County OKs $2.6B budget

The Nassau County Legislature voted 11-8 to approve County Executive Ed Mangano’s $2.6 billion budget on Saturday night, following a contentious, two-day public hearing in Mineola that turned bitterly partisan as legislators argued over details of the spending plan.

Democratic legislators railed against Mangano’s reliance on borrowing and fee increases to balance next year’s budget. “This budget mortgages our children’s future…” said Diane Yatauro, a Democrat from Glen Cove and the Legislature’s minority leader, in a prepared statement. “Since taking office in January, Mangano has proposed nearly $700 million in borrowing, and his 2011 budget calls for even more.”

Mangano, meanwhile, said that his budget would close a $340 million deficit, in part by cutting $100 million in spending, while keeping county property taxes level next year. He noted that the budget would dramatically reduce Nassau’s workforce.

Also at issue was Mangano’s proposal for a water-use fee of 1 cent per gallon charged to non-profit entities such school districts, fire departments, universities and hospitals, but not to houses of worship.

The county executive said the fee is needed to plug a $38 million hole in Nassau’s sewer budget and to fund repair work on the county’s two sewage treatment plants. Democrats, however, said the fee amounts to a tax, and by law, non-profit entities cannot be taxed.

The Legislature’s 11 Republicans voted for the budget, while the eight Democrats rejected it.

In a separate budget resolution, the Legislature voted 11-8 along party lines to shift Nassau’s tax-certiorari refund payments to school districts, towns, villages and other local jurisdictions. The Village of Rockville Centre will not be affected, because it handles its own assessments. But school districts will be hit hard, and school administrators have criticized the plan, saying it will force them to increase school budgets because they will need to establish reserve funds to cover their share of the refunds, and to set aside money to fight the challenges as well. Administrators have argued that this could cause property taxes to rise because, unlike the county, school districts have no source other than local taxpayers and dwindling state aid to fund their budgets.

The shift is scheduled to take place in 2013, and Mangano and Republicans in the Legislature have said that should give school districts and local municipalities time to budget for the changeover.

Guarantee debated

Since 1938, Nassau County has “guaranteed” that it will refund successful tax-certiorari challenges made by residents and business owners. According to Legislator David Denenberg, a Democrat from Merrick, Nassau for years had paid out more than $100 million annually in tax-certiorari refunds, but from 2005 to 2009, the county reduced its refund liability to under $50 million through reform measures. This year, the county paid out more than $80 million, of which it had to bond $30 million to meet its refund obligations.

Without the guarantee, tax-certiorari refunds will be paid by the school districts, towns and other jurisdictions where they originate.

Rockville Centre school Superintendent Dr. William Johnson performed a preliminary analysis of the plan’s budget impact on Nassau’s 54 school districts. According to his estimates, the plan could add anywhere from $608,000 to the East Williston school district’s budget to more than $5.5 million to the Great Neck school district’s budget. Johnson estimates that Rockville Centre’s share will be from $1.2 to $1.4 million.

“Even though the claim is that this is going to take effect in two or three years down the road, we are going to need to start building a reserve immediately,” Johnson said. “The other option is to consider challenging this in court. There’s no court action yet, but I suspect that the school districts will get together and figure out how we can have this more clearly defined.

“Not everyone shares the same opinion that this is permissible,” Johnson added, “and up until this year, there was a common belief that the state needed to give the county permission to do this. There are still questions that need to be answered. But it clearly is not a reduction in the costs of the county government… it is a shift of the costs to school districts.”

Rockville Centre school board president Liz Dion echoed Johnson’s thoughts. “The county claims that they’re lowering their expenses but what they’re really doing is shifting the burden on to us. This is not cutting costs. The county needs to fix the assessment system. If they do, no one would have this expense. Right now we’re looking into joining other school districts across the county to possibly challenge the end of the county guarantee.”

Fixing the assessment rolls

Peter Schmitt, a Republican from Massapequa and the Legislature’s majority leader, responded by saying that the county is committed to fixing the errors in its tax assessments that lead to successful challenges and refunds. "The guarantee removal does not take effect” until 2013, Schmitt said. “That gives us plenty of opportunities to fix this system. We are committed to fixing this system. Are there going to be flaws? Yes, but will we get there? Yes."

Legislator Kevan Abrahams, a Democrat from Hempstead, said that most school districts run according to five-year plans and will have to begin moving monies into reserve funds as early as next year to ensure that they allot sufficient funds to pay future refunds. “I can't state more emphatically enough that this will impact your budget next year,” Abrahams said.

Abrahams said the county should fix its assessment rolls before voting to do away with the guarantee.

Legislator Howard Kopel, a Republican from Lawrence, argued that school districts have benefited from the guarantee since it was instituted, saying that districts receive a “hidden subsidy” from the county. "This won't be implemented for several years,” said Kopel. “Hopefully during that time, we will become a little bit closer to getting the assessment rolls in better shape.”

Denenberg refuted Koppel’s claims, saying that school districts never receive more money than they budget for. Errors in the tax-assessment system that lead to successful challenges are the county’s fault, and the county should accept responsibility for its mistakes, he said.

Republicans argued, however, that any time a home or business owner is over-assessed, the other property owners in that jurisdiction benefit because they pay lower property taxes. When a property owner successfully challenges an assessment, the other residents of that jurisdiction — and not residents throughout the county — should pay the refund.

Legislator Denise Ford, a Republican from Long Beach, said, "We are very sincere in working towards fixing the assessment system. This was never meant in any way to punish our school districts or punish our children."

Denenberg said that he expects school districts and local jurisdictions affected by the shift to file Article 78 lawsuits against the county, seeking to overturn the measure. Denenberg said the county code that originally created the guarantee was enacted with state-enabling legislation. He said he believes the county cannot unilaterally vote to do away with it; the state Legislature must also approve the measure.

Denenberg said he expects school districts and local municipalities to challenge the water-use fee in court as well.

Judy Rattner contributed to this story. Comments about it? RVCeditor@liherald.com or (516) 569-4000 ext. 208.