Suffolk loses appeal bid over order to repay $30 million to county sewer fund
Suffolk County lost an appeal bid Tuesday over a court order to pay back nearly $30 million it diverted from a county sewer fund.
A state Appellate Division panel voted unanimously Tuesday to deny the county’s motion to reargue the case or to appeal to the state Court of Appeals, the state's highest court.
The decision came in a lawsuit brought by the Long Island Pine Barrens Society, an environmental nonprofit, over $29.4 million the county borrowed from a sewer fund to balance its budget in 2011.
"I'm disappointed in this particular decision," legislative Presiding Officer Robert Calarco (D-Patchogue) said, noting the county may have other avenues to appeal.
County officials are “reviewing the decision and consulting with the county attorney to clarify next steps,” said Derek Poppe, a spokesman for County Executive Steve Bellone.
Paul Sabatino, co-counsel for the Pine Barrens Society, said Suffolk still could ask the Court of Appeals for permission to appeal, although it is rare for the high court to grant such motions.
Both a state Supreme Court justice and the Appellate Division have ruled the county has to repay the money.
The society will seek contempt proceedings if the county does not make the payment, Sabatino said.
The lawsuit has bounced between Supreme Court and the Appellate Division since 2012.
The Pine Barrens Society filed suit over money diverted from the Suffolk County Assessment Stabilization Reserve, also known as Fund 404, under former County Executive Steve Levy.
Pine Barrens Society Executive Director Richard Amper, a plaintiff in the case, has said the lower court's ruling will ensure this and other publicly approved tax measures are spent as voters intended.
The fund was established to lower tax increases in existing sewer districts, Sabatino said.
The Appellate Division in 2012 ruled the diversion was “illegal null and void” because the county move did not get voter approval in a referendum.
The money in the sewer fund is collected under the Drinking Water Protection Program, which was approved by voters in 1987.
If the county ultimately is forced to pay, officials would have to work hard to find the money, said county Comptroller John M. Kennedy Jr., who is responsible for paying county bills. Kennedy, a Republican, said officials may have to rely on reserve funds, cut spending or negotiate payment issues with the court.
“It’s going to be extremely difficult,” Kennedy said.
This year's $3.2 billion county budget, passed in November, included no such payment.
The appeal denial comes at a time when the county already is struggling to pay its bills, Kennedy said.
Existing cash flow issues have led officials to use about $120 million in reserves to meet a pension payment due Jan. 31, Kennedy said. The county also plans to increase short-term borrowing by $40 million in April, he said.
Poppe did not answer questions about how Suffolk would repay the sewer fund.
Bellone, a Democrat, has said county finances have improved since the time the county diverted money from the sewer fund.
In a related case, Bellone and environmental groups in 2014 reached an agreement that allowed the county to borrow $171.3 million from the county sewer fund from 2014 to 2017, that will be repaid through 2029.
Rachelle Blidner covers Suffolk County government, politics and breaking news.
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