ALBANY, N.Y. (AP) – State regulators have told the New York Racing Association not to sell $2 million in art at Sotheby’s because the historic paintings are owned by the state.

NYRA, a private agency operating since 1955 on a state franchise, hoped to collect $2 million from auctioning 19 historic paintings December 2. The sale of art donated over decades by horse owners was to be part of NYRA’s plan to remain solvent until its franchise expires December 31, 2007. If its plans aren’t successful, NYRA said it could dissolve by the end of November.

“The New York State Racing and Wagering Board objects to this unauthorized sale of state assets and requests that the art be removed from sale until such time that NYRA has applied for and received requisite approvals,” said state board Chairman Michael Hoblock in a letter November 15 to NYRA and copied to Sotheby’s.

NYRA and the state disagree on whether racing assets – including the Aqueduct, Saratoga and Belmont thoroughbred tracks – are owned by NYRA or the state.

“The board would like confirmation, no later than close of business this Thursday [November 17], that the art has been removed from auction,” Hoblock wrote. “Should the art not be removed from auction, the board is prepared to engage the services of the New York State Attorney General to seek injunctive relief against NYRA and Sotheby’s to ensure that the pieces are not improperly sold.”

Sotheby’s website predicted one of the paintings was expected to sell for $750,000.

NYRA is considering hiring a bankruptcy attorney, a spokesman said. NYRA is also considering the sale of land near Aqueduct race track, but there are also questions over the ownership of that asset.

A NYRA spokesman didn’t immediately respond to a request for comment.