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Nassau seeks new commercial tax refund system

Nassau County Executive Edward Mangano works in his

Nassau County Executive Edward Mangano works in his office in Mineola on Sept 12, 2013. Credit: Howard Schnapp

With days left until the State Legislature adjourns, Nassau County is looking for approval to overhaul its commercial property tax reimbursement process.

Nassau County Executive Edward Mangano is proposing creating a "pay go" system that would allow the county to set up an escrow account to hold tax payments when a commercial property owner files a tax grievance. The money to be held in escrow would be up to 10 percent of the difference between amount the county says a property owner owes in taxes and what the owner says he or she owes, a Mangano aide said.

Mangano contends the new system would put an end to the county's reliance on borrowing to pay for commercial property tax reimbursements, which he said annually costs the county about $80 million.

But some lawmakers and commercial tax attorneys fear that all commercial property owners would have to grieve their taxes or end up paying even more.

A bill introduced on May 30 by the Senate Rules Committee would give the county the authority to make the changes, but whether the bill gets approved by both the Senate and Assembly before they adjourn next Thursday remains to be seen. As of yesterday, Mangano aides were still working on lining up an Assembly sponsor for the bill.

Under Mangano's plan, if property owners win their grievances, they would be reimbursed from the escrow account, including any interest earned on the money while it was being held, Mangano aides said. If the property owners do not win their grievances, the money would be distributed to municipalities and school districts to apply to their tax levy.

In a statement, Mangano said the legislation "transitions our county entirely to a 'pay go' tax refund system by creating an escrow fund to pay claims and eliminates Nassau's 30-year reliance on borrowing to pay property tax refunds."

But Donald Leistman, head of the tax challenge division of the Nassau Bar Association, said that if 10 percent of the tax bill goes into the escrow account, school districts and other taxing groups would only get 90 percent of the money they expected.

"So if everybody is only paying 90 percent of their assessment, the tax base of the school district goes down 10 percent," Leistman said. "That means they have to raise the tax rate 10 percent. The potential problem is, the property owner could be paying close to the same taxes . . . as they would be paying 100 percent of assessed value."

Assemb. Charles Lavine (D-Glen Cove) said he questioned whether there would be a way for Nassau to eliminate its so-called county guaranty, which holds Nassau liable for all tax refunds resulting from erroneous assessments, including those of school districts and municipalities.

"It is of little benefit to the citizens of Nassau County that this very potentially contentious issue is again presenting itself at the eleventh hour," Lavine said.

Steven Schlesinger, who successfully challenged the county's attempt to eliminate the county guaranty, said, "It's a shell game. I don't see how you do it with 2 percent tax cap."

But a Mangano aide said, "It does not effect the tax cap at all. For example, whatever the school district levy is, it is treated the same under this bill as it was in the past."

The county legislature is scheduled to vote on a "home-rule" message on Monday requesting the State Legislature's approval of Mangano's proposal. The message was approved by a unanimous vote of the county legislature's Rules Committee last week, with no public discussion, and Nassau Minority Leader Kevan Abrahams said Thursday he expected Democrats to once again join the Republican majority in voting for the measure.

"I think everyone understands the amount of money we pay in bonds and capital borrowing needs to be addressed," Abrahams said in a phone interview. "With that in mind, we're definitely open to any plans or proposals that would address that."

With Celeste Hadrick

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