Relates to payments in lieu of taxes and impacts on school districts

This schedule will afford school districts fiscal certainty and ample time to comply with the Tax Cap Law's reporting requirements outlined in section 2023-a of the education law. In the event of a PILOT amount is modified contrary to the written agreement after February 1, the modification shall not be deemed effective until the year subsequent to the ensuing fiscal year so that school districts are not faced with a modification to the tax levy limit calculation, their voter-approved budgets and fixed levies.

Justification

The LIPA reform act effective as of the calendar year starting with January 1, 2015, attempts to limit the growth of the LIPA PILOT payments to no more than 2% of the immediately preceding calendar year to the detriment of the school districts and their taxpayers. The unilateral removal of approximately 614 LIPA properties from the tax roll by Nassau County in 2015, after school budgets were approved and school tax levies fixed by the school districts, the LIPA Reform Act and its implementation, which resulted in a unilateral reduction to school districts tax levies by Nassau County have not only cause school budget shortfalls, but have also created fiscal uncertainty. Without legislative intervention, this quandary will likely reoccur annually as school districts are unable to calculate their tax cap in accordance with section 2023-a of the education law due to the disputed total amounts of taxes levied for the prior year and PILOT payments receivable for the prior and coming fiscal years. Compounding the issue is the timing and process by which Nassau County delivers the assessment based PILOT amounts for the prior year under Nassau County Administrative Code tax calculation. This calculation does not occur until September, well after budgets have been submitted to the voters and the tax levies fixed by the school districts. Without legislative intervention providing for a mechanism to calculate these assessment based PILOTs, school districts in Nassau County will be faced with fiscal uncertainty for years to come and their educational programs placed in jeopardy. The pressure of State mandated deadlines of section 2023-a of the education law, also referred to as the Tax Cap Law require school districts to begin preparing their annual budgets much earlier in the school year. The Tax Cap Law limits increases of a school districts tax levy to no more than 2% or the rate of inflation, whichever is less, from the prior school year. By January of the year prior, school districts need to have fiscal certainty on tax levies received for the current year, and PILOT payments receivable for a current and upcoming school year. This is a result of the Tax Cap Law which requires that school districts submit to the State all relevant amounts, including tax revenue received and PILOT payments receivable for the prior and upcoming school year to ensure that the school districts comply with the tax cap. Without the fiscal certainty and timing provisions that written PILOT agreements provide, school districts cannot develop an accurate tax cap limit and as a result an accurate budget to be submitted to their voters.

Therefore this legislation would require that school districts be made aware of the amount of PILOTS in sufficient time to properly calculate its tax levy limit each year.

The proposed amendment would resolve the inherent inconsistency between the property tax laws and Administrative Code associated with these assessments based PILOTs, the Long Island Power Authority's LIPA Reform Act PILOT payments limits and the school district's fixed tax levy needs and their unique budget process.

Legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately.