Talks between schools, county over river district's taxes halted

PHOTOGRAPHER: Jason Subik

Fulton County called off talks with three school districts Thursday after it became apparent that the districts were moving closer to a joint lawsuit against the county for not reimbursing them for the Hudson River Black River Regulating District’s unpaid taxes.

Northville Superintendent Kathy Dougherty said Thursday morning that Greg Fagan, chairman of the Fulton County Board of Supervisors, and Fulton County Administrative Officer Jon Stead informed the three school districts — Northville, Mayfield and Broadalbin-Perth — that they would not be attending a planned 9 a.m. meeting on advice of legal counsel.

“We offered the opportunity to have a conversation about the decision thus far for the county not to pay the outstanding taxes owed by [HRBRRD]. Up until 8:15 a.m. it was our intention to have this meeting,” she said. “On behalf of the three schools, we are all equally disappointed that this was the decision of the county. Of course we respect their right to make this decision.”

Fagan and Stead did not return phone calls seeking comment.

Fulton County officials have indicated they would rather face a lawsuit from the school districts and file their own lawsuit against New York state than cover the property taxes the regulating district has not paid on the Great Sacandaga Lake and its infrastructure.

Under normal circumstances, county governments pay school districts an amount equal to unpaid taxes, then foreclose on the properties that owe the taxes. Fulton County officials have determined that the county can’t foreclose on the regulating district’s state-owned land, leaving them no way to recover any of the cost of paying the taxes.

In Saratoga County, the regulating district owes the Edinburg school district $234,000 for the 2009-10 school year. Saratoga County Administrator David Wickerham said his county will follow state law and make Edinburg whole for the lost revenues but will then begin a process to try to foreclose on the regulating district’s properties.

“We’ll put a lien on them and then after three years we’ll try to foreclose. It’s never been tried before, so the courts will have to decide if it’s legal,” he said.

Saratoga and four other counties are already embroiled in a lawsuit against the regulating district. In February, HRBRRD sent Albany, Saratoga, Rensselaer, Warren and Washington counties a combined $4.5 million in first-ever bills for flood control benefits to make up for the revenues it lost due to a federal court ruling. All five counties have filed a lawsuit in state Supreme Court in Saratoga County against the regulating district and the state Department of Environmental Conservation, which oversees the district. The counties have vowed not to pay the flood control bills unless ordered to do so by a court.

The regulating district owes about $1.5 million in school taxes in Fulton and Saratoga counties for the 2009-10 school year. It also owes some county and local taxes, but it has no stable revenue stream to pay the tax bills.

The regulating district is the largest single taxpayer in Northville and Broadalbin-Perth and owes them $326,000 and $256,000 respectively. It owes Mayfield $354,000 for 2009-10.

HRBRRD likely won’t be able to pay the 2010-11 school tax bills for the districts either. The regulating district has faced a funding crisis ever since a federal court ruled it could no longer pass on the cost of its operating budget and local property taxes to downstream hydroelectric plants licensed by the Federal Energy Regulatory Commission. The ruling eliminated about $4 million of the district’s $5.8 million Hudson River-area operating budget, money that was largely used to pay local taxes.

Dougherty said the three school districts expect the regulating district to owe them a combined $1.9 million after school tax bills for the 2010-11 year come back unpaid. None of the three districts anticipate needing to use short-term financing to overcome budget gaps for the 2010-11 school year.

Broadalbin-Perth Superintendent Steve Tomlinson said his school board voted Monday to commence legal action against Fulton County for not paying the regulating district’s bill.

“I understand the county’s hesitation to meet with us, given the fact that there was a resolution in Broadalbin-Perth to go forward with [potential litigation],” he said.

Dougherty said Northville’s school board is prepared to vote Oct. 12 on a resolution to investigate and commence a lawsuit against Fulton County for not paying the taxes. Mayfield Superintendent Paul Williamson said his school board has voted to allow him to investigate a lawsuit but not commence one yet.

“The process is that they are supposed to make us whole; they’ve made us whole for our other taxpayers, and I expect them to make us whole for this,” Williamson said of the county.

Mike Clark, the newly appointed acting director for HRBRRD, said the regulating district does not expect to have a court date in the lawsuit over the flood control bills until December.

Another potential source of revenue for the regulating district is a FERC-initiated study to determine how much the regulating district can charge the FERC-licensed power plants using the part of the Federal Power Act that allows an annual “headwater benefits” charge. Clark said the results of the study are not expected to be available until sometime in spring 2011.

In the meantime, he said, the regulating district’s Hudson River area has only about $1.8 million in annual revenues, approximately $425,000 of which is generated by and used to fund the Great Sacandaga Lake access permit system. He said the district won’t be able to pay its school taxes until revenues increase.