Nassau schools owed $50M in overdue tax payments from LIPA

Nassau’s 55 school districts have yet to receive about $50 million in overdue property tax payments from the Long Island Power Authority after the county removed hundreds of the agency’s properties from the assessment roll last year.

Representatives of County Executive Edward Mangano had repeatedly assured county legislators and school officials that the assessment changes would not affect district finances because LIPA would make payments in lieu of taxes, called pilots.

But LIPA transmitted $3.7 million less than it was billed by the county for the first-half payment of its school bill, due Nov. 10. That led Nassau to delay distributing the money, county officials said, while 32 districts contend they are being shortchanged because of incorrect assessments.

The school districts, which sent letters to the county for their money this month, insist Nassau must make them whole in accordance with the county guarantee — a decades-old state law that requires Nassau to pay the difference in taxes resulting from erroneous assessments.

The county says its assessments are correct and LIPA’s calculations are wrong.

Deputy County Executive Ed Ward said LIPA underestimated its bill by mixing the lower second-half payment of the 2014-15 school levy with the higher first-half payment of the 2015-16 levy, and then applying a 2 percent cap on any increase.

The dispute is headed to Nassau State Supreme Court on Thursday. School district lawyers say they are suing the county and LIPA for full payment of the tax levies approved by voters last spring while Nassau is filing suit against LIPA to pay the full amount billed for the pilots.

“This is unprecedented,” said Carrie Anne Tondo, a partner in Ingerman Smith, which is representing 15 school districts. “The county without authority and unlawfully reduced the school districts’ levy. They said, ‘Don’t worry. We’re going to make it up with pilots.’ Now the county is saying, ‘We’re not going to make you whole’ despite the fact they unilaterally reduced the levy.”

The county maintains LIPA is at fault. “LIPA’s underhanded attempt to shift their tax burden onto residents is deplorable and they should immediately pay all their taxes to school districts,” Mangano said in a statement.

A spokesman said LIPA could not comment because of ongoing litigation, but noted the authority is acting in accord with state law.

The dispute over LIPA taxes surfaced last June when the power authority shorted Suffolk town tax bills in June and Nassau general tax bills in September. For the first time since LIPA took over from the Long Island Lighting Co., LIPA lawyers said state law required it to make pilot payments rather than pay taxes on its properties. They also said state statute limits any increases to 2 percent annually.

Before removing some 600 LIPA properties from the assessment roll, Nassau County representatives assured Nassau legislators that school districts would be made whole. “That was our major concern,” said Legis. Delia DeRiggi-Whitton (D-Glen Cove), who voted against the change. “We were assured on at least two occasions there would be no problems with the school districts.”

Ward said LIPA had paid $46.3 million in pilots — $3.7 million less than the total billed — to the county in November. Distribution to the schools was delayed while the county disputed the amount, he said. County Comptroller George Maragos’ office said it had approved release of the money late Wednesday and schools would receive at least partial payment by Friday.

“We were told payment was being made every month,” Tondo said. “The money has not been transmitted.”