Lawmakers imploring state leaders to stop making changes to the STAR program
ALBANY — Enough already with the changes to the state's STAR program!
That was the message this week from state lawmakers in the Hudson Valley, where property taxes are among the highest in the nation.
The popular STAR program is now a check for homeowners who earn between $250,000 and $500,000 a year.
And the state has made a series of other quiet adjustments in recent years to the $3 billion a year program that gives homeowners a break on their school taxes.
The annual tinkering with the program is creating confusion for homeowners and creating a headache for local tax assessors, who increasingly have less power over the program, state lawmakers said.
“We cannot continue to negotiate away this vital tax benefit year after year in the budget," Assemblywoman Sandra Galef, D-Ossining, Westchester County, said in a statement.
"I have seen a steady increase in constituent outreach over the last few years from STAR and Enhanced STAR recipients who are simply unable to wrap their heads around the changes to their benefit."
Any additional reforms to the STAR program would have to be made in the state budget for the fiscal year that starts April 1. Lawmakers return to Albany in January.
The state faces a whopping $6 billion budget gap, so Gov. Andrew Cuomo and legislative leaders may again look to find wants to adjust STAR benefits because it is one of the state's most costly programs, supporters of the program worried.
"After years of changes to the STAR program, taxpayers deserve a break," said Assemblyman Kenneth Zebrowski, D-New City, Rockland County.
"The STAR program is often the difference in whether residents are able to afford their property taxes and stay in their homes.”
What has changed with STAR in NY?
Lawmakers said STAR changes have taken place every year over the past five budget cycles, resulting in uncertainty for residents.
This year, homeowners who make between $250,000 and $500,000 stopped getting their STAR rebates as an upfront savings on their tax bills.
Instead, they got checks in the fall to cover a portion of the school taxes, which are due by Sept. 30 in most of New York.
The change meant homeowners who pay their property taxes through escrow would have had to adjust to paying their full tax bill in advance and then await a check from the state tax department.
Also, any new homeowner — regardless of income — are getting checks instead of the upfront savings.
Only those who bought their homes prior to Aug. 1, 2015, still get the upfront savings.
And there was a new catch this year: Anyone can switch to a check, and if you do not, you would not receive up to a 2% increase in your STAR benefit.
In other words, if you don't now get a check, your STAR rebate will stay flat.
“Assessors from all over the state have told me that the yearly changes to the STAR program cause confusion and frustration for homeowners, who often seek assistance from their local assessor’s office," Scott Shedler, president of the state Assessor Association and the assessor in Ramapo, Rockland County.
Other changes to STAR took effect this year
Enhanced STAR, which offers a higher rebate to senior citizens, also underwent changes this year.
Seniors had to enroll in a state income-verification program in order to receive their rebate.
That created a series of problems, assessors said: Elderly homeowners received wrong rebate amounts and the verification program was administered by the state rather than assessors, leaving local officials unable to help residents.
"Over the last few years, my office has received more questions on STAR than any other benefit or program offered by the state, many of them from confused and concerned residents and taxpayers, often seniors on a fixed income," said Amy Paulin, D-Scarsdale, Westchester County.
The savings are significant. Basic STAR — available to homeowners who earn $500,000 or less — averaged about $790 this year.
Enhanced STAR, which is available for seniors with incomes of $88,050 or less, averaged $1,381 this year.
The checks also serve as an accounting benefit for the state. The checks count as a "personal income tax credit" in the state budget. That means they are reported as a reduction in tax revenue, not as state spending.
So the more people who get checks, the less it appears the state is spending on the program, and Cuomo has vowed to keep state spending each year to 2% growth. Conversely, it means the state is reporting less personal income tax revenue each year.
The state also contends the change creates a more streamlined process: Before, schools gave out the savings on homeowners' tax bills, then got reimbursed by the state. Now homeowners simply get the checks directly from the state.
What's next for STAR?
Whether the STAR program will face any additional changes is uncertain.
Another uncertainty is whether the state will continue a separate, $1.3 billion rebate check program, called the property tax relief credit.
The program expires this year, so it would be up to Cuomo and the Legislature to decide whether to extend it.
The checks averaged about $490 this year and were a percentage of homeowners' STAR rebate for those who earn less than $275,000 a year.
Some Hudson Valley lawmakers have separately called for the state to keep the checks next year, saying they are important to help homeowners cover their high taxes.
Freeman Klopott, a spokesman for the state Budget Division, said the changes to STAR in recent years have been limited.
STAR recipients needed only to register once, and they will continue to receive the credit as long as they are eligible. Previously, they had to register for the exemption annually.
And about 70% of those new to the credit program this year were automatically enrolled in the program by the state, he said.
The tax department, Klopott said, took steps to answer homeowners' questions by extending hours for its customer service hotline at 518-457-2036.
“All New Yorkers continue to have the same access to their STAR benefits as they always have," Klopott said.
"The state has simply included recipients in a credit program where we are able to more efficiently administer the program while separating the STAR savings from the tax bill, which makes school districts more accountable to taxpayers," he said.