For the past eight years the Community Preservation Act has provided funding for cash-strapped Island towns looking to preserve historic landmarks, protect open space and create affordable housing.

But in another indicator of the ongoing recession, the state this year has drastically reduced the match paid to towns, who raise their own money through the act’s property tax surcharge. The match for some Island towns has dropped more than 50 per cent, and many local officials are warning things could get worse before they get better.

The act — commonly referred to as the CPA — was established in 2000 and allows communities to levy a property tax surcharge up to three per cent. The state matches the funding through a fee collected by the registry of deeds. The program was designed to help towns address three key needs: affordable housing, open space acquisition and historic preservation.

Under the enabling legislation, at least 10 per cent of each town’s CPA appropriations must go to each of those three categories. Voters in all six Island towns eventually voted to enroll in the CPA program, after it was enacted.

For the first few years the state matched the local contribution dollar for dollar. On the Vineyard the program was hailed as a valuable tool to fund projects that fell outside town budget constraints. Funds raised through the program have been used to restore the historic Edgartown Lighthouse, the bandstand in Oak Bluffs and the Tashmoo Spring building in Vineyard Haven, among others.

A large amount of CPA funding has been used to create affordable housing, including the Jenney Way project in Edgartown, the Middle Line project in Chilmark and the Bradley Square project in Oak Bluffs.

But faced with declining revenues tied to the sagging real estate market, the Massachusetts Department of Revenue in the past two years has slashed matching funds. On the Vineyard the match levels this year dropped to an average of just over 63 per cent.

In hard numbers, the match for Oak Bluffs dropped from $428,893 last year to $204,942 this year; Edgartown dropped from $542,196 to $244,736; Tisbury dropped from $360,554 to $181,149; and West Tisbury dropped from $294,171 to $165,984.

The match is calculated using a complicated formula which generally provides a higher match for smaller towns.

Aquinnah, for example, will still receive a 100 per cent match — or around $65,000, while Chilmark will receive a 77 per cent match or $130,559, down from last year’s $169,594.

Despite the bad news, Island CPA officials say it could have been worse.

“We actually thought the match might be as low as 30 per cent,” said Tony Nevin, the chairman of the Community Preservation Committee in West Tisbury, which recently learned that the town would receive a 56 per cent match this year. “This is not good news, but we easily could have received less . . . we’re happy to get the [56 per cent] match,” Mr. Nevin said.

Adam Wilson, CPA administrator in Oak Bluffs, said legislation has been filed to shore up the state match with a guarantee that the state will match at least 75 per cent of the monies raised by towns. Last week Mr. Wilson traveled to the state house to testify in favor of the legislation, which is currently in committee.

He said the bill has the backing of 21 state senators and 62 state representatives, including the Cape and Islands. Many other legislators oppose the plan and believe the CPA program should be phased out due to the state’s ongoing financial difficulties.

Mr. Wilson said the program has been invaluable for Oak Bluffs and other Island towns.

“In Oak Bluffs the program has prevented us from asking for several overrides [of the annual budget] and it has funded projects that otherwise would have had to wait. The Tabernacle in the Camp Ground, the bandstand in Ocean Park are two examples . . . Hartford park was completely rejuvenated thanks to CPA money,” he said.

Mr. Wilson said he believes the program is still viable, even with a lower state match.

“A 40 per cent match or a 50 per cent match is a big help. It’s better than nothing,” he said.