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December 7, 2007

Judge finds state tax payments, exemptions "palpably arbitrary"

ALBANY, N.Y. (AP) — A judge has found the mix of tax payments and exemptions on state land "palpably arbitrary" and issued a ruling to stop such payments to municipalities following review of his decision by higher courts.

The lawsuit was filed by a town supervisor from western New York against then Gov. George Pataki, the state Legislature and its leaders and the comptroller, claiming some municipalities got state tax money or payments in lieu of taxes while others like his town unfairly did not.

Acting State Supreme Court Justice Timothy J. Walker, in a ruling Nov. 14, agreed. He noted "recognized disparity" resulting in "invidious discrimination" and denying equal protection under law.

"The state constitution does not prohibit dual tax rates or require that all taxpayers be treated the same. It requires only that those similarly situated be treated uniformly," Walker wrote.

The suit was filed by John C. Dillenburg III, who was supervisor in the town of Arkwright in Chautauqua County.

The judge noted the first statute to permit taxation of state-owned land was in 1886 for the Forest Preserve, and many other measures followed. The original justification "bore a rational relationship to legitimate state purpose," like compensating municipalities for the large state-owned parcels that would otherwise be exempt from local taxes in the Adirondack and Catskill forest preserves, or the benefits of state ownership to residents of other parts of the state, like watershed protection.

But some later statutory expansions "divorced the rational relationship from any legitimate state purpose," Walker wrote.

Since he stayed his own ruling, it has no immediate effect. The attorney general's office, which representing the state in the lawsuit, is expected to appeal.

John Sheehan, spokesman for the Adirondack Council, said ending such payments in the 6-million acre Adirondack Park, with 2.7 million acres of state land and another 1 million acres covered by state easements, would have "terrible ramifications" for the region's economy and possibly for the preserve.

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