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A LIPA tax tussle -- so ratepayers pay and pay

A federal ruling could stave off the need

A federal ruling could stave off the need to raise electric rates to pay for millions of dollars in state power-line project costs. Credit: Newsday / Thomas A. Ferrara

New York's tax cap is finally starting to slow the increase in Long Island's astronomical property taxes. Unfortunately, that same cap isn't slowing the increase in some of the property taxes that drive Long Island's astronomical electric bills.

The Long Island Power Authority has a 2015 tax burden of $549 million. Last year, it paid $280 million on about 3,000 properties in Nassau and Suffolk. While technically, LIPA is exempt from property taxes as a public authority, the 1989 law that bailed out the for-profit Long Island Lighting Co. required that local governments continue to collect the revenue through payments in lieu of taxes, or PILOTS.

Then came the LIPA Reform Act of 2013, with its pledge to reduce electric costs, especially through the reduction of taxes. The law said the state's new 2 percent tax cap applied to the authority's PILOTs. That's why LIPA is refusing to pay any increase of more than 2 percent on its properties -- increases had been averaging 7 percent in the past 8 years -- in this category. In Suffolk County, that's a $2 million loss of revenue for local governments and schools. Unsurprisingly, the larger towns that took big hits are putting up a fight. Simply put, their argument is that while each town's increase stayed under 2 percent overall, the bills on individual LIPA parcels might increase more.

Despite the clear intent of the law to hold the line on taxes, this dispute appears to be headed to court. That means taxpayers will pay even more because we will foot the legal bills for both sides. So we'll pay twice for the privilege of finding out whether the towns and schools will recoup the lost tax money by reaching into our left pocket or whether LIPA will pay those bills by reaching into the right one.