Liberty New York Water wants elimination of Special Franchise Tax

Liberty New York Water is advocating for the elimination of the Special Franchise Tax, arguing that this tax significantly inflates customer water bills without providing direct benefits to the utility or its customers.

According to Deborah Franco, Liberty’s president, the initiative, which has been ongoing for over two years, aims to alleviate financial pressure on customers by lobbying New York state officials for legislative change.
Franco emphasized the company’s commitment to removing the tax in a recent email to customers. She highlighted that the tax does not benefit Liberty and comprises a significant portion of customers’ monthly
water bills.

“For more than two years, Liberty has been working hard to convince New York state to eliminate the Special Franchise Tax applied to New York utility water service so that we can remove these costs from our customers’ monthly bills,” Franco wrote. “These costs represent a pass-through of the tax we are required to remit to the New York state government and does not benefit Liberty in any way. And in many cases, it comprises a significant portion of your monthly water bill.”

According to Franco, taxes constitute approximately 30 to 50 percent of the water bills for Liberty customers, with the Special Franchise Tax alone accounting for about 21 percent. Liberty New York Water customers are reportedly the only ones in Nassau County subject to this tax, which she asserted is responsible for making their bills higher compared to those serviced by public water providers.

“Essentially what we’re asking for is the elimination of these tax costs solely for Liberty New York Water customers and spread it over the much larger Nassau County population of 1.3 million customers,” Franco said in a later interview. “By doing that you’re spreading the burden and so the impact is minimal on people, and it has no fiscal impact on the state.”

She urged customers to support the initiative by visiting stopthehiddentax.org, where they can send letters to legislators. According to Liberty, nearly 2,000 customers have already taken action, resulting in over 30,000 letters sent to state legislators and other elected officials.

Franco reiterated Liberty’s efforts since acquiring the system from New York American Water in January 2022. She noted that the high bills due to the tax were evident from the start, prompting the company’s continuous push for legislative change. She explained that removing the tax would allow Liberty to invest more in the system and potentially lower rates in the long term.

Despite these efforts, some residents remain skeptical of Liberty’s motives. Glen Head resident Agatha Nadel, an activist who has opposed New York American Water’s high rates for years, cited past failures to eliminate the tax and concerns about setting a precedent for tax breaks for-profit utilities.

“Even if they were able to convince the Assembly this time, it’s not going to solve the long-term consequences of the private water business model,” she argued. “Yes, it will take some taxes off, but is it going to stop them from charging everything at cost? No, because that’s the outline of private water.”

Nadel also expressed skepticism about the long-term benefits of removing the tax. Nadel highlighted the persistent issue of higher bills for private water ratepayers compared to those serviced by public providers and stressed that municipalization is the only permanent solution.

“The bottom line is that our bills will never be on par with the public water providers until we get public water,” Nadel continued. “Even if they were able to get the Special Franchise Tax taken off, why should the private water ratepayers still have to pay three to five times more than their neighbors do for public water.”

Franco, however, said she is hopeful about the current legislative session. Franco emphasized that she believes that spreading the tax burden over a larger population would have minimal fiscal impact on the state while providing significant relief to Liberty’s customers.

“We have had conversations, we’ve been engaged in active discussions with legislators,” she said. “We want to achieve the right result for our customers, and we feel that the more we can get the word out there and recirculate it, we’re very hopeful that we can achieve the right results.”

For more information on Liberty’s efforts to remove the tax, visit StopTheHiddenTax.org.