2009-10 Enacted Budget Gap-closing Plan – STAR

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STAR Initiatives

STAR was enacted in 1997 to offset rising property taxes experienced by 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. In addition, a local property tax rebate program was enacted in 2006-07, then restructured as the Middle Class STAR rebate program in 2007-08 to target benefits based on income.

These enhancements have contributed to significant increases in the current and projected cost of the STAR program. STAR spending totaled $4.7 billion in 2008-09, an 89 percent increase from 2001-02 when the STAR phase-in was completed. Over 50 percent of this increase is attributable to the introduction of the Middle Class STAR Rebate program.

After savings actions, which include eliminating the Middle Class STAR rebate, STAR tax relief would total $3.5 billion in 2009-10. This is approximately the level of funding provided before the creation of the rebate program.

The base exemption amount directly tied to property tax bills will remain unchanged to ensure that direct property tax relief, which is the core purpose of the program, will be preserved and will provide $3.25 billion of property tax relief to New Yorkers in 2009-10.

Gap-closing Actions

• Eliminate STAR Rebate Program. This budget returns STAR to its original form and purpose by preserving the basic exemption as well as the enhanced exemption for senior homeowners on limited incomes but eliminating the STAR rebate. Under this proposal, no homeowner is denied the basic or enhanced exemption they currently receive. (2009-10 Savings: $1.4 billion; 2010-11 Savings: $1.6 billion)
• Decrease NYC STAR Credit Amounts. Consistent with the elimination of the STAR rebate, the budget reduces the value of the flat refundable credit that is available for New York City resident personal income taxpayers from the current value of $145 per individual to the 2005 tax year value of $62.50 per individual. (2009-10 Savings: $112 million; 2010-11 Savings: $379 million)
• Permanently Shift December Payment for NYC STAR to June. Reflects the impact of continuing to pay the traditional December payments to New York City in the first quarter of the State’s subsequent fiscal year. (2009-10 Savings: $20 million; 2010-11 Savings: $27 million)