The Hudson River-Black River Regulating District is considering using Black River-region money to pay more than $3 million in back taxes that the cash-strapped Hudson River operation owes on property in Fulton County.

The regulating district’s six-member board has scheduled a special meeting for 11 a.m. Aug. 9 in Watertown City Hall to determine whether it will use Black River funding to pay $3,045,337.65 in back taxes owed on the Great Sacandaga Lake reservoir it operates in Fulton County, said Michael A. Clark, the agency’s executive director. The regulating district pays all local taxes on its property.

In June, state Supreme Court Judge Richard L. Aulisi ordered that the regulating district must use Black River funding to pay school and property back taxes due Fulton County from the reservoir for the 2010 and 2011 tax years.

In the past, the regulating district had statutes in place that stipulated Black River and Hudson River were different entities that could not lend funds to each other.

But Judge Aulisi ruled that the regulating district has “a joint obligation to pay the assessed property taxes,” even though the land is in the Hudson River region.

At the Aug. 9 meeting, the regulating district’s board will vote on whether the Black River operation will “temporarily loan” the $3 million to the Hudson River entity to pay the back taxes, Mr. Clark said.

“At this point, it remains to be seen whether that will happen,” he said.

The funding would come from various Black River funding sources, including capital reserves and short-term investment accounts, he said.

In 2010 and again this year, the regulating district unsuccessfully lobbied state lawmakers to pass a bill that would allow the district to lend money between the Black River and Hudson River regions. Jefferson County legislators opposed the plan.

The Hudson River region, which has an annual $5.4 million budget, was hit with a $4.5 million budget shortfall after a federal court in 2008 ruled against the Federal Energy Regulatory Commission, affecting the regulating district’s authority to charge downstream FERC-licensed hydropower plants.

In response, the regulating district levied benefit assessments totaling $4.45 million against the five Hudson River counties: Albany, Rensselaer, Saratoga, Warren and Washington. The counties then filed a lawsuit in an attempt to overturn those assessments.

Since the 2008 decision, the regulating district has been forced to slash its workforce about 40 percent, down to 18 employees, because of the Hudson River region’s financial problems, Mr. Clark said.

In the Hudson region, the regulating district owns and operates the Conklingville Dam on the Sacandaga River and the Indian Lake Dam on the Indian River. Completed in 1930, the Conklingville Dam created the 42-square-mile Great Sacandaga Lake, which is the largest reservoir in the State.

The Black River watershed encompasses an area of 1,916 square miles in Jefferson, Lewis, Oneida, Herkimer and Hamilton counties.

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