ADIRONDACKS — The state Legislature has discretion in deciding which state lands it pays taxes on, an appeals court said in a ruling that upholds payment of more than $80 million in state property taxes to communities in the Adirondacks and Catskills.

The Appellate Division of state Supreme Court on Friday overturned the November 2007 decision of Supreme Court Judge Timothy A. Walker.

Walker, examining the Chautauqua County town of Arkwright’s complaint that the state did not pay taxes on about 2,000 acres there, said state property tax payment policies are inconsistent and unconstitutional. Under their existing structure, Walker ruled, state property tax payments must cease. But he stayed his own decision pending higher court review.

The Appellate Division ruling was praised Monday by an assortment of Adirondack organizations who joined together on the appeal to file a friend of the court brief.

“We are thrilled that the appellate court justices saw the logic of our arguments to reinstate these vital tax payments to Adirondack communities,” said Brian L. Houseal, executive director of the Adirondack Council.

Council spokesman John F. Sheehan said protectionist groups were concerned that the elimination of state tax revenues in the Adirondack Park would undermine the ability of local governments to perform the variety of municipal services that protect and support the Forest Preserve.

Sheehan said the Adirondack lands were the first to receive state tax payments, a policy that was probably conceived to compensate the region for the economic impact of preserving so much land.

“I think we dodged a bullet,” said Michael P. Washburn, executive director of the Residents Committee to Protect the Adirondacks. Had the lower court decision been upheld, Washburn said, loss of state property tax support would have an immediate and “devastating effect” on the region and would have adverse, long-term consequences for the park.

“We were very concerned,” Washburn said.

The Adirondack Mountain Club also hailed the decision, calling it “a major victory for those who live, work and recreate in the Adirondacks and Catskills.”

ADK Executive Director Neil Woodworth said in a news release: “The state Forest Preserve, which protects more than 3 million acres of wild lands in the Catskills and Adirondacks, is an important asset to all New Yorkers, and the fiscal burden of maintaining these lands should be shared by all New Yorkers and not fall on the shoulders of a few.”

Though the town of Arkwright lost the case, Sheehan said, it may have drawn enough attention to its grievance that the Legislature will consider expanding its property tax system.

Sheehan said the state pays taxes on about 94 percent of its forest lands. Picking up the remaining 6 percent of forest lands would eliminate “these kinds of suits,” Sheehan said.

Arkwright’s attorney, Michael K. Bobseine of the Fredonia firm of Brautigam & Brautigam, could not be reached for comment.

But Sheehan said legal experts he has consulted with on the issue do not expect the decision to be heard by the state’s highest court, the Court of Appeals. The legal experts, Sheehan said, contend Walker “really stretched” to formulate his ruling on the principles of sovereign immunity and equal protection under the Constitution.

In its Oct. 3 ruling, the 4th Judicial Department of the Appellate Division in Rochester said while “it is axiomatic that a state has sovereign immunity from the obligation to pay taxes on land owned by it …it … has the discretion to waive that immunity.”

Noting Arkwright’s argument that the state has been unfair in disbursement of property taxes, the appellate judges cited case law in finding that the Constitution’s equal protection clause does not apply and that the Legislature has discretion in determining where it pays taxes.