The state would no longer pay the same property tax rate as local landowners under a plan proposed by Gov. David Paterson.
In a practice dating back to 1886, the state has paid property taxes to localities for certain lands to which it holds title. In 2007, the last year figures were available, the state paid about $6.1 million in taxes to towns, school districts and county governments in Chenango, Delaware, Otsego and Schoharie counties.
The proposal to cap the amount of property tax paid by the state to localities at 2008 levels would, statewide, save $9 million in 2009-10 and $16 million in 2010-11, according to the state Division of the Budget.
But the measure would create a double standard and harm the budgets of rural towns and school districts, according to advocacy groups who spoke out against it in recent days.
Much of the land owned by the state lies within the Adirondack and Catskill park boundaries. Most of the money paid out locally was for the many state forests in the area.
The state pays more than $200,000 each in county, town and school taxes for property in towns such as Pharsalia, McDonough, Colchester and Andes, where there are large tracts of state forest.
"It's just absolutely unfair and wrong," said Colchester Town Supervisor Robert Homovich on Monday.
In Colchester, 42 percent of the town is owned by the state or the city of New York.
"That doesn't leave us much for development and growth," Homovich said.
If this passes, the end result would be that the town's residents will be responsible for a greater share of the tax levy, he said.
"We're easy targets," Homovich said. "We don't have money. We don't have a big population."
The state in 2007 paid nearly $660,000 in county, town and school taxes for property it owns in Colchester.
Since individual tax rates vary between towns, school districts and counties, some of the rates have not been set.
A calculation of what the loss would be for the area in the 2009-10 state fiscal year was not available Monday.
Sen. James Seward, R-Milford, said he is opposed to the plan.
"Like any other landowner, the state should meet its obligation to pay local governments," Seward said Monday. "I'm going to work very hard to reject this proposal by the governor."
Aside from the double standard a tax cap would create, Seward said, he is also worried the measure would be an example of the state shifting its burden to local governments.
The proposal is bundled into Paterson's 2009-10 budget plan, which under state law must be adopted by the Legislature by April 1.
Paterson, a Democrat who released his executive budget a month early in December, has asked the Legislature to adopt a budget by March.
Seward said the Senate is waiting to see how the federal stimulus package would benefit the state before making major decisions on the budget.
It is not likely the Legislature would enact a budget by March 1, but Seward said it is on track to meet the April 1 deadline.
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