ALBANY (TNS) — An effort by Gov. Andrew Cuomo to move more New Yorkers off an upfront savings for their STAR benefits to a check each fall was quietly beaten back by state lawmakers.
The state budget approved in early April did not include Cuomo’s proposal in January to move all homeowners who earn $200,000 a year or above onto a STAR check each fall.
Everyone earning $200,000 or less, who are not recent home buyers, will continue to receive the exemption upfront in their school tax bills, as has been the case since the program’s inception in the mid-1990s,
In recent years, the state has been moving more homeowners to STAR credit checks, known as a “personal income tax credit.”
Since 2015, all new homeowners enrolled in STAR get checks instead of the savings on their tax bills, and last year, the state moved everyone with an adjusted gross income between $250,000 to $500,000 to a check.
This year, Cuomo wanted to add everyone earning more than $200,000 a year to checks, but suburban lawmakers rejected another change to the popular, $3 billion a year program.
“We fought very hard for that, to keep it the status quo,” said Assemblywoman Sandra Galef, D-Ossining, who heads the chamber’s Committee on Real Property Taxation.
Galef said avoiding another change was important in the context of the impact the coronavirus has had on homeowners’ finances.
Switching to checks means homeowners might have to adjust their escrow to account for paying more upfront and then waiting for a check each fall.
“Now when you think back on it, people having to pay their money and get it back in a check for their school taxes would be even more difficult this year,” she said.
Lawmakers, though, failed to get another tax-rebate program reauthorized.
For three years, New Yorkers received separate rebate checks to cover a portion of their school property taxes. But the $1.3 billion program expired last year, and with mounting state budget woes, it was not returned.
New York created the STAR program under then-Gov. George Pataki as a way to alleviate the pressure of some of the highest property taxes in the nation.
And the benefits are sizable. About 3 million New Yorkers get breaks on their school taxes through STAR, averaging about $800 a year.
It is available on a homeowner’s primary residence if their income is under $500,000 a year.
About 665,000 income-eligible senior citizens get Enhanced STAR, which averages $1,400 a year. They still get the money as an upfront savings.
The state has moved toward STAR checks because it helps balance the books.
Having the checks count as a “personal income tax credit” means they are reported as a reduction in tax revenue, not as state spending
And that helps the ledger as New York has had to close deficits that swelled to $6 billion this fiscal year and as Cuomo has vowed to to keep spending to 2% growth.
State officials argue the checks are a more efficient way to run the program: The money goes directly to the homeowners.
Under the original program, schools have to give homeowners the tax break on the bills, then await reimbursement from the state.
“Shifting more people from the exemption to the rebate check may have some administrative benefits,” said David Friedfel, director of state studies at the Citizens Budget Commission, a business-backed New York group.
“But because of how the shifts of other STAR beneficiaries have been administered, it also masks growth in state operating spending.”
The only change made to STAR in the fiscal year that started April 1 dealt with those who own back taxes.
Cuomo proposed denying Basic STAR and Enhanced STAR to homeowners who were behind on their property tax payments for a full year.
The enacted budget didn’t include Enhanced STAR recipients in the punishment and allows Basic STAR recipients to pay their debt and get a lump sum for the STAR benefits they missed.
Then they could re-enter the STAR program. They would then get a check and not the upfront savings — essentially considered new homeowners at that point.