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Officials mulling a LIPA tax settlement, sources say

LIPA power plant towers are seen at sunset

LIPA power plant towers are seen at sunset over Port Jefferson's harbor on Oct. 28, 2010. Credit: Jessica Rotkiewicz

State lawmakers are mulling a plan that would rely on state funds to help cushion the impact of a possible tax settlement for four Long Island power plants, according to people familiar with the negotiations.

They say state Senate Majority Leader John Flanagan (R-East Northport) met with LIPA and local officials last week to discuss the proposed settlement, which would rekindle the approach of involving the state in a broad settlement of tax disputes for the plants in Northport, Island Park, Port Jefferson and Glenwood Landing. Talk of a settlement has heated up in recent weeks as the first of the four tax challenges is scheduled to go to trial in May.

Flanagan’s office didn’t immediately return a call seeking comment. Flanagan had backed the plan when the LIPA Reform Act passed five years ago. A Long Island Power Authority spokesman wasn’t available.

Meanwhile, a coalition of business groups is urging taxing districts and state lawmakers to get on board with a settlement.

“We are aware that LIPA and local municipalities recently participated in discussions regarding a ‘phase-down’ settlement,” the group, known as the Long Island Business Coalition, said in a letter Monday to Gov. Andrew M. Cuomo, Flanagan and Democratic Assembly leader Carl Heastie (D-Bronx).

The group is urging state officials to increase funding for an existing program called the Electric Generation Facility Cessation Mitigation Program, and expanding its use to include tax settlements for plants that will remain open. LIPA last year determined that it plans to keep open but not overhaul National Grid-owned power plants in Island Park and Port Jefferson. It has yet to study whether the largest plant, at Northport, will be overhauled. LIPA still pays taxes for a plant site at Glenwood Landing, even though the major plant there was demolished. (Smaller peak-power plants remain at the site).

In all LIPA pays just under $200 million in taxes on those plants. It has filed court challenges to lower the taxes over time.

“We urge you to increase funding for the Electric Generation Facility Cessation Mitigation Program and earmark those funds for the affected Long Island tax districts so that a fair phase-down settlement can be reached regarding LIPA’s over-assessed properties,” the group wrote in its letter.

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