LIPA settlement could push districtwide tax rate up an estimated 9.5%
The Northport-East Northport board of education is scheduled to hold an emergency meeting today to finalize the tax levy before the October 1 deadline. The public meeting begins at 6pm at the Brosnan building.
A recent settlement between the Town of Huntington and the Long Island Power Authority could push Northport-East Northport (NEN) tax rate increases above what voters anticipated when they approved the district’s 2026-27 budget in May. District officials now estimate that residents could see a tax rate increase of about 9.5%, when accounting for the recent settlement and the final year of the 2020 Northport Power Plant settlement’s tax “glidepath.”
NEN residents approved the district’s 2026-27 school budget on May 19 – before any word of the new LIPA/Town of Huntington agreement. The $195.1 million budget carried a 1.99% budget-to-budget spending increase and a 2.26% tax levy increase.
At the September 16 BOE meeting, the district explained that, as part of the new settlement, certain LIPA transmission and distribution properties are being removed from the tax roll and becoming tax-exempt properties subject to PILOT payments, or payments in lieu of taxes.
Board members discussed later in the meeting whether to reduce the district’s tax levy of 2.26% to account for anticipated LIPA PILOT payments or leave the levy unchanged. The board is scheduled to meet in an emergency meeting today, Thursday, September 24 to finalize the tax levy before the October 1 deadline.
Assistant Superintendent of Business Bob Howard was hesitant to provide numbers detailing the exact financial impact this settlement could have on individual taxpayers, stressing that the figures as of last week were not final and will depend in part on the amount of LIPA PILOT revenue given to the district.
Why this could further increase school taxes
When property comes off the tax roll, the school district loses some of the taxable property value it uses to generate its tax levy. PILOT payments can replace some of that lost revenue. If the PILOT payments are less than the property taxes previously generated by those properties, the remaining burden is spread across the district’s taxable property, potentially increasing the tax rate paid by homeowners.
Later today, the board is expected to take action on a resolution to lower the levy by the “best guess estimate” of anticipated PILOT revenue at its emergency meeting, Superintendent Dave Moyer told the Journal. The final tax impact will depend on the board’s decision and the amount of PILOT revenue ultimately available to the district.
Preliminary district calculations have put the potential increase to the districtwide tax rate in the range of approximately 9% to 12.5%, depending on the final PILOT estimates and levy adopted by the board. Those figures were not final as of September 23.
A quick look back
In 2020, the Northport-East Northport Board of Education approved a settlement with LIPA and the Town of Huntington that established a seven-year “glidepath” for reducing the taxes paid by the Northport Power Plant. The Huntington Town Board subsequently approved the settlement in September 2020.
This newest settlement between LIPA and the town is separate from the 2020 settlement that gradually shifted the tax burden to taxpayers.
Under the most recent settlement, LIPA’s transmission and distribution properties throughout the Town of Huntington are being removed from the tax roll and will instead be subject to PILOTs. Combined with the final year of the Northport Power Plant settlement’s glidepath, the change is expected to reduce the taxable assessment within the Northport-East Northport school district. As a result, the tax rate would have to increase to raise enough money to fund the approved budget.
Taxpayers can therefore expect to see a tax rate increase of approximately 9.5%, according to the district’s current estimate, if the school board reduces the levy as anticipated. That increase would be more if the levy were to stay the same.
The final impact on individual tax bills has not yet been determined and calculations are still changing, in part because the LIPA PILOT affects more than just NEN and has to be reconciled among the various taxing jurisdictions – the district was continuing to receive additional information from the town just yesterday, Moyer said.
Navigating the unknown
An additional factor in this equation is the amount of PILOT revenue LIPA will actually pay. When asked by the Journal earlier this month if the interim agreement between the town and LIPA guarantees that LIPA’s Payment in Lieu of Taxes for 2026-2027 will 100% replace the property tax revenue previously generated by the properties in Northport-East Northport, town officials said, “no.”
In 2014, the LIPA Reform Act capped annual increases in certain LIPA PILOT payments at 2%. The board discussed this limitation at its September 16 meeting, noting that it allows LIPA to have “a ceiling but no floor” when making payments. According to the discussion, the amount LIPA pays can fall short of the property tax revenue that would otherwise have been generated by the properties. Over the last decade, Suffolk County has made up some of those differences. Under the new settlement, district officials said that amount could instead fall on local taxpayers, contributing to further tax bill increases and uncertainty.
To navigate these variables, school district officials said they consulted with school business officials in Nassau County, where districts have dealt with LIPA PILOTs for approximately a decade. Because the payments can fluctuate, those districts have generally used the previous year’s payment as an estimate for the coming year. The NEN school board is expected to follow suit and will be estimating the LIPA PILOT revenue using the prior year’s payment because the actual amount for 2026-27 isn’t known yet.
What happens next?
Board members are expected to vote on whether to adjust the levy, and by how much, in light of the anticipated LIPA PILOT payment at tonight’s emergency board of education meeting.
When asked by the Journal earlier this month when the town assessor’s office will release the final, confirmed LIPA PILOT allocation amounts to the Northport-East Northport school district so officials can properly account for those revenues before setting the levy, town officials said that the town comptroller was working with each affected school district to provide them with the necessary information prior to the September levy.
The board also briefly discussed on September 16 engaging a lobbyist to advocate for changes related to LIPA’s tax payments. No decision was made.
A video of the full LIPA/TOH discussion from the September 16 BOE meeting can be found here. The emergency meeting is scheduled for Thursday, September 24 at 6pm at the Brosnan building in Northport. The agenda and link to live video can be found here.
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