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Citing Fiscal Responsibility, Lower Property Values, LIPA Seeks to Negotiate on Taxes

LIPA says that negotiating with Port Jefferson is a preferable solution to litigation in tax grievance.

While it has filed tax grievances seeking a reduction in the taxes it pays on its power plant in Port Jefferson, LIPA says that it prefers to negotitate a settlement that is agreeable to all parties.

Last fall, LIPA filed a tax grievance with the Town of Brookhaven on the plant in Port Jefferson based on lower property values and because the plant’s value is also tied to its usage, which has declined significantly in the past few years.

At a LIPA Task Force public meeting last month, Mayor Garant revealed that on Feb. 4, LIPA filed a tax grievance with the Village of Port Jefferson as well.

The utility is seeking a 90 percent relief based on the purported reduced value. The tax recertification filed with Port Jefferson village on Feb. 4 also seeks a 90 percent reduction in village taxes.

If successful, Port Jefferson will face a severe revenue shortfall in its schools and village government, along with the fire department and the Village of Belle Terre.

Port Jefferson School Board Vice President Mark Doyle said that the district gets about 40 percent of its revenue from LIPA, about $17 million out of a budget of $37 million.

According to a report by the LIPA Task Force, 30 percent of the 2010/2011 budget for the Port Jefferson village comes from taxes paid by LIPA on the power plant. In contrast, about 24 percent of the village budget comes from residential taxes.

Whatever impact the tax petition will have on the school and the village will depend on the end result of the tax grievance and a repowering campaign that the Port Jefferson LIPA Task Force is promoting. In a worst-case scenario, the plant will shut down for good. If that happens then the money for the village and schools would have to made-up somehow.

"Through a combination of budget cuts and increased taxes on other taxpayers," Doyle said.

The LIPA Task Force presentation showed that the fire department, library and other services also face potential budget cuts. Even the Suffolk County Police Department receives a good amount of money from LIPA taxes on the Port Jefferson property. About 17 percent of the money collected from the tax bill by the Town of  Brookhaven goes to the SCPD annually.

LIPA says that challenging the taxes it pays on the power plants is the fiscally responsible thing to do for its customers.

“For perspective purposes, in the 2011 budget, LIPA pays $539 million in taxes in total,” said Vanessa Baird-Streeter, a LIPA representative. “On behalf of our customers we have to manage costs.”

The LIPA website says that “of the $539 million LIPA pays in taxes, $194 million is applicable to the properties owned by National Grid. These taxes are a direct pass through to LIPA customers.”

Baird-Streeter also said that litigation is not the outcome that LIPA wants for either the ratepayers or Port Jefferson.

“Litigation is not in the best interest of LIPA rate payers,” she said.

Baird-Streeter said that a negotiated settlement would be the best outcome. She also said that LIPA has spoken to Port Jefferson village officials about a negotiation to resolve the tax recertification.

“We realize there should be a benefit to communities that house the plants,” said Baird-Streeter.

In response to an email sent to the Town of Brookhaven, a representative said that the case is currently in litigation and because of that the Tax Assessor cannot comment on the issue.

Mayor Garant said that the village can deny the grievance but timing is important since the tax roll is due on April 1 and if National Grid is successful in its tax grievance the back taxes the village owed to the utility would come out of the village’s coffer.

When asked if taxes would be cut dramatically all at once if LIPA won the tax grievance, Baird-Streeter said, “that’s not the situation we want to be in.”

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