NEW YORK (Reuters) - New York State municipalities could save $765 million by merging administrative functions and sharing services, the state comptroller said on Monday.

New York has 3,175 local governments, including counties, cities, towns, villages and school districts, which could save tax dollars by pooling resources and eliminating duplication, State Comptroller Thomas DiNapoli said in a report.

"Tax dollars are tight and families are struggling," said DiNapoli. "Now more than ever we need to find ways to cut costs and lower property taxes."

Counties, cities, towns and villages spent nearly $4.3 billion on general government administrative office services in 2008, according to the report. School districts outside New York city spent about $7.3 billion.

Studies indicate sharing services in this area would save 2 percent to 5 percent of that amount, or a total of $230 to $580 million, according to the report.

Municipalities could save up to $580 million by sharing back-office functions, the report found. They could save another $185 million if they boosted cooperation in areas including recreation, water, sewer and sanitation services, it found.

Shared service activity is growing as measured by the amount local governments collect in revenue from other governments, typically in return for providing a service.

New York municipalities collected $881 million of these revenues in 2007, up from $674 million in 2002, the report said.

(Reporting by Ciara Linnane; Editing by Padraic Cassidy)