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The state of New York owes Northville Central School hundreds of thousands of dollars in unpaid property taxes (Photo:  Northville CSD website)
The state of New York owes Northville Central School hundreds of thousands of dollars in unpaid property taxes (Photo: Northville CSD website)

Are state property tax payments to Adirondacks a sure thing?

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In many parts of the Adirondack Park, the biggest engine of the local economy isn't tourism or timber or mining. The main driver of the cash economy is the state of New York.

The state funds thousands of jobs in the Park at prisons, hospitals, schools, and mental health facilities.

But Albany also makes tens of millions of dollars in direct property tax payments every year to local governments and school districts, while asking for almost no services in return.

With New York's budget deficit expected to top ten billion dollars next year, community leaders are worried that those tax payments could be squeezed.

In part one of a two part series, Brian Mann looks at communities in the Park that have already seen the state cut off their property tax payments.

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For decades, the Hudson River Black River Regulating District has managed a massive system of dams and reservoirs across the North Country.

But the state agency has also been one of the region’s biggest property tax payers, forking over millions of dollars a year to counties and towns and school districts like the one in Northville that sits on the shore of Great Sacandaga Reservoir in the southern Adirondacks.

But in 2009, Katherine Doherty, Northville’s superintendent says those property tax payments suddenly stopped.

"The Regulating District owes the Northville school district from the 2009-10 school year $326,000 and a similar amount for the 2010-2011 school year."

Doherty says the Regulating District’s decision to stop making the payments sent shock waves through her district.

 "Oh my gosh!  We have just a little over a $9 million budget.  So $650,000 is a significant amount of money."

Northville isn’t alone.  School districts and local governments in Fulton, Saratoga and Hamilton Counties have all seen their property tax payments from the regulating district stopped. 

"We're always anxious when taxes don't get made," says Mark Brand, superintendent in Indian Lake.

The Regulating District stopped paying after a court decision in 2008 cut off one of the agency’s main sources of revenue. 

Acting director Mike Clark acknowledges that the state’s debts to local governments and schools are mounting fast.

"Our school taxes run about $1.5 million per year," he said.  "So you're looking at approximately $3 million [in unpaid taxes]. "

Clark says the Regulating District is scrambling to find new sources of revenue, but that effort too is tangled up in the courts.  In the meantime, his organization has asked the state legislature to help make the payments.

"We understand the impacts that this has to these small rural school districts.  We don't like one bit the bind that they are in as the result of this Federal court decision," Clark said.

"We're asking [the legislature] for some help, either a loan, or a budget item or something to that effect that would help us."

But the state of New York faces a $10 billion dollar deficit next year.  So far, Albany has declined to bail the regulating district out. 

And after two years of non-payments, school districts and counties in the Adirondacks have begun exploring legal options of their own – trying to figure out ways to make the state of New York pay up. 

"I know that the local person who owned a home in the community that didn't pay their taxes, we would recover that money through the county," said Indian Lake's Mark Brand.

"The county...would recover the taxes owed to the school district.  I'm really not sure if the same circumstance works with a big out fit like the Regulating District because it's part of the state."

While all the court fights and the political wrangling in Albany continue, schools have been forced to get creative to make up the lost revenue.  

"Our fund balance has become frighteningly low, so we have made steps internally to be very, very frugal with anything we do," said Northville's Katherine Doherty.

She says the district has been forced to cut back on extra bus schedules and school supplies.  She also sees the state’s failure to make these property tax payments as a warning sign for other school districts and governments that rely on the state for funding.

"There's concern about the future of all state funding," Doherty said.  "We don't live in a bubble here.  We certainly appreciate that the state is going through it's own fiscal stress.  We're just a microcosm of what's happening in the state."

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