BILL NUMBER:  S1295

 TITLE OF BILL :  An act to amend the public authorities law, in
relation to payments in lieu of taxes

 PURPOSE :

This legislation would clarify the Long Island Power Authority's
(LIPA) obligation to make timely payments in lieu of taxes

(PILOTs) for the benefit of various municipalities and school
districts and to require LIPA to enter into written agreements with
the assessing jurisdictions (towns in Suffolk and Nassau County)
detailing such requirement. It will also help to create fiscal
certainty during the school district budget process.

 SUMMARY OF PROVISIONS :


Section 1 of the bill amends subdivision 1020-q of the public
authorities law by adding (b) to subdivision one which requires LIPA
to enter into written PILOT payment agreements which shall include
annual schedules of fixed payments. Such schedules shall be finalized
on or before February 1 of the year prior to the fiscal year of the
budget that the school district is in the process of developing.

              

This schedule will afford school districts fiscal certainty and ample
time to comply with the Tax Cap Law's reporting requirements outlined
in section 2023-a of the education law. In the event of a PILOT amount
is modified contrary to the written agreement after February 1, the
modification shall not be deemed effective until the year subsequent
to the ensuing fiscal year so that school districts are not faced with
a modification to the tax levy limit calculation, their voter-approved
budgets and fixed levies.

 JUSTIFICATION :

The LIPA reform act effective as of the calendar year starting with
January 1, 2015, attempts to limit the growth of the LIPA PILOT
payments to no more than 2% of the immediately preceding calendar year
to the detriment of the school districts and their taxpayers. The
unilateral removal of approximately 614 LIPA properties from the tax
roll by Nassau County in 2015, after school budgets were approved and
school tax levies fixed by the school districts, the LIPA Reform Act
and its implementation, which resulted in a unilateral reduction to
school districts tax levies by Nassau County have not only cause
school budget shortfalls, but have also created fiscal uncertainty.
Without legislative intervention, this quandary will likely reoccur
annually as school districts are unable to calculate their tax cap in
accordance with section 2023-a of the education law due to the
disputed total amounts of taxes levied for the prior year and PILOT
payments receivable for the prior and coming fiscal years. Compounding
the issue is the timing and process by which Nassau County delivers
the assessment based PILOT amounts for the prior year under Nassau
County Administrative Code tax calculation. This calculation does not
occur until September, well after budgets have been submitted to the
voters and the tax levies fixed by the school districts. Without
legislative intervention providing for a mechanism to calculate these
assessment based PILOTs, school districts in Nassau County will be
faced with fiscal uncertainty for years to come and their educational
programs placed in jeopardy. The pressure of State mandated deadlines
of section 2023-a of the education law, also referred to as the Tax
Cap Law require school districts to begin preparing their annual
budgets much earlier in the school year. The Tax Cap Law limits
increases of a school districts tax levy to no more than 2% or the
rate of inflation, whichever is less, from the prior school year. By
January of the year prior, school districts need to have fiscal
certainty on tax levies received for the current year, and PILOT
payments receivable for a current and upcoming school year. This is a
result of the Tax Cap Law which requires that school districts submit
to the State all relevant amounts, including tax revenue received and
PILOT payments receivable for the prior and upcoming school year to
ensure that the school districts comply with the tax cap. Without the
fiscal certainty and timing provisions that written PILOT agreements
provide, school districts cannot develop an accurate tax cap limit and
as a result an accurate budget to be submitted to their voters.

Therefore this legislation would require that school districts be made
aware of the amount of PILOTS in sufficient time to properly calculate
its tax levy limit each year.

The proposed amendment would resolve the inherent inconsistency
between the property tax laws and Administrative Code associated with
these assessments based PILOTs, the Long Island Power Authority's LIPA
Reform Act PILOT payments limits and the school district's fixed tax
levy needs and their unique budget process.

 LEGISLATIVE HISTORY :

S7909 of 2016

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
This act shall take effect immediately.