Three Fulton County school districts blocked last week in state Supreme Court from directly recovering millions of dollars in delinquent property taxes owed by the state agency that operates the Great Sacandaga Lake met Wednesday to decide whether to sue the county for the money.
Northville Central School Superintendent Kathy Dougherty said Wednesday the parties were preparing a news release to announce their decision. She declined to confirm a lawsuit will be filed against the county, a step she said Tuesday was likely.
In his decision last week, state Supreme Court Judge Richard T. Aulisi blocked the school districts from receiving direct payment from either the Hudson River-Black River Regulating District or New York state, but noted that county government is the entity legally obligated to make school district’s whole for unpaid taxes.
In litigation filed in March, the county and the Northville, Mayfield and Broadalbin-Perth school districts were co-plaintiffs against both the regulating district and the state.
While Aulisi ruled the regulating district had 30 days to pay Fulton County more than $3 million in back taxes, he dismissed claims against the state and found the school districts had no standing in litigation against the regulating district because of their option to sue the county.
By law, Aulisi said, the county must make the school districts whole by April 1 each year.
“The record before the court was silent as to why the petitioning school districts failed to exercise their statutory entitlement of payment from the Fulton County treasurer,” Aulisi noted.
The lawyer for the Northville school district, Kristine A. Lanchantin, did not return a phone call. Mayfield Superintendent Paul Williamsen and his counterpart in Broadalbin-Perth, Stephen Tomlinson, could not be reached Wednesday.
The school districts may not have had standing in the first lawsuit, but they will eventually win anyway since most of the $3 million ordered to be paid to the county by the regulating district is earmarked for the schools.
The main question asked by all parties, including regulating district officials, is whether the agency will find the money to make the payment to the county. A 2008 federal court decision nullifying the agency’s authority to collect fees from downstream hydropower facilities eliminated about $4 million of the agency’s annual $5.8 million revenues.
The agency responded by imposing about $4.5 million in total annual levies on five downstream counties for flood control services. The counties asked to have that bill overturned but lost this year in state Supreme Court, though they are appealing.
Michael Clark, executive director of the regulating district, said the agency recently served the five counties with a demand for payment. As of later this year, the five counties will owe for three years — nearly $15 million in total, Clark said.
“We’ve been working all along to find a way to pay all those tax bills. We’re looking at all options in the short term to make that payment,” he said of the court-ordered $3.1 million.
Fulton County Administrator Jon R. Stead said county officials and their attorney are “still trying to find out where [the court decision] leaves us in terms of the next step. … It’s quite a quagmire if you think about it.”
Stead said Wednesday the county remains optimistic about payment. “We’re hoping to receive a check from Hudson River any day now,” he said.
He said the county might be able to make the school districts whole on the initial tax claim, but cannot cover the bills as they continue to come due from the regulating district. Stead said the county has a surplus of about $10 million.
“The county understands the predicament the school districts are in,” Stead said.
The county and the school district have also accrued legal bills. Stead said the county spent about $15,000, and Dougherty said the school districts spent slightly less than $6,000 each.
Northville voters rejected the district’s proposed budget this spring, which even after resorting to adoption of an austerity plan imposes a tax hike of more than 20 percent. Prior to the vote, Dougherty calculated about 15 percent of the tax increase is attributable to the lost revenue from regulating district taxes.
Northville’s share of the $3.1 million is $656,000, but when tax bills are mailed in September, the agency will owe another $330,000, Dougherty said, raising the total to about $1 million.
In Mayfield, which also shares a long border along the lake, as well as lake-bottom property owned by the district, Williamsen said last week the total bill as of September will be about $1 million.
The agency’s two-year bill in Broadalbin-Perth is $475,000.
To help balance the budget this year in Northville, the district eliminated two teacher positions, reduced four others to half-time and cut five other positions.
Even if the district had received its tax money from the agency, Dougherty said it would not have restored all positions or eliminated a tax increase. She said the district also lost $556,000 in state aid, another large portion of its $9.7 million budget.
Spending in the defeated Northville budget was up $229,000 over last year.
Mayfield and Broadalbin-Perth also cut positions to balance budgets strained by loss of the property tax money.