2010-2011 Executive Budget – Briefing Book
STAR
- Basic STAR
- Enhanced STAR
- New York City PIT STAR
I. Overview
The STAR program consists of three separate initiatives designed to provide local property tax relief:
- Basic STAR provides savings to residential homeowners by exempting from school taxes at least the first $30,000 of the full assessed value of their primary residence. This benefit would reduce the tax bills of nearly 2.9 million homeowners by an average of $641 in 2010-11.
- Enhanced STAR provides a larger benefit to residential homeowners age 65 years and older with incomes below $74,700 by exempting the first $60,100 of the assessed value of their primary residence from school taxes. Nearly 642,000 senior homeowners would be eligible to receive this enhanced property tax exemption in 2010-11, with an average benefit estimated at $1,205.
- New York City STAR supports tax relief through the income tax for more than three million New York City residents. Under the program, City residents receive a flat refundable credit of $125 for a married couple filing jointly and one-half of that amount for single taxpayers, and a six percent City tax rate reduction.
II. History/Context
STAR was enacted in 1997 to offset rising property taxes for homeowners and to provide additional targeted property tax relief to senior citizens. Over time, the scope of the program was expanded by raising the Enhanced STAR income eligibility threshold, and by
increasing the size of the Enhanced STAR exemption.
These enhancements have contributed to increases in the current and projected cost of the STAR program. STAR spending totaled $3.1 billion in 2009-10, a 25 percent increase from 2001-02 when the STAR phase-in was completed. Despite this program’s intent and cost,
local property taxes have continued to increase. Outside of New York City, school property taxes grew by an average of seven percent per year from 2001-02 to 2008-09. This rate of school property tax growth was twice the rate of inflation and twice the average growth
in wages. As a result of the economic downturn, school districts outside the Big Five cities proposed budgets with average property tax increases of two percent for 2009-10. In spite of this, New York’s local property taxes remain among the highest in the nation.
III. Proposed 2010-11 Budget Actions
After the recommended savings actions described below, the school tax relief program would total $3.18 billion in 2010-11, a $47 million increase from 2009-10.
IV. Summary of Spending (All Funds)
| Category |
2009-10
($ in millions) |
2010-11
($ in millions) |
Change |
Dollar
(in millions) |
Percent |
| STAR Spending (commitment) |
3,132 |
3,179 |
47 |
1.5 |
| Category |
2009-10
(millions) |
2010-11
(millions) |
Change |
Dollar
(in millions) |
Percent |
| Basic STAR |
1,787 |
1,857 |
70 |
3.9 |
| Enhanced STAR |
716 |
775 |
59 |
8.1 |
| NYC PIT STAR |
629 |
547 |
(82) |
(12.9) |
V. Major Initiatives
Gap Closing Actions
| Proposal |
2010-11
($ in millions) |
2011-12
($ in millions) |
| Restructure NYC PIT STAR Benefit |
143 |
180 |
| Increase the Maximum Annual Reduction for STAR Exemptions |
40 |
40 |
| Eliminate STAR Exemption Benefit for Homes Valued at $1.5 million and Above |
30 |
30 |
| Total |
213 |
250 |
- Restructure the New York City Personal Income Tax STAR Benefit. The NYC personal income tax rate reduction benefit provided through the STAR program would be limited to the first $250,000 of personal income. Currently, taxpayers who earn more than $250,000 receive more than 50 percent of the overall benefit from the NYC STAR personal income tax rate reduction, but represent 2.9 percent of the total number of recipients – a poorly targeted allocation of the State’s limited resources, especially during a fiscal crisis. By contrast, those with incomes over $250,000 receive 3.9 percent of the overall benefit of the STAR property tax exemption portion of the program. While this recommendation would eliminate the six percent rate reduction on personal income above $250,000, all New York City taxpayers would continue to receive the existing benefit on their first $250,000 of personal income. (2010-11 Savings: $143 million; 2011-12 Savings: $180 million)
- Increase the Maximum Annual Reduction for STAR Exemptions. The maximum reduction in STAR benefits that can occur as a result of changes in assessed value or market value of a homeowner’s real property would be increased from 11 percent to 18
percent. This action would make exemption amounts less disparate across communities. (2010-11 Savings: $40 million; 2011-12 Savings: $40 million)
- Eliminate the STAR Exemption Benefit for Residences Valued at $1.5 Million and Above. Under current law, every primary residence, regardless of how much it is worth, is eligible to receive a STAR exemption benefit. This proposal would eliminate the exemption benefit for homes valued at $1.5 million and above. (2010-11 Savings: $30 million; 2011-12 Savings: $30 million)
