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Residents overbilled - and underbilled - in $18.4M Nassau sewer tax error, officials say

Nassau County Executive Laura Curran, left, and Nassau

Nassau County Executive Laura Curran, left, and Nassau County Legis. Debra Mulé (D-Freeport) discuss the sewer tax levy at a news conference in Mineola on Sept. 13, 2019.   Credit: Howard Schnapp

More than 450,000 Nassau residents and businesses have been overpaying their sewer bills since 2016, while nearly 300,000 were underpaying, due to an $18.4 million miscalculation of the sewer and storm water tax levy, a probe by County Executive Laura Curran's office found.

The multimillion-dollar error began during the administration of former County Executive Edward Mangano, Curran and other Democratic legislators said, but continued until this year when a flaw in the formula to calculate the sewer rate was discovered.

Mangano, a Republican, served from 2010 through 2017. Curran took office in January 2018.

From 2016 through 2019, property owners in the sewer disposal-only zone were overbilled by an estimated $13.9 million, while property owners in the storm water zone were overtaxed by about $4.5 million. Over the same time period, property owners in the collection and disposal zone were undertaxed by about $18.4 million. 

A taxpayer with multiple properties in the county brought the flaw to the attention of the administration, which undertook a monthslong investigation, officials said. A new formula for the allocation of county sewer fees has been put in place to correct the problem.

"We don't hide from the mistakes when we find them — we fix them. We tell you what we are going to do going forward to make sure they don't happen again," Curran said at a news conference announcing the findings in front of the executive and legislative building in Mineola on Friday. 

Property owners will receive either credits or rate increases over a five-year period. Homeowners will see the adjusted rates beginning with their 2020 tax bills, officials said.   

As part of the plan to fix the problem, over the next five years:

  • 40,175 properties in the disposal-only sewer zone — which includes Freeport, Rockville Centre, Mineola, Garden City, Hempstead and Roslyn — will receive about a $47 annual credit.
  • 296,075 properties in the collection and disposal sewer zone will be taxed an extra $9 a year.
  • 413,266 property owners in the countywide storm water zone will receive a $1.86 annual credit.

The impact on Curran's 2020 budget plan, expected to be released Monday, is minimal because the underpayments largely offset the overpayments.

"The cost of the system won't be affected but who pays will be," said Ray Orlando, Nassau County deputy county executive of finance. 

Curran administration officials said the error in the formula for the sewer funds began during the Mangano administration and might have been the result of adjusting the allocation of fees in a contract with SUEZ Water Long Island Inc.

In September 2014, SUEZ, then called United Water, based in Harrington, N.J., signed a 20-year, $1.2 billion agreement with Nassau officials to operate the county’s wastewater treatment plants, pumping stations and sewers. It is among the county's largest contracts with an outside vendor.

The contract called for the salaries of 77 workers on the county payroll assigned to sewer operations to be transferred to the general fund within the Department of Public Works, Curran administration officials said. They said that appeared to be a factor in the misallocation of sewer funds, although they didn't explain why. 

"Nassau County taxpayers must pay only their fair share for the service they receive," said Nassau County Legis. Debra Mulé (D-Freeport), who joined Curran at the news conference.

"By unearthing and correcting this error, we are restoring fairness for residents and taking another step toward repairing financial controls that were compromised by the Mangano administration," Mulé said.

In February 2018, Curran administration officials found residents of five villages were erroneously overcharged by the county because of a mistake in the 2017 budget by the Mangano administration. Homeowners in Rockville Centre, Hempstead, Freeport, Garden City and Mineola saw a hike of nearly 75 percent in their sewer disposal taxes. The county later issued refunds.

Legislative Presiding Officer Richard Nicolello (R-New Hyde Park) said: "The Majority was not briefed before the county executive’s press conference but will be setting up a briefing in the next few days. We intend to look into the issue to ascertain the nature and extent of the problem. We will press the administration for their proposed remedial actions and assurances that these types of errors will not continue to occur."

Sewer fees were overcharged:

$13.9 million in the six villages of the disposal-only zone impacting 40,175 properties.

$4.5 million in the county-wide storm water zone impacting 413,266 properties.

Sewer fees were undercharged:

$18.4 million in the collection and disposal zone impacting 296,075 properties.

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