Editorial: LIPA makeover in Albany ducks tax issue

LIPA power plants towers are seen at sunset LIPA power plants towers are seen at sunset over Port Jefferson's harbor. (Oct. 28, 2010) Photo Credit: Newsday/Jessica Rotkiewicz

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The time to make a deal on reforming the Long Island Power Authority must be now.

Gov. Andrew M. Cuomo was right to give priority to making serious changes in the utility that powers Long Island after the debacle of superstorm Sandy. In fact, he would have been well served to move on them after Tropical Storm Irene exposed similar but less shocking weaknesses the year before.

But even though there are significant improvements to LIPA operations in the legislation to be voted on this week in Albany, the state senators who represent areas benefiting from overtaxed power plants are standing in the way of a much better deal for all Long Island.

By doing so, they are playing a very risky game with the tax bills of their voters and the stability of schools, libraries and other institutions in their districts. This obstruction could lead to far larger hikes in property tax bills than would a smart, negotiated deal that ends LIPA's lawsuits against these flawed taxing arrangements.

These communities have feasted for years on the inflated revenue these plants brought them. LIPA has claimed, for instance, that the plant in Northport is overassessed by 90 percent, while officials with the Town of Huntington, which assesses that plant, claim the overage is as little as 10 percent. Now, to avoid repayment shock, a schedule of reductions over several years is the best way to end the litigation and give the municipalities time to adjust. The majority of LIPA ratepayers deserves to know that the high taxes that inflate their utility bills will steadily descend into reasonable territory.

It's hard to believe that senators refusing to hash out a sane compromise would rather expose the school districts and towns that host power plants to the risk of losing in court and the huge tax hikes and refunds that would follow. If that happens, no one will let them off the hook when they try to cast blame on a judge instead of themselves.

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After considerable effort, there is now a LIPA reform bill printed and under consideration in Albany, but it doesn't nail down how property tax assessments and repowering decisions on old plants are going to be made. The bill does have real progress in it: shrinking the LIPA board to nine members, capping future growth on the tax assessments of the transmission and distribution system, creating a path to lower debt payments, and increasing oversight of the utility. Probably most important, it turns all meaningful LIPA operations over to PSEG of New Jersey and gets them out of the hands of an organization that has always been as much about politics as practicality.

But it's not good enough. The biggest stumbling block to finding the money to improve the power infrastructure on Long Island and repay $7 billion in debt from the Shoreham nuclear plant is the more than $500 million per year that LIPA pays in taxes, much of it unfairly. A deal that doesn't establish a structure and time frame for reducing these tax payments doesn't accomplish what needs to be achieved.

The recalcitrance of the senators means any tax plan must be a "side deal," but backed by the full force of law. The Long Island delegation should back a solution, lest it become clear to voters that they're the ones who refused to fix the problem.

Reject the LIPA reform bill unless there is a solution on taxes.

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