The Franklin Square, Elmont and Sewanhaka school districts have joined in a lawsuit, along with more than half of Nassau County’s 56 districts, to fight the county’s plan to transfer to schools the responsibility for refunding excess taxes collected in error from commercial properties.
The repeal of the county guarantee, which ensures that the county will refund those taxes, is included in County Executive Ed Mangano’s Proposed 2011 No Property Tax Increase Budget to help balance the budget, and is all too familiar to Nassau County schools. School districts sued the county for threatening to repeal the guarantee in 2009, and won.
Ingermann Smith L.L.P., and Guercio & Guercio, LLP argued the case pro bono for the Nassau Suffolk School Boards Association in 2009.
School districts have estimated that the repeal would cost them $80 million — an average of $1.4 million per district — and bring about higher taxes for homeowners and school funding cuts.
Katie Grilli-Robles, Mangano’s press secretary, said that commercial properties receive 80 percent of the county’s assessment refunds, and that refunding the claims filed by those properties costs the county nearly $80 million per year. Between 15,000 and 20,000 claims are filed each, she added.
Additionally, Grilli-Robles said, the county spends $150 million annually on debt service related to the fund from which it has borrowed to pay back refunds over the past decade.
She explained that Nassau County has $1.6 billion in debt and outstanding liabilities resulting from what she described as a “broken” assessment system, which it is currently working to correct. Commercial properties are currently assessed at 1 percent of their total value, she said.
Grilli-Robles said that the repeal of the county guarantee would help to reform Nassau County’s assessment process and finally end the county’s borrowing to pay refunds.
Patrick Manley, superintendent of the Franklin Square Union Free School District, said the county has tried to ease school districts’ worries about taking on the responsibility for paying refunds by claiming that it will fix the assessment problem and withhold the repeal’s effect until 2013. However, Manley said, districts are wary of the county’s ability to improve the accuracy of tax assessments, since it has been unable to improve its assessment process for several years.
Manley said he believes that a repeal of the county guarantee would be a major blow to school districts’ finances. “We will probably have to hire an assessor to address this issue, which is another unfunded mandate,” Manley said. “In either case, the taxpayers will pay this tax either to the county or to the school district. The [Franklin Square] Board of Education does not think the local taxpayers in Franklin Square should fund the gap created by the county’s current assessment system.”
Manley added that nearly 30 of 56 districts in the county have formally joined the lawsuit so far, that many still have the suit vote on their agenda for February and that, ultimately, most districts are expected to sign on. He said he believes that instead of transferring the liability to schools, the county should raise taxes to pay for the over-assessments and work diligently to determine their cause.
Grilli-Robles said, however, that the tax liability for assessments is already unfair to taxpayers since it is spread evenly, forcing residents in school districts with low concentrations of commercial property to pay an unfair share, while residents in high-commercial districts benefit.
Jean Fichtl, the Sewanhaka Central High School District Board of Education president, said the county is pushing the liability for over-assessments onto school districts because it has nowhere else to turn, and it should be taking responsibility for its own mistakes.
“They are saying we should pay it back because we have gotten all of the benefits, but they have not fixed the problem — they have not ensured these properties are assessed properly,” Fichtl said, adding that nearly 50 of the county’s school districts are expected to participate in the lawsuit, including Bethpage, where Mangano lives. The cost to participating districts for the suit will be capped at $5,000, but should be lower if the majority of districts participate.
“What it comes down to is everything is always pushed down to school districts, and we have no place else to go,” Fichtl said. “There is no place else to cut, and now we are going to have to cut into programs, and we are going to start harming the children. I have no idea where this budget is going, but it’s not going to be good. It’s sad, it’s really, really sad, and the kids are going to be penalized.”
Fichtl said she believes the lawsuit will go forward in February, once all of the county’s school districts have a chance to vote on whether to join the litigation.
Comments about this story? JNash@liherald.com or (516) 569-4000 ext. 214.