Solving the American Water problem on Long Island

Lane Filler for Newsday

June 17, 2019

Originally published in Newsday on June 17, 2019.

In the waning days of each Albany legislative session, unexplained bills go winging through the hallways and into the chambers at the speed of light, to be voted on by legislators left mostly in the dark. This is a problem for bills big and small but mostly it’s the hyperlocal ones that, if faced with a full session of scrutiny, would surely evaporate.

The New York State Water Tax Equality Act, passed unanimously in the Senate last Thursday and expected to die quietly in the Assembly this week, is an exemplar of the species.

The bill, sponsored by Long Beach Sen. Todd Kaminsky, is intended to help solve a very real grievance: the large water bills paid by many customers of for-profit provider American Water. About 96 percent of New Yorkers get their water from municipal non-profit providers, but those on much of the South Shore of Nassau County, and some North Shore communities, such as Glen Head and Sea Cliff, are served by American Water.

The company is regulated by the Public Service Commission, which sets its rates, but the bills can run into the hundreds of dollars a month and can be as much as three times those of Long Islanders served by non-profit systems.

The reason for the outrageous bills is the same as the reason for most outrageous bills on Long Island: property taxes. Private water companies pay them, public ones do not.

Kaminsky’s bill notes that 33 percent to 59 percent of each American Water bill is property taxes. The company's president recently said more than 70 percent of its bills go to pay property taxes.

Kaminsky’s answer? A law that over a five-year phase-in excuses American Water from its $25 million annual state franchise fee, and passes that savings on to the company’s customers. The catch? The lost money would be made up with increased taxes billed to the Long Island Power Authority, Verizon and Altice, who would have to decide how to make up for the extra expense and would likely pass it on to local customers, and a monthly surcharge on the bills of every National Grid customer in Nassau County, which is allowed by the Public Service Commission to increase rates any time its taxes increase.

At the moment, though, the bill seems to have no momentum with Assembly members or Gov. Andrew M. Cuomo  reportedly because they understand that splashing one community’s property taxes -- disguised as water bills -- onto other communities is the ultimate slippery slope.