A state Supreme Court judge ordered the Long Island Power Authority on Tuesday to make tax payments it owes Nassau County school districts.
Justice Anthony Marano’s temporary restraining order in a lawsuit brought by more than 40 Nassau school districts says LIPA must pay the $3.72 million the county billed the utility for first-half payments in lieu of school taxes but the utility previously withheld.
The order will let districts recoup revenue the county told them it would get from LIPA but did not actually receive when $45.8 million of the power authority’s school payments for the 2015-16 fiscal year were disbursed last month.
It also directed LIPA to pay its full second-half tax bill when it comes due, said Carrie Anne Tondo, an attorney with the Ingerman Smith law firm representing 15 school districts, including Mineola and Roslyn.
“I think he (Marano) recognized that any dimunition in funds, any money received that’s less than what the board fixed their levies could significantly impact the districts, and that shortfall is an irreparable harm that would harm the children, ultimately,” Tondo said.
The districts filed the lawsuit in January arguing LIPA should make the full payments in lieu of taxes, or the county should otherwise make them whole under the County Guarantee, which puts Nassau on the hook for any tax shortfalls resulting from incorrect assessments.
LIPA has maintained its payments can’t increase more than 2 percent over the previous year under the 2013 LIPA Reform Act, a state law. But the county has reportedly said LIPA incorrectly calculated what it owes based on the calendar year and not the school year.
Marano said in court he agreed LIPA was correctly following the state law and limited his ruling to payments for the 2015-16 fiscal year, the lack of which posed “irreparable harm” to the school districts.
LIPA spokesman Sid Nathan said the additional payments will lead to rate hikes for its 1.1 million customers, which contradicts the state Legislature’s intent in passing the LIPA Reform Act.
“We are disappointed the court ordered LIPA to make an additional $3.7 million payment in lieu of taxes in the interim while the case continues,” Nathan said in a statement, adding that the power authority “is reviewing all options available to best protect the interests of its customers.”
County Executive Edward Mangano praised the court order in a statement.
“This is good news for local schools as the court prevented LIPA from it’s attempt to shift taxes onto the backs of residents,” he said.
Before the law instituted the 2-percent cap, LIPA was to make payments in lieu of taxes, or PILOTs, equivalent to regular taxes, Nassau County Attorney Carnell Foskey has said.
The county removed LIPA properties from regular property tax rolls for the first time last year to comply with that law, he said this month.
In September, Nassau County reduced school district tax levies by the amount LIPA would pay in PILOTs after the district fixed and filed the levies with the county in August.
Tondo said she thinks the impact on LIPA ratepayers would be minimal, adding LIPA’s short payments would have shifted a burden onto school district residents.
“These ratepayers and taxpayers are one in the same,” she said.
