BATH — Bath Iron Works is withholding a third of its property taxes from the city because of a dispute over the value of its property. Local officials complained the shipyard was “stiffing” the city.

City officials were notified Thursday that the shipyard — the state’s largest private employer and the local government’s largest taxpayer — is withholding $1.25 million for at least six months.

The decision marks the second consecutive year that the shipyard refused to pay its taxes. The City Council had to raise taxes when the shipyard refused to pay its bill last year.

“They don’t care about us. They’re stiffing their own hometown,” said Dean Almy, council president. “I think it’s a really patronizing, 19th-century approach from a big firm to a little town.”

Other officials shared the anger. Said councilor Herbert T. Caverly II: “We have been all too willing to accept the Iron Works as a benevolent dictator. Now we see it is Attila the Hun.”

BIW spokesman Kevin Gildart said the company is trying to make the city deal with the tax dispute as quickly as possible.

“There is no indication that they want to resolve this issue quickly,” Gildart said. “We weren’t confident that the city understood the urgency of the issue.”

Gildart said the company’s solution is to appoint a mediator who would hear the debate and hand down a judgment as opposed to taking the appeal through the court system.

City Assessor Michael L. Austin said the shipyard’s plan is bogus and could set a dangerous precedent by bypassing state law that clearly plots the appeal process.

“There’s no way we’re going to circumvent state law,” he said. “We can’t take them aside separately and work things out. What kind of a precedent does that set for anyone else who wants to challenge their taxes?”

Austin added that it appears BIW wants local taxpayers to subsidize their business.

“This is just plain crazy,” he said.

The $1.25 million withheld from the shipyard’s overall tax bill of $3.67 million represents 6.45 percent of the city’s income for 1992-93 — almost as much as the budgets for the police and fire departments combined.

The shipyard asked for a $1.2 million refund for last year and never paid $500,000. On Thursday, the shipyard requested a $600,000 refund this year.

A letter from company President Duane Fitzgerald said the $1.25 million payment will be made by April 1 if the city and BIW “make a good faith effort to resolve our differences amicably,” or the state Board of Property Tax Review rules in the case.

Fitzgerald specified in the letter that the payment was being “deferred,” not “withheld.”