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Northport’s cash cow is Long Island’s burden

A LIPA win on power-plant assessment would be a step toward fiscal fairness

The administrative offices of the Northport-East Northport School

The administrative offices of the Northport-East Northport School District on Laurel Avenue in Northport. Credit: Newsday/Lawrence Striegel

Among New York school districts with enrollments of 4,000 or more, the list of highest property taxes per pupil is what you’d expect — topped by Great Neck, Scarsdale, Syosset and Bedford.

In fifth place is a somewhat less wealthy outlier: the Northport-East Northport district. It will raise $28,556 per pupil in property taxes next year, based on data from the state’s 2018-19 Property Tax Report Card. That’s 57 percent above the Suffolk County average.

With a boost from state aid, Northport-East Northport will spend a whopping $32,361 per pupil — which is high even by inflated Long Island standards, up 6.7 percent from the 2017-18 level. Nonetheless, the district’s spending plan passed by 3-to-1 in recent voting.

Despite the district’s high spending, average annual school property taxes are thousands of dollars less than those in four neighboring districts contained wholly or partially in the Town of Huntington. Elsewhere in Suffolk, the larger Sachem district spends only three-quarters as much per pupil as Northport-East Northport, while imposing an effective property tax rate that’s 20 percent higher.

These seemingly irreconcilable numbers are made possible by Northport-East Northport’s milking of a fat (and captive) cash cow — the Northport power plant, which may be the single most overassessed utility property in New York State.

Northport is the largest of the legacy Long Island Lighting Co. plants operating under long-term contracts with the public Long Island Power Authority. Opened in 1967, the plant needed to use less than one-fifth of its 1,589 MW output capacity in 2016 — a usage level expected to continue to drop over the next decade.

Nonetheless, LIPA ratepayers are footing the bill for nearly $83 million a year in property taxes on the Northport plant. Of this amount, $53 million flows to the school district, accounting for roughly one-third of its school budget.

Measured by capacity, the Northport plant’s tax assessment seems wildly out of proportion to those for comparable facilities in New York. For example, NRG Energy’s Bowline plant in Rockland County, with roughly 70 percent of Northport’s maximum capacity, pays only $2.7 million in combined property taxes in town and school districts.

Via LIPA rates, a big chunk of the outsized Northport-East Northport school budget has been passed along to everyone else living and doing business on Long Island. And that’s not all. On top of the Northport bill, LIPA complains of paying another $115 million a year in property taxes on other old and overassessed generating plants in Nassau and Suffolk.

The good news is this tax-shift game seems about to come to an end.

Brookhaven, Port Jefferson and Nassau County reportedly are working to reach settlements with LIPA that will reduce excessive assessments on other LIPA plants in their jurisdictions, ratcheting down future tax payments while avoiding retroactive tax refunds to the power authority.

The holdout is Huntington, which is proceeding toward a mid-June trial of LIPA’s lawsuit challenging the Northport assessment. If the authority prevails, which seems likely, annual school taxes could rise by thousands of dollars for Northport-East Northport homeowners.

LIPA also is reported to have proposed a settlement that would reduce taxes on the Northport plant by 50 percent over nine years. That should be enough time to adjust school spending, in particular, to levels more in line with what homeowners can actually pay.

While the settlement would translate into smaller, more gradual savings for LIPA than an outright court win, it also will represent at least a small step forward for the kind of fiscal accountability that’s sorely lacking on Long Island.

E.J. McMahon is research director at the Empire Center for Public Policy.

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