State Senate passes bill limiting LIPA tax refunds — just in case

Mark Harrington for Newsday

February 12, 2020

Originally published in Newsday on February 12, 2020.

The State Senate on Tuesday passed a bill that would limit the Long Island Power Authority’s ability to demand refunds from municipalities resulting from tax challenges of power plants and other LIPA properties, as mediation talks resume in LIPA’s ongoing court case with the Town of Huntington.

The bill, if it advances, would serve as an insurance policy of sorts should the Town of Huntington lose a court decision in LIPA’s tax-challenge case, in which the utility is seeking to lower its $84 million property tax bill in Northport by 50 percent over seven years. LIPA in settlement talks already has agreed to forgive refunds for taxes in past years provided Huntington agrees to the 50 percent. Without the settlement, the bill would prevent LIPA from collecting hundreds of millions in potential refunds. 

The Senate bill, sponsored by State Sen. James Gaughran (D-Northport) and co-sponsored by minority leader State Sen. John Flanagan (R-East Northport) and State Sen. Todd Kaminsky (D-Long Beach), now heads to the Assembly, where a companion bill is sponsored by Assemb. Steve Stern (D-Huntington). It would require the signature of Gov. Andrew M. Cuomo, whose LIPA board majority has strongly supported tax challenges, and recently named a trustee, Laureen Harris, who is a prominent tax-challenge attorney . 

A verdict in LIPA’s challenge in Huntington is expected soon. Taxpayers in Huntington and the Northport-East Northport School district could face a tax refund that LIPA has estimated at $650 million.

Gaughran on Wednesday said the bill is aimed at LIPA tax challenges across Long Island, not just Northport. He noted the utility has already begun to file tax challenges for substations and other properties, potentially impacting other school districts. "This would still apply moving forward to any other community that's affected," he said. 

A LIPA spokesman declined to comment. 

The Senate bill would require LIPA to “discontinue or abandon all proceedings” that seek repayment of all or part of the taxes assessed against the plants or other properties. National Grid, which like LIPA has lobbied against the bill, owns most of the plants on Long Island, but LIPA and its ratepayers pay the plants' costs, including property taxes.

LIPA has reached a tentative settlement with Nassau County to lower by half the taxes it pays on the E.F. Barrett plant in Island Park and the Glenwood Landing power station, which no longer hosts a large plant. LIPA has agreed to forgo refunds as part of those settlements, as it has in a settlement with Brookhaven Town over the Port Jefferson power station. The Nassau settlements require approval by the Nassau Legislature, but the measure won’t get a vote this month, after a committee that could have put it on a calendar failed to do so this week.