LIPA to challenge assessment

The Long Island Power Authority plans to challenge the tax assessment of the Barrett Power Plant in Island Park in the hope of reducing the taxes it pays, which could lead to dire financial consequences for residents of the Island Park School District.

LIPA has contracts with many National Grid power plants, and pays the taxes on those plants. According to LIPA, its tax burden accounts for over 13 percent of customers’ bills. The power authority wants to challenge the plants’ assessments, and hopes to lower its taxes, so that it can reduce rates for its 1.1 million customers.

“It could potentially have a huge impact on us,” said Island Park schools Superintendent Dr. Rosmarie Bovino. “[The Barrett plant] represent 46 percent of our tax base.”

This year, the school district’s tax levy was just over $28.9 million. LIPA paid 46 percent of that, or just over $13.3 million. Any reduction in the amount that LIPA pays in taxes to the school district would mean an increase for residents.

LIPA says it is challenging its plants’ assessments because it is overtaxed. A 2008 report by the American Public Power Association calculated that the median payments in taxes and other payments to municipalities of 340 public power systems were 4.7 percent of a system’s operating revenues. LIPA’s tax payments, in contrast, represent about 13.2 percent of its operating revenues, according to a statement released by the authority.

“I think it would be a very difficult thing to happen immediately,” said Bovino of a sizable reduction in LIPA’s tax payments. “It would have such a huge impact on the community — I can’t imagine any of the legislators that represent the people of Island Park would do anything like that to them, especially during these very difficult economic times.”

Bovino added that any major change in the assessment of the Barrett Plant would have to be gradual. There are laws, she said, governing the amount that an assessment can be increased or reduced.

“So they are limited,” she said. “The community would have to be informed of whatever the proposals are, exactly, in terms of the changes that would be made to the assessment.”

For its part, LIPA stated in a press release, “As part of LIPA’s mission to provide highly reliable and economical electric service, it is the fiduciary responsibility of LIPA’s independent Board of Trustees to manage and examine all of LIPA’s costs. LIPA will continue to pay property taxes to municipalities that host generating facilities and LIPA-owned equipment to the extent agreed to, but it should not be unfairly burdened with taxes that ultimately are passed on to our customers.”