Could the recent rush to impose, increase and ferret out novel fees to raise revenues in Nassau and Suffolk county budgets be drawing to an end?
Not quite yet.
But a decision by a State Supreme Court justice designating l some assessment appeal-related fines as illegal taxes could at least make elected officials in both counties think twice.
On Long Island, raising property taxes is considered to be politically toxic, which makes officials look almost anywhere else to raise revenue. In Nassau and Suffolk, sales taxes now generate more revenue than county property taxes.
But sales tax revenues rise and fall with the economy. In recent years, Nassau — and later, Suffolk — began increasing fees on recreation and other services. The also instituted additional fees on traffic violations.
In his decision, Justice Anthony Marano rejected Nassau’s attempt to collect up to $36 million in penalties from thousands of commercial property owners for failing to file financial information with the assessor.
The money generated from the penalties went into the county’s general fund — where it could be used to pay expenses related to any department. Money raised from such penalties, or fees, generally is supposed to be put toward funding department activities.
In this case, however, “ ... There isn’t a scintilla of evidence that demonstrates that the revenues raised are used for assessment purposes, let alone assessment of commercial properties,” Marano wrote.
Nassau “failed to demonstrate that the funds generated by the imposition of penalties are uses to support the goals of the Annual Surveys of Income & Expenses program, i.e., to better the assessment of commercial properties in this county,” he wrote.
Instead, the penalties “are relied on to balance the County’s budget” — making them an illegal tax, Marano ruled.
The county intends to appeal the decision — as it usually does with any potential liability, which kicks the issue down the road. And, officials said, they will not refund fines until the case is decided by appellate courts.
Nonetheless, the decision likely will impact the county’s 2018 budget — which includes an estimated $5.2 million in revenue coming in from the penalties.
Nassau commercial property owners aren’t the only ones suing over newfound county revenue sources. In October, the nonprofit Government Justice Center sued Suffolk, challenging $66 million in fee hikes as “unauthorized taxes.”
That case is pending.
Even so, Marano’s decision should send a message to officials in both counties. “Using fees to raise revenue is clearly illegal under state law,” Doug Kellogg, a spokesman for the conservative good-government group Reclaim New York told Newsday. “It’s time for the counties to have an honest discussion about their budgets.”
In short, where will the search for new revenues go next?