By JARRETT CARROLL

For the Express

Fulton County and three area school districts formally filed a lawsuit yesterday against the Hudson River-Black River Regulating District seeking to recoup over $3 million in unpaid property and school taxes.

The legal proceedings were initiated after state, county and school officials could not come to any consensus on how to rectify the situation.

The unpaid property tax bills come as a major blow to the schools and the county as they face an uncertain state budget proposing deep cuts in financial aid. The regulating district is operating as a state agency, which ties the hands of local tax collectors because they cannot foreclose on state-owned land.

In total, Fulton County, the Northville Central School District, the Mayfield Central School District, and the Broadalbin-Perth Central School District —who are all named as claimants — are owed $3,132,774.78 in real property taxes and penalties.

The back taxes include the 2009-10 and 2010-11 tax years.

The county has hired outside counsel for its recovery efforts in the Albany firm of Murphy, Burns, Barber and Murphy. Attorney Peter Barber is handling the case and said the issue was trying to be resolved through the state legislature, but that an impasse resulted in legal action.

Barber’s firm issued ultimatums to both the regulating district and the office of State Comptroller Thomas DiNapoli before filing the suit yesterday.

“We have commenced an Article 78 proceeding,” he said.

The county and the schools have named the State of New York and the Hudson River-Black River Regulation District in the lawsuit, which will be heard by the Fulton County Supreme Court.

District officials like Broadalbin-Perth Superintendent Stephen Tomlinson said they cannot discuss the details involved with the suit, but minced no words when it came to what money means to their schools.

“I cannot comment further on pending litigation, but I do want our taxpayers to know we are working to get every penny we believe we are owed,” he said.

The regulating district is the largest single taxpayer in the B-P district. Tomlinson said that out of the $3 million, his district is owed $196,000 from last year and an additional $279,000 this year. Which means his district is out nearly half a million dollars before the new state budget is even passed.

Simply put, Tomlinson said the lost tax revenue has put his teachers’ jobs in jeopardy.

“The money this year is very important,” said Tomlinson. “Eight teaching jobs could be lost as a result of this.”

Michael Clark, executive director of the Hudson River-Black River Regulating District, said the fully understands the severity of the situation and that his organization intends to pay back all money owed.

“I completely understand the school districts and we acknowledge our responsibilities,” he said. “We fully expect to pay the school and property taxes when we are able to ... we can’t pay the taxes right now, but that cannot continue.”

The delinquent payments began after the regulating district lost a substantial portion of its funding.

A federal court ruling in November of 2008 eliminated the agency’s authority to levy taxes against federally-licensed hydropower plants along the Hudson River, as it had done since the reservoir was created in 1930. This decision took away 80 percent of the Hudson River area’s revenue, an annual take of about $4.5 million.

Clark said the regulating district has had “a multitude of discussions” with the state legislators on what to do and how to properly fund the agency. How the agency is going to make up for lost tax revenue in order to pay its own taxes has been the main issue.

“Our taxes alone have been 50 percent of our expenditures,” said Clark.

Assemblyman Marc Butler, R-Newport, who’s 117th District covers Fulton County, said he and state Senator Hugh T. Farley, R-Niskayuna. proposed legislation that would allow the agency’s Hudson River districts borrow money from its Black River districts.

“The Black River districts are in a better financial state,” he said of the two separate districts controlled by the regulating district.

However, the bill never took off and talks have gone from bonding to other solutions, but nothing substantial has been move forward by the legislature.

“We’ve been talking with the parties involved to come up with some kind of arrangement,” Butler said.

The agency describes itself as a “New York State public benefit corporation that protects public health and safety by regulating the flow of waters in two great neighboring watersheds in the Adirondack Region: The Upper Hudson River and the Black River.”

The regulating district reduces floods and drought in the Hudson River and Black River valleys through a series of dams and reservoirs as well as applying water conservation and management methods.

As it stands now, the matter is in the hands of the county court.

“Right now this thing is a tremendous mess and I feel for the school districts,” Butler said. “There’s no doubt that the state budget has exasperated the situation.”