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Public water takeover stalled in Assembly, taken out of budget

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Legislation to allow a public takeover of New York American Water’s Long Island assets has stalled in the State Assembly.

According to a report released on March 29, a study ordered by Gov. Andrew Cuomo and conducted by the state Department of Public Service found that creating a public entity to take over NYAW’s Long Island infrastructure would be both viable and in residents’ best interests.

The DPS recommended that state legislators act now to establish a new municipal Nassau County Water Authority to relieve the burden of special franchise taxes on NYAW’s ratepayers. However, some legislators are concerned about how the relief of those taxes for NYAW ratepayers could affect the rest of Long Island. Efforts to include the takeover in the 2021-22 budget were unsuccessful, so it will have to be accomplished through standalone bills.

NYAW President Lynda DiMenna said the company commends Cuomo for introducing a reasonable proposal that included addressing the tax burden placed on its customers. She said it is unfortunate that the State Legislature did not take action.

“Now New York American Water’s long delayed May 1 rate increase will be implemented without the benefit of tax relief that would have lessened the impact of this increase for our customers,” DiMenna said. “We will continue to help our customers minimize the impact of this rate increase on their bill by providing them with tools to help them monitor water usage and conserve.”

Assemblyman Charles Lavine, a Democrat from Glen Cove, said the legislation could involve NYAW being relieved from having to collect $25 million to $30 million per year in special franchise taxes. He said this could result in those taxes being compensated by other utility companies, possibly raising taxes for people across Long Island whose water is not currently under NYAW control.

Another option, Lavine said, could see the state compensate for the special franchise tax if the Nassau County Water Authority were established. He said the legislation does not necessarily need to be a part of the budget and could instead become one or two freestanding bills dedicated to dealing with the special franchise tax and establishing the Nassau County Water Authority. If the legislation were turned into freestanding bills, he said, the measures would receive more care and attention than it would if they were a part of the state budget.

“It’s a complicated matter, and it requires the time and attention necessary to make sure the program is understood and to make sure the program helps and does not hurt the people of Nassau County,” Lavine said.

Assemblyman Michael Montesano, a Republican from Glen Head, said the impact that the special tax relief might have on other Long Islanders could be low. He used the taxes that the Long Island Power Authority pays to the North Shore Central School District as an example. LIPA currently pays over $10 million in taxes to the district because of its property in Glenwood Landing. Those property taxes are funded by all of LIPA’s customers, not just those who live in the North Shore School District, he said, and the elimination of the special franchise tax would likely function in the same way, having a minimal impact on other residents’ taxes across the Island.

“This type of scenario applies to everything that’s out there,” Montesano said, “so I don’t know why they’re singling out American Water.”

Montesano said Cuomo has to address the specific concerns that legislators have with the legislation and address them in the budget to let it go through. Cuomo has been supportive of the legislation, Montesano said, so he should push for it to be approved by the Assembly.

The State Senate approved the legislation last week. State Sen. Jim Gaughran, a Democrat from Northport, has been a strong supporter of public water on the North Shore since he took office in 2019 and has authored several bills aimed at bringing municipal water to the area. He said NYAW’s 125,000 Nassau County customers have been exploited for years and are “staring down the barrel” at a 26 percent rate hike coming May 1. The state government must act urgently to provide relief, he said.

“That’s why the State Senate will be passing my legislation as soon as possible, written with the partnership of the governor’s office and the Department of Public Service, to municipalize Nassau County NYAW ratepayers and get rid of private water in Nassau County,” Gaughran said, “and I hope my colleagues in the State Assembly will swiftly follow suit. Time is of the essence.”