Nassau Comptroller George Maragos reported Wednesday the amount of property tax refunds paid by the county last year jumped to $114.4 million and may wind up $2 million to $4 million higher by the time he closes Nassau's books in a few weeks.
In 2008, Nassau paid $98.8 million in refunds as a result of property owners winning court-ordered reductions in their property tax assessments. Maragos said $90 million was projected to be paid in 2009.
"Two months ago nobody was predicting we would reach $114 million and possibly go higher. The whole system is out of control," Maragos said.
Only $50 million was budgeted for tax refunds last year and the county borrowed to pay the rest.
"We're just very suspicious," said Maragos, who is conducting an audit of the county's assessment system. "Now when we're trying to close the books, all these settlements are coming out of the woodwork."
Former County Executive Thomas Suozzi, a consultant for Cablevision, which owns Newsday, declined to comment.
But in his budget summary this year, Suozzi warned that there may be "the appearance of massive current year expense" because of steps taken by his administration to reduce the refund backlog that built up over decades.
Under the county's former assessment system, Nassau borrowed as much as $125 million a year to pay tax refunds - a practice blamed in large part for the county's 1999 fiscal crisis and near bankruptcy.
Nassau's countywide reassessment in 2003 was intended to stem the massive number of annual tax challenges while the county was expected to stop borrowing for refunds by 2007. But challenges never abated and the county soon began borrowing again.
"The cost to the county of the broken tax assessment system has once again far exceeded the prior administration's estimate," County Executive Edward Mangano, who has put reforming the assessment system a priority in his administration, said in a statement. "We are working to complete the estimate of the cost in 2010 and reviewing unopened mail and claims and will have an estimate of the burden on our taxpayers shortly."
Over 80 percent of the refunds are for successful challenges by commercial property owners, with tens of millions of dollars going to lawyers who represent them.
The county must repay excess taxes received by school districts and other taxing jurisdictions even though it received less than 20 cents of every dollar collected.
"It's a big issue that we need to come to grips with and put fixes in place as soon as possible," Maragos said. "It's a critical issue."