"The Catholic Church will reap massive benefits if this event is held in Sydney," Ms Rhiannon said, according to an ABC report.
"They should be the ones that pay the compensation costs," she said.
"The Greens welcome World Youth Day occurring but it should not be at the expense of the public."
Under the agreement reached last week, the racing industry will receive up to $40 million from the Federal and New South Wales governments.
In return, the industry will be required to grant World Youth Day organisers access to Randwick Racecourse for 10 weeks.
The money will go to trainers and jockeys affected by the papal mass and also pay for upgrades to Randwick Racecourse, as well as the tracks at Warwick Farm and Rosehill.
The State Government has defended the payments, saying the event will inject $150 million into the NSW economy.
Church urged to foot taxpayers' Youth Day bill (ABC News, 16/11/07)
LINKS (not necessarily endorsed by Church Resources)
World Youth Day 2008
Lee Rhiannon (Greens)
Holy socks fund Portsmouth WYD pilgrims (CathNews, 16/11/07)
Indigenous artist's work for WYD merchandise (CathNews, 16/11/07)