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East Rockaway, Lynbrook among villages that lost sales tax lawsuit

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A Nassau County Supreme Court judge ruled in favor of the county and its townships on July 26 in a dispute over the distribution of sales tax revenue to villages.

In June 2018, 27 villages filed a joint Article 78 suit alleging that under state Tax Law Section 1262-e, villages in Nassau County are owed one-sixth of the revenue that the county collects in sales tax. In his decision, however, County Supreme Court Justice Steven Jaeger ruled that according to the language of the law, the county is not obliged to distribute that revenue to villages, and instead the amount owed is negotiable with the County Legislature up to one-sixth of what is collected.

The action claimed that the county “unlawfully and arbitrarily withheld tax revenue from the villages.” The Towns of Hempstead, North Hempstead and Oyster Bay were also named in the suit. The action was spearheaded by Village of Freeport Mayor Robert Kennedy, who said the villages planned to appeal the court’s decision. The towns were included in the lawsuit because the county counts village populations as part of town populations when it divides sales tax revenue, which, the villages claimed, unfairly inflates the amount of revenue the towns receive.

The villages of Lynbrook and East Rockaway joined the suit last August.

East Rockaway Mayor Bruno Romano said he was disappointed by the ruling. “The village board and I are very disappointed in the court decision, as it denies relief to our village residents,” he said. “We are exploring all available options, including pursuing an appeal.”

Lynbrook Mayor Alan Beach offered a similar sentiment. “We generate a lot of sales tax revenue,” he said, “and would like our share.”

In Jaeger’s 28-page decision, he ruled that tax law states that the county has the authority to enact and establish a local government assistance program for villages but is not required to do so, as it is for towns and cities.

Kennedy found that East Rockaway generated $1.4 million in sales tax in 2018, but received only $27,280 in reimbursements from the Town of Hempstead and the county — or $2.78 per resident. Lynbrook generated more than $2.8 million in state sales tax, but received only $53,979 — or $2.76 for each village resident.

Meanwhile, the town and county received $49.50 per resident.

Lynbrook and East Rockaway are self-sufficient villages with their own sanitation and public works departments, so they do not use town services. But they do need a greater share of sales tax revenue to maintain those services, according to Kennedy and Romano.

As the action played out in court, the Village of Lynbrook was embroiled in a different controversy.

The Manhattan-based law firm D’Amato & Lynch, which served as counsel for the plaintiffs in the case, sought to remove Lynbrook as a plaintiff on the petition over issues that stemmed from the March village election between Beach and then challenger and current Trustee Hilary Becker. The motion was filed by Megan Marchick Le, who represented the firm, in April.

“The Village of Freeport raised with the Village of Lynbrook its concerns regarding disparaging remarks about the Village of Freeport and circulated literature that is derogatory in nature as to the Village of Freeport,” the complaint read, according to court documents.

During the Lynbrook mayoral election, Becker came under question for having several Freeport residents on his campaign payroll, which led to negative social media posts and mailers about Freeport and rumors that Becker’s campaign was politically driven by Freeport officials. Lynbrook Village Attorney Tom Atkinson argued that Marchick Le’s motion did not state what the alleged remarks were, who made them, the context in which they were made or whether the person who made them had any connection to the Lynbrook administration or the village in general.

On June 20, a judge denied D’Amato & Lynch’s request to terminate its representation of Lynbrook, saying that the firm did not establish enough cause to do so, and that Lynbrook had not agreed to terminate the firm’s employment.

“We thought them asking to sever us from the action was improper,” Atkinson said.

Lynbrook remained on the case, which the villages ultimately lost.