Tuesday, March 07, 2006

STAR Gazing In Albany

State Legislators Hitch Hopes For Property Tax Relief To Distant STAR

Funny thing about stars -- they appear at their brightest shortly before they implode. The light from a dying star, or a star that, in fact, had died out eons ago, can be seen in the dark night sky millions of years after the demise of that gaseous ball of fire.

So it is that, up in Albany, the perennial answer to our property tax woes -- or at least to the school portion of the property tax, which consumes 60% or more of our property tax dollars -- is to look to the stars, or at least to one STAR in particular, New York's School Tax Relief program.

The STAR program, held out by legislators and school administrators alike as a bellweather of taxpayer relief, is touted as an initiative through which "more than 3 million homeowners are saving over $2 billion each year."

Forgive us for asking, but, just how much did STAR actually save you last year?

STAR is intended to work as a homestead exemption, to be claimed by the homeowner, which, in theory, reduces the amount of school taxes the homeowner pays.

As a paper tiger, STAR does exactly what it sets out to do -- lower the amount of school property taxes a homeowner must pay. The dollar amount that your STAR exemption translates into appears on your tax bill, and you take solace that your school tax burden has been reduced accordingly. Or so your State Legislators would have you believe.

Let's take a closer look, through The Community Alliance's own version of the Hubble telescope, at the reality of STAR, and actually answer the question, "If STAR reduces my school property tax liability every year, how come my school property taxes never go down?"

The equation is simple, really. A (school budget) - B (State Aid) = C (taxpayer liability).

If a school district has a budget of, say, $1000, and State Aid is 10%, or 100, the taxpayer, through the property tax, must come up with the balance of $900. A ($1000) - B ($100) = C ($900). Are you still with us? Good!

Now, if STAR "reduces" the taxpayer liability by, say, $100, the taxpayers, in theory, will only have to pay $800. Doing the math [A - B = C], we find that there is a shortfall of $100.

The school district, of course, still needs the $1000 to meet budget demands. The State, which, in theory, is supposed to chip in the difference, is still contributing the same 10%, or $100. So who pays that $100 gap created by the STAR exemption? Surprise -- YOU DO!*

Through that little variable that doesn't fit neatly into the equation -- the tax rate -- the taxpayers cough up just as much (if not more, depending on just how much "cushion" the district builds into the tax rate hike) as the STAR exemtion has saved them. A little legislative slight of hand that puts money in one pocket while it picks from the other.

We're no math mavens, to be sure. So if you don't believe us, prove it to yourself. Take out your tax statements going back to 1997, the first year STAR appeared in the property tax sky. Note the amount of your STAR exemption. Jot down the tax rate. Then check out the bottom line for each successive year. Savings? Reduction? Lower school property tax? Not on the tax bills we've examined, for school districts from Elmont to Wantagh.

Even with the naked eye, the light from New York's STAR program fades with every school budget increase, with every hike in the tax rate. Yet, our legislators in Albany remain STAR struck, continually reinforcing the myth, as if by astrological force, that STAR is saving us money.

This year, in the wake of the property tax uproar that is sweeping the Island, State Legislators, in their infinitely myopic vision, have navigated the treacherous tax seas once again by following that STAR.

The State Senate, in a widely publicized proposal, suggests we adopt a plan that's been dubbed "Rebate-NY." According to the various press releases out of the Senate chambers (the language being the same, but for the Senator's name after the quotes), "in 2006, the rebate would equal 30% of the homeowner’s STAR savings for the 2005-06 school year, with the rebate rising to 50% in 2007 and 75% in 2008."

Under Rebate-NY, we are told that "Long Island homeowners would receive $532.8 million in direct rebate checks from New York State." Statewide, the figure for the projected rebate is $1.9 billion. [Yes, that's 1.9 BILLION DOLLARS!]

In addition to this generous rebate, the State Senate proposes to further "enhance" the STAR exemption "to account for increased property assessments, saving property taxpayers an additional $250 million."

One might ask, and justifiably so, "Where is this $1.9 billion coming from?" That one is easy. YOUR POCKETS! Not unlike that huge rebate check President Bush sent you some years back, taxpayers will, invariably, be picking up the tab through higher taxes. That's right, there are no free school lunches!

While New York State does enter this fiscal year with a $2.7 billion surplus, one need only look back to that Bush tax rebate, at a time when this country was coming off of a record surplus, to realize that a surplus squandered quickly turns into a mounting deficit. And short of turning to our children and grandchildren for support (assuming they, too, do not flee New York), who will pay for Rebate-NY and those enhanced STAR exemptions?

Aside from Rebate-NY (which will also give the indians back the $24 they paid for Manhattan island), there are other plans afloat in Albany that purport to offer a "fix" to the property tax crisis. All, in one way or another, have their prospects aligned to a STAR.

The newly-proposed STAR Excelsior Program, being considered by the Assembly, would provide $1.75 billion in additional tax relief by immediately indexing the Basic and Enhanced STAR exemptions to the current median housing value. As a result, homeowners would see their current STAR exemptions rise by 70 percent.

A great idea -- in theory. The reality, however, brings us no closer to tax relief than does making a wish upon the first star we see tonight. A - B must still equal C.

Of course, there are ways to adjust the numbers to make STAR work or, better still, to eventually take STAR out of the equation.

- Insist that school districts tighten their belts, reducing burgeoning administrative and non-academic costs through consolidation and elimination;

-Freeze school district tax rates at 2005-06 levels through 2010, with annual increases thereafter limited to cost of living adjustments;

- Fully fund State mandated education programs, now paid for through local tax dollars;

- Replace the regressive school property tax with a progressive income tax;

- Furnish State Aid to local school districts on a equitable basis, so that every student, and every community, is put on equal footing;

- Distribute commercial property taxes collected throughout the county equally to every school district in the county;

- Relieve counties and localities of paying the bill for State mandated programs, such as Medicaid.

While looking at ways to fund heretofore unfunded State mandates (such as Medicaid) is on the Legislature's radar screen -- a consideration we applaud -- beyond the "STAR Poor" initiative, there is little on the horizon in Albany that would make a serious dent in the school property tax.**

Legislators won't touch an income tax, even were it to save taxpayers thousands of dollars per year, any sooner than they could reach the stars in the heavens. And don't look for school districts to voluntarily consolidate, eliminate, or cut noses off their own faces any time soon.

We fear yet another State Legislative session -- in a year when every seat is at risk, no less -- will pass without any real property tax relief, and that homeowners will be left with little more than STARdust in their pockets.

Watch the night skies, fellow Long Islanders, for stars of the shooting, falling, and exemption variety, and keep an eye on your mailbox for that $532.8 million rebate check.

*Our own argument, that an increase in the STAR exemption will require a corresponding increase in the tax rate, does not always hold true, and, in some respects, is entirely specious -- in theory. After all, the premise of STAR is that what the homeowner saves through the exemption will be made up to the school district through a corresponding increase in State Aid. Of course, the school districts do not always realize an increase in aid from the State sufficient to cover the revenue gap, and, best of intentions and that rare surplus aside, there is usually not enough money flowing from the State Capitol to cover the gap.

In practice, the wealthier districts benefit, at the expense of the poorer districts (the reverse Robin Hood effect), and the tax burden, while technically spread across the tax base spectrum, falls most heavily on those with the least ability to bear it.

Then, too, consider the source of State Aid. Your tax dollars at work. What is not taken out of one pocket must be taken from another. At the end of the day, our school children are none the wiser, and John Q. Public, STAR exemption in hand and "enhanced," is none the richer for it.

**It should be noted that both Rebate-NY and the STAR Excelsior Program are Republican-generated initiatives, the former in the GOP-led Senate, the latter in the Democratic stronghold of the Assembly.

Given that the leadership of both chambers find themselves not only at odds, but all too often, unwilling to compromise, query as to whether either proposal -- or any reasonable facsimile thereof -- will ever emerge for the Governor's signature?

As for the Democrats in the State Legislature, our due diligence has failed to yield a single initiative designed to formally address the property tax crisis. [If the Democrats, as a whole, have a plan, they're keeping it awfully quiet!] Lots of grumpling and pointing across the aisle, but no real urgency to devise a plan to address New Yorker's primary concern -- property taxes.

Clearly, if we are going to get serious about fixing the property tax problem -- and we'd better -- we really do need to fix Albany, once and for all!
- - -
Click HERE to read The Regressive Effect of STAR
Click HERE for more on New York State Funding Equity
Click HERE to read Star-Crossed Property Tax Relief -- And How To Fix It
Click HERE to read Unintended Consequences of Property Tax Relief: New York's STAR Program
Click HERE for Walt Disney's When You Wish Upon A Star

1 comment:

  1. The star program is akin to the one day sale at any department store. You know the one day sales that claims to save you 50% and you can take an extra 30% plus if you use your card another 10% so thats 90%. In other words if I were to buy something for 100 dollars YOU should get it for 10 but you know that never happens. All that happens is you pay what you would have before all the gimmicks. Same as the star you save nothing only a dream. I have seen and heard holding the line ON TAXES and never understood why my taxes keep going up year after year. I guess the term holding the line and star are just that: A ONE DAY SALE.