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Lansing School Business Administrator Mary June King warned the Board Of Education Monday that the State is planning a major change to the School Tax Relief (STAR) program.  The new approach would take away the up-front property tax exemption, replacing it with an income tax credit when taxes are filed in April.

"The State has decided that for new home purchases they are going to move away from STAR being a guaranteed reduction in your school tax," King reported.  "Instead you'll be applying for those monies in your income tax."

New York State spends $3 billion annually to provide the STAR rebate, a popular program among state property taxpayers.  Property taxpayers with incomes below $500,000 get an exemption from the first $30,000 of the full value of their home value, and for seniors who qualify for Enhanced STAR the first $65,300 of their home value is exempt from school taxes.  New York's STAR program is the largest of similar programs elsewhere in the United States.

In the first two years, the change proposed by Governor Andrew Cuomo is estimated to save New York State approximately $100 million, as well as an additional $112 million that would be saved by capping the growth in the STAR rebate at 0%.  The program currently allows up to a 2% annual rise in STAR benefits.  If the program is inacted, owners of newly purchased homes will pay their school tax in full, then receive an income tax credit.  It would place more burden especially on people with fixed incomes who decide to downsize by buying a smaller house.

"It's an interesting shell game," King said.  "They're not quite sure how they're going to carry it out yet.  The Assessment Office will keep us apprised of any information that comes down the pike.  We'll see how the State decides to pull that off.

King said the state plan is another way to remove a protection that school districts had that allowed them to tell people at least they were guaranteed the STAR and Enhanced STAR reductions.

"You don't have to be concerned about it if you are not moving to a new home," she said.  "If you had a STAR reduction in your school taxes for the 2015-16 school year, you will have it moving forward as well."

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