A state appellate court decision to strike down Nassau County’s bid to shift the responsibility for paying property tax refunds to school districts and towns could cost the county up to $50 million a year beginning in 2015, according to County Comptroller George Maragos.
“That is the amount the county is potentially liable for as a result of the court decision past 2015,” Maragos said. “That would have to be managed.”
The decision of the Nassau County Legislature to abandon the county guarantee in a party-line vote in 2011 was challenged by school districts and towns that would have to pay out the refunds, and on Wednesday a four judge panel unanimously struck down the law. The county is planning an appeal.
School officials cheered the court’s decision, which they say unfairly burdened schools with paying for challenges for what they describe as Nassau County’s flawed assessment system.
“I am extremely pleased with the decision of the appellate division and hope that it will be sustained on appeal,” said Great Neck Public Schools Superintendent Tom Dolan. “The county does the assessing, and if we pay for their mistakes there is no motivation for them to get it right.”
“Personally, I think this is a big victory,” said Herricks Superintendent of Schools John Bierwirth. “But we can’t exhale yet.”
“Shifting the responsibility of Nassau County property tax settlements onto the school districts was another example of mandates that further constrain school districts in these very challenging budget times. It is our sincere hope that the county does not appeal the New York State Appellate Division Court’s decision,” said East Williston Superintendent of Schools Elaine Kanas.
Town of North Hempstead Town Supervisor Jon Kaiman also applauded the ruling.
“The plan that was defeated would have had the towns and schools pay for the county’s assessment mistakes. The town neither sets the assessment or plays any role in the assessment challenge process which is controlled completely by the county,” Kaiman said in a statement. “To have us pay for the mistakes would cost us millions upon millions of dollars each year without allowing us any input or participation in the process from beginning to end.”
Nassau County Nassau County Executive Edward Mangano had called for the county to abandon the county guarantee in 2011, citing the cost to the county. In doing so, Mangano had noted that no other county in the state guaranteed money lost in tax challenges to school districts and villages – a point repeated by county attorney John Ciampoli in criticizing the appellate court’s decision.
“This decision holds Nassau County’s government to a different standard than any county in the state and nation. Accordingly, we will seek an appeal on behalf of all taxpayers,” Ciampoli in a statement.
Maragos said the ruling, if it withstands a challenge, could cost the county $50 million per year starting in two years when the change is scheduled to go into effect.
That figure represents the commercial tax certiorari cases which the county was seeking to place on the books of schools, towns and special districts. Though the county would have to adjust its finances and seek ways of reducing those liabilities, Maragos expressed confidence Nassau could handle the increased cost.
“The sky’s not going to fall. The county’s not going to go bankrupt,” Maragos said.
County liabilities have shrunk in recent years, from $114 million in 2009 to the estimated $50 million going forward, according to Maragos. More accurate assessments have contributed to the decline, he said, but those liabilities will not go away entirely.
“The fact of the matter is the assessment system progressively has gotten better and better,” Maragos said. “Even if it’s 100 percent accurate, you’ll never get two independent appraisers to come in with the exact same value of a particular home.”
The county guarantee, established by the state in 1948 at the request of the county, put payments of school and town tax refunds on Nassau’s books.
By 2010, court challenges to county assessments of property values were costing Nassau $80 million annually in refunds, and the Republican majority in the Legislature in a party-line vote passed Mangano’s plan to end the guarantee in 2015 in an effort to stem the flood of red ink that had placed Nassau near bankruptcy.
The county’s backlog of unpaid refunds has grown to hundreds of millions of dollars since Mangano took office. Republicans have sought to pay them with county bonds and Democrats have nixed the proposed debt increases, which require a supermajority vote in the Legislature.
Mangano’s aspiring Democratic challengers in the upcoming county executive race jumped on the decision.
“To claim Ed Mangano’s administration hasn’t raised property taxes – when they merely pushed the burden on to our schools – is an outright deception. The county has accumulated over $300 million in debt on this issue alone and the now the bill must be paid,” said former County Executive Tom Suozzi in a statement.
Suozzi, who lost his seat to Mangano by a razor thin margin in 2009, is again running for the county’s highest office and has the backing of the Nassau Democratic Party.
Suozzi’s challenger in the Democratic primary, Roslyn school board member and businessman Adam Haber, painted the decision as an indictment of both Suozzi’s and Mangano’s administrations.
“Today we saw a previous county executive discussing whose outcome is worse, $100 million in the hole verses $400 million in the hole. Whether it’s the Suozzi administration or the Mangano administration the situation is the same – political insiders offering up shortsighted approaches that fail to address serious problems,” said Haber in a statement. “Both were playing shell games and neither has offered a viable solution to stop this from happening again or mitigating the hurt on middle class families.”
Mangano’s office rejected the charges, criticizing Suozzi and county Democrats for creating debt and obstructing payment of tax refunds.
“Tom Suozzi must have bumped his head as he created the problem, left behind $1.6 billion in debt and his fellow Democrats refuse to follow the County and NIFA plan to pay residents their rightful property tax refunds,” wrote Mangano spokesperson Brian Nevin in an e-mail.
