Lawmakers scramble to offset possible impact of LIPA tax cases
The Northport power station, as seen on Aug. 26, 2015. Credit: Newsday/John Paraskevas
As LIPA’s challenge of property taxes for the Northport power station heads back to court next month, state legislators are working overtime on longshot proposals to help soften the potentially devastating ruling for local schools, homes and businesses.
This week, legislators from both sides of the aisle introduced bills, amendments or budget proposals that would provide upward of $70 million in funding to help offset any large tax bill resulting from challenges across the state, including to school districts, as a result of court judgment or settlement.
It’s uncertain whether Gov. Andrew M. Cuomo, who made reference to a plant closure mitigation fund in his State of the State Address in January, would sign any of the bills if they are approved by the Legislature. A Cuomo representative said the governor’s office “will review” the bills.
LIPA pays around $82 million a year in taxes for the Northport power plant, the majority of which funds the Northport-East Northport school district. LIPA says it is overassessed and has offered a settlement that would gradually reduce the tax payment by half over nine years, but the town has rebuffed the offer. A trial over the tax challenge began earlier this month, and is scheduled to continue for several more weeks in state Supreme Court in Riverhead next month.
LIPA has challenged assessments on four of National Grid’s largest power stations or plant properties, including in Port Jefferson, Glenwood Landing and Island Park. It’s already reached a settlement with Brookhaven and Port Jefferson village over the Port Jefferson plant, leading to a 50 percent reduction in taxes over nine years.
The most recent efforts to help soften the blow of a potentially adverse judgment came in a Senate budget bill offered by State Sen. James Gaughran (D-Northport) that would provide $70 million for a new “local government financial stability program” for distressed local governments, including school districts, “impacted by tax certiorari” related to “electric generation and other jurisdictions facing significant fiscal distress.”
Gaughran this week also introduced a separate bill that would authorize $69 million to any local government entity, including school districts, affected by a successful tax certiorari or even a settlement after April 1. The impact on the district must be 20 percent or greater. The bill would authorize amounts that decrease from 80 percent of the lost revenue to 20 percent from the first through seventh year of the impact.
Neither bill has an Assembly counterpart at the moment.
Earlier this week, Senate Minority Leader John Flanagan (R-East Northport) attempted to introduce an existing bill that would extend a fund intended to help communities impacted by closure of a plant to those impacted by a tax challenge. The effort was unsuccessful. A companion Assembly bill by Assemb. Charles Lavine (D-Glen Cove) also hasn’t advanced.
The bill is opposed by some environmental groups, including the Environmental Advocates of New York, which takes issue with it because it would take money targeted for power plant closures and redirect it toward “a special carve out for power plants owned by LIPA,” according to a position paper by the group. “This maneuver robs climate and clean energy funds to subsidize LIPA’s property tax obligations with any guarantee of carbon pollution reductions.”
Flanagan in a statement invoked the prospect of “financial instability for decades to come — forcing businesses to close, crippling our local economy, driving property values down and producing significant tax increases to all residents — particularly in the Northport-East Northport School District.” Last year, when he was Senate majority leader the bill passed the Senate but stalled in the Assembly. Flanagan called the failure of his amendment this year “an affront to all Long Island taxpayers impacted by these lawsuits.”
Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.
