According to the state Office of the Budget, New York will save in excess of $1 billion annually over the next 30 years.
Paterson is calling the Tier V law the most significant attempt at reining in statewide property taxes in decades.
According to the Budget Office, Essex County stands to save $14.2 million over the next 30 years, and Hamilton County, $3.1 million.
North Warren Central School District taxpayers are expected to save $5.7 million, and the town of Horicon, $407,847. The town of Lake George is expected to save $1.1 million, and the village of Lake George, $568,000.
Taxpayers in the Johnsburg Central School District are projected to save $4 million, and town residents, $574,477.
Local state Sen. Betty Little, who has been calling for local municipal relief for years, supported the measure and Thursday she applauded Paterson's efforts.
"This is a sensible and necessary change," Little said. "The impact is two-fold, saving taxpayers an estimated $35 billion over the next 30 years while ensuring that the pension system remains solvent in the future."
New York State Association of Towns Executive Director Jeff Haber said that the Tier V reform is a "huge step" in easing the burden on local governments, which are faced with skyrocketing retirement and medical insurance costs.
"The Association of Towns applauds Governor Paterson's actions in proposing and enacting Tier V. For the first time in decades, legislation could actually reduce current local pension bills, and will definitely provide significant long-term savings and property tax relief," Haber said.
The association is often critical of the state for overburdening local governments with costly mandates.
The legislation also tightens the reins on teacher's pensions, raising the retirement age two years to 57 and increasing the personal contribution from 3 to 3.5 percent.
The Tier V legislation excludes municipal employees in New York City.
The largest municipal savings will surface once the current generation of public employees has retired and they are replaced by employees who are subject the new system.
Journal Editor Thom Randall contributed to this report.