Editorial: Suffolk Should Appeal Rejection of LIPA Settlemen

SECTION: Viewpoints
DATE: 12-15-2000

Now that state Supreme Court Justice James Gowan has rejected the settlement that spared Suffolk County from having to pay back about $1.4 billion in excess taxes collected on the Shoreham nuclear power plant, Suffolk has little choice but to appeal the decision.

To let it go unchallenged would throw the county's otherwise well- managed finances into disarray. And it could set off a round of intracounty fiscal and legal battles, as Suffolk tries to recoup the shares of the debt due from Brookhaven Town and the Shoreham-Wading River School District. That could push the school district in particular into bankruptcy.

Under the settlement that the Long Island Power Authority struck with Suffolk, LIPA settled for less than half, $620 million, to be repaid through a small surcharge on all Suffolk electric rates. That was a reasonable and essentially painless compromise, since Suffolk consumers got a big rate cut at the same time. And it was the best solution LIPA could devise on its own; Suffolk politicians failed to produce any repayment plan more to their liking.

But the settlement was challenged by Islip Supervisor Peter McGowan and supervisors from other towns, on the ground that it unduly burdened their communities: As county taxpayers, they argued, they should bear the cost only for the county's small share of the refund, not for Brookhaven's and Shoreham's shares.

Would that it were so easy. If they got their way, the result in terms of financial burden probably wouldn't be much different from the settlement: There's no practical way the Shoreham school district, with a $33-million annual budget, can repay its share- roughly 40 percent of the total now owed, about $250 million. Suffolk probably would have to bail out the school district, so all county taxpayers, including Islip's, would wind up with that tab anyway. But it would be hard to raise taxes to pay for it and to undo all the legal tangles involved.

Those are practical concerns: The further question is whether the settlement violates the Suffolk County Tax Act. Judge Gowan thinks so. We think it's well worth testing that conclusion in a higher court.