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LIA analysis questions Cuomo's LIPA plan

A LIPA subcontracted worker works on restoring power

A LIPA subcontracted worker works on restoring power lines as night falls in Merrick. (Nov. 13, 2012) Credit: Danielle Finkelstein

The Long Island Association has taken issue with elements of Gov. Andrew M. Cuomo's LIPA restructuring bill, including its failure to address LIPA's high property taxes and its call for a much smaller LIPA board.

The unpublicized analysis, which was sent to state legislators last week, coincided with a considerably more critical review by state Comptroller Thomas DiNapoli, who said the LIPA bill would remove crucial checks and balances on utility operations. Cuomo's staff has rejected DiNapoli's analysis.

Separately last week, the Suffolk Legislature's LIPA Oversight Committee passed a resolution opposing the bill, saying the decision is too important to rush into by June 20.

Cuomo's proposal would give PSEG, the New Jersey-based utility, nearly complete control of the Island's electric grid, place PSEG under control of a state regulatory board, refinance LIPA's debt and freeze electric rates for three years.

The LIA, the largest Long Island business association, recommended that the bill increase the LIPA board to seven members from Cuomo's planned five, and appoint the new board in July rather than December.

The LIA also said it would object to any reduction in efficiency and renewables programs that come from Cuomo's "goal" of a three-year rate freeze, which includes 2013.

The LIA analysis applauds Cuomo's proposed 2 percent cap on LIPA property taxes, but notes that those properties remain overassessed and "need to be significantly lower before the cap is put in place."

Property taxes on local power plants, the LIA said, similarly are too high and need to be reduced. Cuomo's staff in public meetings last week said it is working to address property tax issue, including finding a balanced approach to lowering them that doesn't impact local school districtss.

The LIA offered the "suggestions" while saying it supported "many" provisions of the bill.

The LIPA Oversight Committee, on the other hand, is opposed to the bill as written, said Sheldon Sackstein, the group's chairman, who also heads a local coalition of activist groups that also oppose it.

Sackstein, who is also head of Action Long Island, a business group, said opponents want more oversight, a larger board and assurances that LIPA will be able to keep its tax-exempt debt status. Administration officials have said that if the status were rejected under the new proposal, they would revert to the original PSEG contract, which the IRS has accepted. A spokesman for Cuomo declined to comment on the committee's resolution.

State Assemb. Steven Englebright (D-Setauket) said that, while numerous objections to the bill remain, including the need for more oversight and property tax assurances, it was still "quite possible" the bill would pass before the end of the legislative session on June 20.

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