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Hudson River-Black River Regulating District OKs loan from north country to Hudson River valley

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Money that the city of Watertown and other north country municipalities have paid to keep the levels of the Black River steady will now flow further south — to a cash-strapped portion of a state authority in the Hudson Valley.

The Hudson River-Black River Regulating District on Tuesday approved a $3 million loan from a reserve fund that has been built up on the Black River side of the authority to the Hudson River side of the authority, which is $4.9 million in the red.

In a 5-1 vote, board members and officials who met at the City Council chambers said they had little choice. They interpreted a court ruling on back taxes to mean that the entire Hudson River-Black River authority was responsible for the obligations, not just one half of it. That’s despite a state law that, north country lawmakers argue, keeps the Black River and Hudson River bank accounts separate.

“It’s not a huge issue in the scheme of things, but it doesn’t seem entirely fair what was going on,” said Watertown Mayor Jeffrey E. Graham, who said that the city pays the authority $28,000 annually. “As a contributor to the pot of money, I don’t like to see it just shipped down to the Hudson River to bail them out.”

The move must also gain the approval of the state comptroller and a state Supreme Court justice. Officials said that the approval was likely. If the board didn’t approve the move, the judge could find the authority in contempt of court, exposing it and its board members to fines or even imprisonment, said Robert Leslie, the authority’s counsel.

At the center of the debate is whether such a move would even be permitted. Opponents point to a 2010 comptroller’s office opinion that suggests it is not (Mr. Leslie said that he hasn’t received word yet from the comptroller’s office about whether it will approve the loan). Proponents of the loan, though, said Tuesday that such a loan would not be unprecedented. In the 1980s, the Hudson River side of the authority lent about $300,000 to the Black River side, officials said at the meeting.

“I don’t see where we can legally loan the money,” said Michael F. Astafan, a board member and the sole dissenter on the vote. “The judge is asking us to break a law. If we do it, we’re breaking the law. If we don’t do it, we’re breaking the law.”

The loan will soon be paid back with interest, supporters said.

“I am an optimist,” said David W. Berkstresser, the board’s chairman. “I think we will right the ship.”

The authority is trying to levy a tax on counties in the Hudson Valley, which would provide it a new stream of revenue. The counties are fighting the move in court.

“It’s like me saying I’m going to pay my bills when I win the lottery,” said state Sen. Patricia A. Ritchie, R-Heuvelton, who opposed the measure. “I don’t think it’s the best way to do business.”

Assemblyman Kenneth D. Blankenbush, R-Black River, attended the meeting Tuesday morning to voice his concerns.

“I think, financially, it’s a bad decision,” he said. “I still think the comptroller’s office will override this.”

Barring that, state legislators have pledged to submit legislation that would fully separate the Hudson River and Black River portions of the regulating district. Assemblywoman Addie J. Russell, D-Theresa, said in a news release that she will author the legislation on the Assembly side, and Mrs. Ritchie said she was also open to such legislation.

“Just because the Hudson River Regulating District has been unable to solve its financial challenges does not mean that we should sit by and allow them to undermine the financial health of the Black River Regulating District,” Mrs. Russell said in a news release.

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