Here’s the latest change to the (New York State) STAR tax exemption

Among suburban voters and lawmakers, the STAR school tax exemption is an endless topic of discussion since over the years there have been a number of tweaks to the popular program, which helps homeowners with their school taxes, over the years.

This year is no exception. The latest adjustment centers on pushing the program more toward a rebate model rather than one in which the savings are realized off the top.

Here’s a story that ran on the topic a few days ago.

ALBANY — Homeowners, take note: If you don’t switch the way you get your School Tax Relief (STAR) property tax break, it could cost you money.

Starting this fall, those who opt to keep getting their savings as an exemption, or a reduction on their tax bill, rather than as a rebate check won’t benefit from an annual increase in their STAR savings of up to 2 percent. And those with incomes between $250,000 and $500,000 could lose the tax break entirely if they don’t sign up to get the savings in a check rather than taking it off their bill.

The changes are the latest iteration of the seemingly ever-changing STAR program, which aims to help ease the burden of New York’s highest-in-the nation school taxes by lowering the amount at which a home is assessed for property tax purposes.

The state Department of Taxation and Finance says it is instituting the changes to better track the STAR program, which is available to homeowners with incomes of up to $500,000. Moving the savings to a rebate or credit is more efficient than taking the savings off the bill, which is also known as an exemption.

But others see it as a move to help the Cuomo administration continue to say that it has kept state expenditure growth below 2 percent annually. Because the rebate checks are tied to incomes, they are booked as a reduction in revenue flowing to the state.

The exemptions, however, are recorded as an state expense. The reason: New York’s general fund pays school districts the difference between the full tax bill and the bill with a STAR exemption.

And they say this latest change will likely take many homeowners by surprise, even though the state says it will be informing people of the change in coming months. Some may be upset when learning they didn’t get the 2 percent additional savings.

Those who earn between $250,000 and $500,00 will be truly angry if their school taxes no longer include STAR savings, which can be $1,000 or more depending on a home’s value.

“I foresee there being a lot of angry taxpayers,” said David Friedfel, Director of State Studies at the Citizens Budget Commission, a spending watchdog group.

“There certainly should be more pushback on this,” added Queensbury Assessor Teri Ross, a former president of the state Assessor’s Association.

Ross, who said other assessors are worried about the change as well, sees a number of potential land mines.

For one thing, they worry about when homeowners will be notified by the state about the changes. While they are listed on the Department of Taxation and Finance website, people need to be contacted and reminded about this.

And like Friedfel, Ross fears that a lot of homeowners between the $250,000 and $500,000 bracket will simply lose their exemptions and get significantly larger bills in the fall if they haven’t switched to the credit, or rebate check.

“A boatload of people are getting denials,” she said.

The savings can be gotten retroactively — but that will involve time and hassle for both homeowners, assessors and the state. For those who pay taxes through an escrow account on their monthly mortgage payment, the costs will simply rise.

Additionally, many older residents, whose mortgages are paid off, simply write a check for their school taxes in September when they are due.

But if they switch to the rebate, the amount they must pay up front could easily increase by several hundred dollars, which will be a hardship for those on low incomes. “It’s almost preying on the elderly,” Ross said.

This is one of several changes made to the $3.4 billion STAR program since it was created almost two decades ago.

In 2016, new homeowners had to sign up for rebate checks — they couldn’t get the exemption.

STAR reduces by $30,000 the value of a home’s assessment for tax purposes, as long as the owner’s income is below $500,000.

Those 65 and older with incomes below $86,300 get a larger home value reduction of $68,700.

Another change this year centers on enforcement: Those who knowingly provide false information on STAR applications can be banned from getting the benefits for six years. The STAR reduction is supposed to be for one’s primary residence, but there have been cases of people — knowingly or otherwise — claiming the break on multiple properties.

Friedfel sees the latest move as one of several bookkeeping gambits to allow Gov. Andrew M. Cuomo to keep saying he has kept spending growth below 2 percent, since the rebates come off the income side of the equation. STAR costs the state $3.4 billion annually. The cost accrues to the state since the general fund reimburses local school districts the money that homeowners save through the tax break.

The Citizens Budget Commission, for example, in January concluded that the proposed 2019-20 budget was actually growing by 3.4 percent rather than the self-imposed 2 percent limit the Cuomo Administration says it is.

“It’s because of these types of offsets,” Friedfel said of how they stay at 2 percent.

Published by the Albany Times-Union

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