JOHNSTOWN - State Supreme Court Justice Richard T. Aulisi on Thursday ordered Fulton County to pay nearly $1 million to three school district bordering the Great Sacandaga Lake in lieu of back taxes owed to them by the Hudson River-Black River Regulating District.
The districts are owed the money and the county was ordered to cover the delinquent taxes as required under state law.
"In view of the fact that the [county] had a statutory obligation and mandate to pay these assessments on or before April 1," Aulisi wrote, county Treasurer Terry Blodgett must make the payments within five days of the county receiving his decision and judgment.
Any delays in the process, Aulisi wrote, "will not be tolerated by the court."
"I'm very pleased," Northville Central School District Superintendent Kathy Dougherty said Friday. "I'm surprised at that timeframe."
Mayfield Central School District Board of Education Vice President Ernie Clapper stated Friday: "I think it is great news for our district in the troubled financial times we're facing."
But Clapper noted the county is also facing tough financial constraints and the ongoing, protracted litigation over the regulating district not paying its back taxes is "so frustrating."
The regulating district lost one of its main revenue sources in 2008 when a U.S. Court of Appeals ruled it no longer could charge fees to downstream hydropower companies.
The county was ordered by Aulisi on Thursday to pay, or "make whole," the regulating district's back taxes owed in these amounts to the districts: Mayfield Central School District - $372,036; Northville Central School District - $337,981; and Broadalbin-Perth Central School District -$230,169.
On May 25, the three school districts issued an Article 78 proceeding against the county and Blodgett seeking back taxes owed.
Aulisi's decision takes county officials, such as County Attorney Arthur C. Spring, to task for footdragging on the issue of making the districts whole, which is required under state Real Property Tax Law.
The judge noted the application by the school districts was returnable to his court June 25, and the county and Blodgett had until June 20 to serve an answer and supporting affidavits, but didn't.
"By not providing the assigned judge with a copy of the answering papers served on behalf of his clients in the matter at hand, it is readily apparent that the Fulton County attorney has failed to comply with even the most elementary rules of practice," Aulisi wrote.
Aulisi wrote that the three school districts have each "clearly" complied with state law.
He wrote that the county is taking the position the unreturned school taxes, levied upon the regulating, are "somehow unenforceable," but they are under state Environmental Conservation Law.
Board of Supervisors Chairman Michael F. Gendron and county Finance Chairman Greg Fagan couldn't be reached for comment Friday.
Delinquent taxes owed by the Hudson River-Black River Regulating District to the districts has been an ongoing issue the last few years. The latest legal entanglement involves the regulating district, which controls the Great Sacandaga Lake, being delinquent on 2012 county property taxes and 2011-12 school taxes.
The previous tax year, the districts, the county and the regulating district were involved in the same back taxes issue.
Last August, the regulating district's board voted to liquidate more than $3 million from its Black River section and loan the money to the Hudson River section to fulfill a court order by Aulisi. He ordered the regulating district then to pay Fulton County the full amount due to it and the school districts.
On Aug. 30, Blodgett paid $617,911 to the Northville Central School District, $703,418 to the Mayfield Central School District and $417,225 to the Broadalbin-Perth Central School District.
Dougherty noted that last year, the school districts joined with the county to sue the regulating district to get its back taxes for the previous year. But she said the districts didn't do that this year. She said Aulisi had indicated the districts were "suing the wrong entity." The school districts filed an application this year with state Supreme Court in Johnstown against the county.
"He's enforcing what he said last year," Dougherty said. "He's saying the county is responsible."
On May 14, the Fulton County Board of Supervisors voted to sue the regulating district for about $1.7 million the agency owes in delinquent property taxes. That Article 78 proceeding seeks $719,942 in county property taxes for 2012, as well as the money the regulating district owes the three school districts. That legal action echoed what happened last year, which ultimately caused the regulating district to use $3 million in reserves from the Black River arm of the agency to pay 2010 and 2011 county and local taxes and 2009-10 and 2010-11 school taxes to fulfill the court order.
Spring said the county's actions in the regulating district back taxes matter have sometimes been more symbolic than anything.
"We know what the law says," Spring said. "We just took a position that somebody has to stand up to the state, somewhere. We realize two wrongs don't make a right."
Hamilton County lawmakers in May also initiated their own lawsuit, saying the regulating district owes $71,588 for three years of unpaid taxes to the Northville and Wells school districts, as well as $48,000 in county and town taxes in Benson, Hope and Wells. Unlike Fulton County, Hamilton County covered the regulating district's missing tax payments for the schools.
The regulating district also owes million in taxes to Saratoga County, including the towns of Edinburg, Hadley and Day, and the Edinburg and Hadley-Luzerne school districts.
The regulating district in 2010 began to bill five downstream counties for flood control - a strategy that has withstood court challenges by the counties - but has yet to see revenue.
A state appeals court in early May upheld the district's plan to bill five counties downstream of the Great Sacandaga Lake for flood-control benefits. The counties are Albany, Rensselaer, Saratoga, Warren and Washington. The court also ordered the district to bill the state, which owns land along the Hudson River and benefits from the regulating district's flood-control operations. The plan may bring in millions in revenue for the regulating district each year.
Michael A. Clark, the regulating district's executive director, said Friday the appellate decision in May was "very positive." He said his agency recalculated the apportionment amongst the beneficiaries and recalculated the share to New York state.
He said his board meets Tuesday, but his agency is now "an awful lot closer" to receiving money it needs to pay its taxes.
"We acknowledge we've got to pay the taxes," Clark said.
Michael Anich covers Johnstown and Fulton County news. He can be reached at johnstown@leaderherald.com