the money, which remains in a custodial account as the case plays out.

In court Friday before Nassau Supreme Court Justice Jack Libert, attorneys for the two districts argued about a state education law that addresses the unusual central high school district setup. There are only three such districts on Long Island.

That law does not mention PILOTs because they had not yet been created when the law was written, the attorneys said.

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Matthew Mehnert, lawyer for District 24, said cases since then have made it clear that properties with PILOTs should be treated as if they remain on the tax rolls.

But Carrie Anne Tondo, attorney for the high school district, said that only the State Legislature can change the tax scheme and despite numerous opportunities, has chosen not to do so.

The two sides are due back in court Aug. 9, and the districts’ boards of education must set their 2017-18 tax levies by Aug. 15. Libert said he will not likely make a decision before then. District 24’s board has not yet decided if it will count PILOT payments as tax revenue when it calculates its levy.

The high school district previously had asked Libert to force three members of District 24’s board who also sit on the high school’s board to recuse themselves from discussions and votes about the lawsuit. They have voluntarily recused themselves since the suit was filed.

After court Friday, John Maier, who sits on both boards, said of a potential recusal that “we’ll have to take it day by day” if a high school board meeting is called before the case is resolved.