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State Property negates the effects of corporations and the maintenance penalty for distance to the Palace, and increases food production from Workshops and Watermills. This civic is most useful for large empires, or civilizations with overseas territory.
The state property civic describes an economy in which the citizens have no private property: everything belongs to the State. The State owns the factories, the farms, the universities, the grocery stores and virtually everything else. A citizen may own his or her clothing, furniture, and vehicle, but everything else he has is given to him by the State, and may be taken away any time the State sees fit.
In a utopian society there would be no need for private property. Each person would contribute his or her best to the State; in return the State would distribute its largess according to each citizen's needs. Unfortunately, state property is quite a bit less fair when applied in real life. The State determines what each person gets, but often those decisions are based upon the citizen's political orthodoxy, family connections, or ability to pay bribes. The citizens feel that they are not rewarded for the quality of their efforts, and thus they see no point in achieving excellence. Innovation is pointless if one doesn't personally benefit from the innovation.