A provision in the voter-approved Community Preservation Fund allows a portion of the fund, which is generated through a 2 percent real estate tax in the five East End towns, to be used to offset taxes in school districts.

Originally, the criteria approved by East End voters in 2003 specified that only districts with a certain percentage of land off the tax rolls for pine barrens preservation qualified for the payments in lieu of taxes, or PILOTs, which serve to offset the high taxes communities incur owing to having so much land off of the tax rolls.

Riverhead School District was the only district to qualify.

But in 2007, the state legislature changed the criteria, without a public vote, and now the wealthier Hampton Bays and Eastport-South Manor districts also qualify.

The result, combined with a drop in preservation fund revenue, was that the PILOT amount allocated to the Riverhead School District in Southampton Town went down by $2.7 million for this year. Thus the school taxes in this part of the district shot up a staggering 14 percent.

Many residents in the communities of Flanders, Riverside and Northampton say their tax bills went up by close to $500 this year, and some fear they will increase even more in 2010.

"Senator LaValle and I are considering legislation that will make sure that doesn't happen again," Mr. Thiele said of the tax hike. He said a proposal has been drafted and it will be circulated to school and town officials for comment. The actual bill will probably be submitted in May or June, he said.

Mr. Thiele said the proposed bill will still make Riverhead, Hampton Bays and Eastport-South Manor the only districts that qualify for the PILOTs, but the decision as to how much PILOT money each district qualifies for will be very specifically spelled out in the legislation.

"We want to take away discretion from the town as to who gets what, because each year, the town comes up with different numbers," Mr. Thiele said.

Another important change, he said, is that the amount of PILOT payments each district is eligible for will be based on the amount of tax loss in that district, not on the size of the tax levy, as is currently the law.

Under the new tax loss formula, a district like Riverhead, which has about 80 percent of its land off the tax rolls in Southampton Town, would qualify for the largest PILOT amounts. Under the current tax levy formula, Hampton Bays gets more, because the amount of school taxes it collects in Southampton Town is larger than that of Riverhead.

Asked if the new proposal would be subject to a public referendum and whether that referendum would involve the entire East End or just Southampton Town residents, Mr. Thiele said, "That would be part of the discussion with the towns and schools."

Mr. Thiele and Mr. LaValle had urged the Southampton Town Board not to lower the PILOT amount to the school districts in a jointly written Nov. 10 letter to the board, warning that it would have "significant adverse impact on taxpayers in these affected districts."

The letter also urged the town to base the distribution on tax loss, rather than on tax levy, and also stated that the proposed changes be subject to a public referendum, adding that the state would retroactively ratify all town actions with regard to the PILOT program.

Mr. Thiele still feels the town should not have reduced the PILOT payments.

"The Town of Southampton really screwed up the PILOT payments and we're going to resolve it, so we thought the best thing to do was maintain the status quo while that was being done," he said.

Town officials, on the other hand, were critical of the state for changing the rules on the PILOT payment without a public referendum and with little notice. While three Town Board members initially wanted to maintain Riverhead's PILOT amount, the board ultimately reduced it, as Supervisor Linda Kabot warned them that the town had been notified by the state comptroller's office that the PILOT amount it allocated to Riverhead in 2007 was illegal and exceeded the amount permitted.

Ms. Kabot said at the time that the state law requires them to base the allocation on tax levy, and that when Riverhead was the only district qualifying for the PILOTs, it wasn't a problem, but when Hampton Bays became eligible, it ended up getting the largest chunk of the money.

Ms. Kabot also pointed out that the amount of money being generated by the preservation fund was way down.

"There's not enough money coming in to give additional money," she said at the time.

She said the town was being asked by two state lawmakers to ignore the town code regarding the PILOTs and to ignore its revenue projections for the preservation fund.

"They are saying put it in, and we'll fix it in Albany next year, and they'll ask the voters to ratify all that. It just doesn't smell right," Ms. Kabot said at the time.

Mr. Thiele acknowledged this week that the amount of revenue generated by the preservation fund was the one factor that could create fluctuations in the annual PILOT payments, even under his proposed revision.

"The overall fund numbers are down and that's simply a reflection of the national economy," Mr. Thiele said. "I wouldn't expect any increase in the PILOT payments in the short term, even based on the right numbers."

One depressed resident at the Riverside mobile home park, Derek Castro, 44, said he found it interesting that "rich people" in other parts of Southampton hadn't seen their taxes skyrocket.

Mr. Castro, a school bus driver currently on disability, likened the state's recent change in PILOT payouts without a referendum to taxation without representation.

"Our country fought against this over 200 years ago," he said. "I think it's crazy that the middle class and poor people are always getting the shaft."

tgannon@timesreview.com

Add your comments below:

Your name:

Your email:

Subject:


Comments:



Enter text seen above: