The city and the county are close to an agreement on how they will collect overdue property taxes in Schenectady.
By next week they may have a deal, officials on both sides said.
The issue stems from Schenectady’s cash-poor condition. Mayor Gary McCarthy said the city can no longer afford to pay county taxes for property owners who do not pay their own bill.
The city has always “made the county whole” by paying all delinquent bills, then city officials try to collect from the property owners, but until recently they had little success.
Last year, under threat of foreclosure, hundreds of taxpayers paid up. But many more routinely pay late — often a full year late — and the city has to front the money to the county in those cases.
In 2011, the City Council voted to put an end to that policy. Instead, council members said, they would pass on county tax payments as soon as they wrested them out of the delinquent property owners.
County officials cried foul and tried to block the change on technical grounds. The council paid up last year, draining the city’s savings account down to $75,000 to pay the $1.4 million bill. That created serious cash flow problems all year, as the council could not pay for emergency items that came up, including at least one proposed lawsuit settlement.
This year, the council stood firm and did not pay the $1.2 million owed to the county. In response, the county sued.
But McCarthy said a month of negotiations has been fruitful.
“There’s a proposed settlement,” he said.
He plans to brief the council about it Monday. Until then, he would not release details, though he called it “advantageous to both parties” and said he found it a reasonable solution to the dispute.
County Attorney Chris Gardner agreed, saying negotiations are going well.
“It is quite possible we’ll have a tentative agreement by next Wednesday,” he said.
The county Legislature meets Tuesday and could discuss the proposed settlement then.
In the meantime, the county agreed to extend the deadline for the city to respond to the lawsuit.
“We gave them an extension on answering the lawsuit to work this thing through,” Gardner said.
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