A New York Senate proposal to eliminate local school property taxes in favor of broader, state-administered funding was widely panned by policy analysts and shot down by Democrats on Thursday.

But the idea laid out Wednesday by the Republican-led Senate may have served its purpose: It sparked renewed dialogue on how to deal with a property tax burden that is the highest in the country.

And legislative leaders Thursday agreed to some additional property tax breaks for seniors.

Gov. Eliot Spitzer and legislative leaders said Thursday that they had agreed to consider additional property-tax breaks for senior citizens.

Senate Majority Leader Joseph Bruno, R-Brunswick, Rensselaer County, wants to add $200 million to the $1.3 billion that is to be sent to homeowners later this year to partly offset school property taxes.

The state doesn’t yet know when those checks will be mailed out.

The Senate passed a bill Wednesday that would phase out school taxes on residential property and pay the roughly $9.5 billion annual cost for schools out of the state’s general fund.

“Clearly, this is going to be a cost to the state and there is no way to pay for it,” Assembly Speaker Sheldon Silver, D-Manhattan, said during a meeting of legislative leaders.

Said Spitzer: “We all want (fewer taxes), but we have to be fiscally prudent.”

Observers said the bill has other fatal flaws and could lead to unintended consequences, such as a massive increase in income taxes to offset the loss of property taxes. Good government groups said lawmakers should look at capping spending rather than changing how education is funded.

“This is flashy, because you’re saying we’re going to eliminate your school taxes. But it’s a fantasy,” said E.J. McMahon, director of the Empire Center for New York State Policy. He added: “It’s not going to happen and they have no road map for achieving it.”

McMahon said the proposal was unrealistic because it could essentially force the state to raise income taxes by 25 percent, a move that would further hurt the state’s business competitiveness and hammer people who rent rather than own homes. Also, the proposal doesn’t include businesses that pay property taxes.

RDAC