A state appeals court has unanimously rejected a challenge to the state's authority to make property tax payments on state lands.

The Appellate Division of State Supreme Court reversed the November ruling of a judge in Chautauqua County who found the mix of tax payments and exemptions on various state-owned land was "palpably arbitrary."

In a ruling that alarmed some municipal officials in the Adirondacks and Catskills, he ordered payments to municipalities stopped, but stayed his decision.

The appeals court says the state has sovereign immunity from the obligation to pay taxes, but also can waive that immunity and pay local municipalities. The justices cited case law that the waiver is up to the Legislature's discretion, not subject to "equal protection" challenges under the constitution.

In his ruling, Walker had noted that the first statute permitting taxation of state-owned land was in 1886 for the Forest Preserve, which "bore a rational relationship to legitimate state purpose." But later measures did not, he wrote, and now some municipalities get payments while others don't, despite similar situations.

John Dillenburg, then town supervisor of Arkwright, brought the lawsuit, arguing that his community was being unfairly denied tax payments on state-owned property within the town.

Neil Woodworth, executive director of the Adirondack Mountain Club, said the reversal was a major victory for those who live, work and recreate in the Adirondacks and Catskills, where the state Forest Preserve protects more than 3 million acres. "The fiscal burden of maintaining these lands should be shared by all New Yorkers and not fall on the shoulders of a few," he said.

Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed