Nassau County Comptroller George Maragos estimated the potential liability from an adverse court decision regarding certain special tax levies received by Special Districts, dating as far back as the 1990’s through 2010, could reach $300 million including interest – despite the fact that the special districts received the funds, not the County. On September 23, 2014, the highest Court in New York, the Court of Appeals, denied motions by the County to further appeal based on the “County Guaranty.” We encourage the Mangano Administration to pursue alternatives to minimize the potential liability through the State Legislature, legal alternatives, negotiations with the towns and special districts and petitions to the State Public Service Commission.
“The Mangano Administration should be complimented for its swift action early in its first term to correct the assessment roll in order to end future liability,” said Comptroller Maragos. “Although this is a major court setback, the County had anticipated the potential liability in its financial statements, including most recently in its 2013 year-end financial statements. The County would need to bond to pay the eventual refunds even though it never received the money that went to the special districts.”
The “County Guaranty” was enacted in 1948, which places a heavy burden on Nassau County, namely, the obligation to refund any taxes or levies paid to Schools, Towns and Special Districts of the County, which were later successfully grieved, even though the County never receives the money. Attempts by the Mangano Administration to end the “County Guaranty” were denied by the courts. In response, at the request of the Mangano Administration, the State Legislature recently passed legislation, which is awaiting Governor Cuomo’s signature, which will have the effect of reducing the County’s commercial tax certiorari exposure prospectively resulting from the “County Guaranty.” The Mangano Administration had previously also enacted local reforms to settle residential small claims assessment errors prior to incurring any potential refund liability.
The court cases were filed by various utility companies including Verizon, Keyspan, and New York Water against the Towns of Oyster Bay, Hempstead and North Hempstead and certain garbage districts in one set of cases; and against the County in other cases. In the first group of cases, the utilities sought tax refunds paid for poles and transmission wires, claiming that these properties did not benefit from the services provided by the garbage districts and thus should not have been subject to the levy. On September 23, 2014, the New York State Court of Appeals denied the County’s request to appeal a lower court ruling that allows the towns to seek indemnification from the County under the “County Guaranty” for any refunds paid by the towns and special districts.
“Whatever the final settlements and payments to the utility companies, it is worth noting that these utility companies have already recovered any levies paid through higher rates charged to our residents,” emphasized Comptroller George Maragos. “I am confident that the Mangano Administration will pursue potential relief through the State Legislature and appeals to the State Public Service Commission to reduce the payments to be made or to apply any refunds received by the utilities to lower utility rates. Additionally, the County liability may be further minimized by appeals on the interest responsibility of the towns and special districts.”