Tax battle proves costly to Fulton County school districts

It cost nearly $50,000 for Fulton County and three local school districts to recover back taxes owed

It cost nearly $50,000 for Fulton County and three local school districts to recover back taxes owed to them by Hudson River Black River Regulating District, but county and school officials say the court battle may be over only temporarily.

The county just received its final invoice from the firm it hired to commence a lawsuit compelling payment of delinquent taxes by HRBRRD. In total, the effort cost Fulton County $23,840.40.

The Broadalbin-Perth, Mayfield and Northville school districts are receiving their final invoices in the mail, too, and their litigation fees are adding up. The three school districts filed a joint lawsuit March 11 to compel the state and regulating district to pay back the property taxes.

Northville Central School District Superintendent Kathy Dougherty said the district paid Albany law firm Girvin & Ferlazzo a total of $8,941.99 to recover those funds.

“We did sue for recovery of costs but that wasn’t allowed, and we also were looking for the interest but we didn’t get that,” Dougherty said. “So we lost a considerable amount of money getting this money back. It’s just another example of school districts having to fend for themselves.”

Broadalbin-Perth Central School District Superintendent Stephen Tomlinson said he has received legal bills totaling $3,172 to date but expects there to be more on their way.

“It’s disappointing that we have to sue another public entity to get them to pay rightfully owed school taxes,” Tomlinson said. “And any cost to taxpayers is unacceptable.”

The regulating district is the largest single taxpayer in the Northville and Broadalbin-Perth school districts and the second-largest in Mayfield.

Mayfield Central School District Superintendent Paul Williamsen could not be reached for comment Thursday.

The Fulton County Board of Supervisors’ Finance Committee approved a resolution Thursday to appropriate additional funds designated for the legal services of Murphy, Burns, Barber & Murphy. They were hired at an initial rate of $200 an hour, and the total payment was unknown after the lengthy court battle with HRBRRD.

County Attorney Arthur Spring recommended an estimated $5,000 be allocated from its contingency fund for legal fees. But as more invoices trickled in, the county ended up with a bill totaling $23,840.40 and a budget shortfall of $1,840.40.

“It was totally outrageous and irresponsible that [the regulating district] and the state of New York did not take responsibility for paying their tax bills,” Johnstown Ward 3 Supervisor John Callery said at Thursday’s Finance Committee meeting. “After many, many months of litigation, the Supreme Court decided not to make them responsible for any legal fees or interest. So unfortunately the county has to pay out to recover those taxes.”

School district officials said they’re not at all confident the regulating district will pay its 2011-12 tax bills, which are due today. Dougherty said the Northville school district will proceed with any necessary legal action to recover those funds as well.

“The fact that it took three school districts the equivalent of about $18,000 — that it took us that kind of money to obtain money that was owed to us and that we deserved and the students deserved for their programs — I think is extremely unfortunate,” she said.

The three districts earlier this month received outstanding taxes for the last two years from HRBRRD. The regulating district transferred more than $3 million from its Black River account to its Hudson River account to cover the overdue taxes after a June 23 judgment ordered payment of the $3,045,337.65 in debt.

But the regulating district is struggling to recover from a 2008 funding crisis and is in the midst of a five-county lawsuit. School and county officials said they believe until that suit is settled, HRBRRD will continue to have problems paying its taxes.

It was a given that the districts initially agreed to pay litigation costs, Tomlinson said, because if they hadn’t they would have been left still with almost $400,000 in unpaid taxes.

“But quite honestly we’re facing the same situation right now,” he said. “They haven’t paid next year’s bill yet. And I don’t know how there’s any long-term answer to how they are going to keep paying it. So I’m hopeful that we don’t have to pay litigation fees every year to have these bills paid.”

Categories: Schenectady County

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