Annual residential tax bills in Nassau County garbage districts rose to as much as $1,200 this year after court rulings removed utility equipment from the tax rolls, creating a $13 million hole filled primarily by homeowners, a Newsday analysis shows.
Residents of the Lido Refuse & Garbage District in Hempstead Town saw the largest average increase among Nassau’s 23 garbage and sanitation districts: $137 for a total $755 average annual trash pickup and disposal tax payment — a 22.33 percent jump over 2014. The smallest increase was in North Hempstead’s Carle Place District, where a $4.56 — 2.6 percent — hike pushed the average tax bill to $181.74. Residents of Hempstead’s Sanitation District 6 pay the highest annual average tax bill at $875, a 9.1 percent increase over last year. Tax bills vary based on the assessed value of a home.
The increases were the result of decades of litigation involving the county, the towns of Hempstead, North Hempstead and Oyster Bay, and utility companies.
Several New York State courts have ruled that the districts had improperly charged utilities for taxes on equipment such as poles, cables, wires and transformers even though they generated no trash. Nassau County officials removed 665 pieces of equipment from the assessment rolls after the Court of Appeals, the state’s top court, declined to hear the county’s appeal of lower court rulings in September 2014.
This year was the first in which utility equipment was not included in sanitation district taxes. Because the change did not reduce the amount of refuse to be collected or the costs of doing so, other taxable property in the districts had to make up the difference.
Homeowners, as the largest class of taxpayers, had to cover most of the losses, officials said.
“The taxpayers bore the burden of the judge’s decision,” said Howard Weitzman, a financial consultant for North Hempstead and former Nassau County comptroller. “Garbage taxes are a fixed amount, so that if it goes down from one group, other groups have to pay more to make up the difference.”
Nassau County “is the only place that we can see in New York State where the towns don’t take direct responsibility for the provision of municipal garbage services,” Weitzman said.
Utility companies argued in lawsuits dating to the mid-1990s that the equipment should be exempt from sanitation district taxes because it didn’t create refuse and that they should be refunded for years of paying those taxes. The companies included the former Long Island Lighting Co., which was transformed into the Long Island Power Authority and KeySpan in 1998. KeySpan operated Long Island’s electric grid, which is now managed by PSEG Long Island. Verizon, KeySpan, some water distribution companies and the defunct telecommunications company MCI also were participants in the lawsuits. LIPA agreed to drop the claims in return for tax refunds.
Attorneys for the towns have argued that taxing the equipment was proper, citing other examples of utilities paying taxes for services that don’t produce direct benefits to them, including in sidewalk, drainage, and parking districts.
Burden falls to residents
Pat Nicolosi, 58, an Elmont resident who lives in Sanitation District 6, had his tax bill, which also includes a fee from Hempstead’s Refuse Disposal District, rise $35 to $635 this year. In 2014, the bill had dropped $54 compared with 2013. The district covers Elmont, Franklin Square, Garden City South, Lakeview, Malverne Park, North Valley Stream, South Floral Park and West Hempstead.
Nicolosi said municipalities wanted to “shift it [the tax burden] to the homeowners, without explanation. . . . Instead of them talking about consolidation or saving money, they just pass the problem on to us. There are no people thinking outside the box to deal with these problems on a constant basis; everyone wants their taxes lowered.”
Nassau’s garbage districts generate half of all revenue collected statewide for refuse districts, according to data from the state comptroller’s office.
Special districts for sanitation, garbage and sewage services formed on Long Island in the 1920s, and the first were in Nassau County, where families moved from the city but wanted the same types of municipal services. Separately elected commissioners were empowered to raise levies and issue bonds. In 1932, a state law generally banned the elected boards and transferred their powers to the town boards, according to the state comptroller’s office. Some commissioner-run districts were grandfathered in or created under special exemptions and still exist. The bulk of them are in Hempstead Town.
In Suffolk County, the towns are primarily responsible for collecting garbage or hiring private companies to do so. Many of the Island’s villages contract directly with carters and do not levy a separate garbage tax. Instead, homeowners pay a single village tax. Some housing developments in Nassau County hire private companies to remove their garbage.
State limit doesn’t apply
The tax on utility equipment generated a total of $12.9 million for the Nassau districts in 2014, a review of town budgets shows. To cover the loss of the utility tax payments, levies were increased overall for district homeowners by $13.4 million this year. In the previous year, the districts’ tax increases totaled $3.4 million, with some district taxes going up and others down.
State law limits the increase in the share that homeowners pay to no more than 5 percent. The limit was set at 1 percent this year. It grew by as much as 26 percent in the Glenwood/Glen Head District in Oyster Bay and by nearly 20 percent in Hempstead’s Lido/Point Lookout District.
The 1 percent limit did not apply to garbage districts this year because removing the equipment from the rolls is a physical or equalization change, according to acting County Assessor James E. Davis. A spokesman for the New York State Department of Taxation and Finance deferred to the county to interpret the law.
Nassau County creates the tax assessment rolls while the towns control or approve garbage district budgets and set the levies for the districts they run, while elected district commissioners set levies for their districts.
Some town boards discussed the garbage tax increase during their budget hearings in the fall, officials said. But residents called for more transparency in setting the levies.
“We were blindsided,” said Laura Mallay of South Hempstead, executive director of the nonprofit Residents for Efficient Special Districts. “While their hands were tied, the town governments should have been notifying the residents to prepare for the increases.”
Mallay, 44, paid $141 more in sanitation taxes this year than in 2014, for a $1,229 annual bill. She is charged $976 for Sanitation District 2 taxes, and she pays $252 to the Hempstead Town Disposal District. Her overall bill in 2014 increased $16 compared with 2013, she said.
Costs reflected in taxes
Taxes in Hempstead’s Sanitation District 1, covering Five Towns, Green Acres, Valley Stream South, and Inwood, rose an average $61 to about $767 per household.
For residents of Syosset and Glenwood/Glen Head, the bill was about $62 more. In Hempstead’s Sanitation District 7, which covers Oceanside, the average tax this year was about $86 per household higher than last year.
“The true cost got borne by the majority of the homeowners,” Oyster Bay Town Comptroller Robert McEvoy said.
Some town officials said they had little recourse after the county removed the equipment from the rolls. The September 2014 court action, and the county’s response, surprised many financial officers. “They [county officials] decided to take it off without any warning to us,” Oyster Bay Finance Director Rob Darienzo said.
Roslyn district officials anticipated an eventual resolution to the litigation and worked to renegotiate the carting contracts, achieving $80,000 in savings over a two-year period, Roslyn Garbage Commissioner James A. McCann said. Residents still got an average $20.78 tax hike in 2015 after their bills dropped by about $4 between 2014 and 2015.
Bill Fabrizio, 60, a retired electrical contractor in East Atlantic Beach, pays taxes to Sanitation District 14 for trash pickup and to the Hempstead Town Refuse Disposal District for disposal. The district picks up trash five days a week — more than he needs, he says. His tax bill rose $63 this year after dropping $67 in 2014.
“The budget process is not clear to me as a taxpayer,” said Fabrizio, who pays about $900 a year in district taxes. “They react, from one catastrophe to the next.”
‘There’s nothing we can do’
The only way to protect homeowners from the increase was for districts to slash their budgets, said Charles Berman, North Hempstead’s Receiver of Taxes.
“There’s nothing we can do,” McEvoy, the Oyster Bay comptroller, said. “We need a certain amount of dollars to collect the garbage and ship to its resting place.”
Garbage district commissioners said districts are saddled with fixed costs and high disposal fees but have worked to renegotiate contracts to find savings. Nassau’s garbage districts have differing pickup schedules and do not prorate costs based on the type of service provided.
“Garbage is garbage and has to be picked up,” said McCann, the Roslyn garbage commissioner. “The homeowner was paying less because they were charging for the poles. In a sense, now they’re getting a true picture of what it actually costs.”
A two-decade-long fight
The dispute over garbage districts taxing utility equipment has been litigated for nearly two decades by several companies, Nassau County and the towns of Hempstead, North Hempstead and Oyster Bay:
- 1997 The Second Judicial Department of the Appellate Division ruled that Long Island Lighting Co. should be exempt from a North Hempstead garbage district levy because some of its facilities did not generate garbage.
- 2005 The Court of Appeals ruled 4-3 in favor of N.Y. Telephone Co., which had disputed several special district charges in the Town of Oyster Bay.
- 2010 The Second Department of the Appellate Division ruled the county is obligated to pay the refunds instead of the towns.
- 2010 Nassau County, after County Executive Edward Mangano took office, sought to repeal the County Guaranty, a local law passed in 1948 making Nassau liable for refunds to special districts, towns and school districts for wrongly assessed taxes.
- 2014 The State Court of Appeals ruled the repeal was unconstitutional.
- 2014 The Court of Appeals declined to hear an appeal from Nassau County over the past litigation. Officials said that decision affirmed the companies’ claims that they were improperly taxed for garbage services and that the county, not the towns, owed millions in refunds. The towns, however, must first make the payments, courts have ruled.
- 2014 Nassau County removes 665 pieces of utility equipment from the tax rolls.
- 2016 Appeals are scheduled to be heard in 75 cases over whether Nassau must pay $185 million in refunds to utility companies.