Nassau blocked from charging tax-exempt organizations for sewers

A state Supreme Court justice has rejected Nassau’s eight-year effort to raise revenue by charging school districts, hospitals and other nonreligious tax-exempt organizations for discharging sewage into the county’s sewer system.

Justice Antonio Brandveen in Mineola declared Wednesday  that the county’s 2010 ordinance and amendments that imposed sewage fees on such entities as Hofstra University, St. Francis Hospital and multiple Nassau school districts, are “null, void, unenforceable and invalid.”

County spokesman Michael Martino said officials have not decided whether to appeal.

“The county has just received and is reviewing the decision,” he said.

Hospitals, libraries and schools historically have not paid for sewage treatment or disposal.

But in October 2010, as then-County Executive Edward Mangano and the Republican-controlled legislature were looking for ways to address persistent budget deficits, GOP county lawmakers adopted new fees of up to 1 cent per gallon of water used by tax-exempt groups. They exempted houses of worship, veterans organizations and fire companies.

Minority Democrats voted against the new fees, calling them a “toilet tax.”

The county ordinance also imposed service charges on some “high water users” that pay property taxes, arguing that some commercial properties were paying too little for the excessive amount of water they used.

At the same time county lawmakers imposed the sewage fees in 2010, they voted to repeal the “county guaranty” requiring Nassau to pay all tax refunds resulting from erroneous assessments.

The guaranty, which repays taxes collected by other taxing jurisdictions, including school districts, had been costing the county more than $80 million a year.

In 2014 the Court of Appeals ruled unanimously that Nassau’s repeal violated the state constitution and home rule law because only the State Legislature could change the guaranty.

In the sewer case, just as the new charges were to take effect, multiple plaintiffs won an injunction prohibiting the county from imposing or collecting the fees. The state Appellate Division subsequently denied Nassau’s motion to lift the injunction while arguments were being heard in Supreme Court. As a result, the sewer fee revenue was not included in recent county budgets.

In a 26-page decision, Brandveen determined that the county legislature’s authority to impose sewer fees expired in 2003 when the State Legislature approved creation of the Nassau County Sewer and Storm Water Finance Authority, which consolidated Nassau’s numerous sewer districts into one system.

That statute directed that only taxes, not fees, would be used to pay for the costs of providing sewer services. Hence, Brandveen wrote, the county ordinance imposing sewer fees is invalid because the county legislature cannot overrule state law.

 Furthermore, Brandveen said, the ordinance directing the county treasurer to set fee rates for the tax-exempt organizations was too vague and could lead to arbitrary enforcement while giving “unchecked authority” to the county treasurer.

Martino said the county was represented in the case by the White Plains law firm of Spolzino Smith Buss & Jacobs. 

The county legislature’s current Presiding Officer Richard Nicolello (R-New Hyde Park), who was a county legislator in 2010, said in a statement that the Sewer and Storm Water Finance Authority "has operated at a deficit since it was created by the Suozzi Administration," a reference to former Democratic County Executive Thomas Suozzi, now a congressman.

County Executive Laura Curran, a Democrat, "will now need to find another way to fund the Authority without raising taxes,” Nicolello said.