STAR checks start to arrive

PHOTOGRAPHER: Jill Bryce

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The check is in the mail, or about to be.

The state Department of Taxation and Finance started sending out STAR tax rebate checks this week to Capital Region homeowners, who can expect the rebate in the mail within the next couple weeks.

Basic STAR, which stands for School Tax Assessment Relief, was started in 1997 to ease the burden of property taxes that pay for public schools. The checks are a rebate on top of the assessment break and began last year.

The rebate checks are being mailed in alphabetical order by county, Albany and Fulton counties first in the Capital Region. Some of those residents may have received theirs already. Montgomery County checks will be mailed out Monday, according to state plans. In Rensselaer, Saratoga, Schenectady and Schoharie counties, the checks are to be mailed on Oct. 13.

Most homeowners will not have to apply for this year’s rebate. If a household’s property information is unchanged from 2007 there is no need to reapply. Homeowners will get the checks automatically, said Tom Bergin, spokesman for the state Department of Taxation and Finance.

Bergin said there may be several hundred thousand people who have to reapply, but the vast majority — about 2 million rebates — will arrive in the mail. “You will either get the check automatically or the application automatically,” Bergin said. Anyone who gets the application has until Dec. 31 to send it in.

The maximum benefit for those receiving the Basic STAR rebate goes toward upstate homeowners who earn $90,000 or less and the benefit decreases until a homeowner’s income reaches $250,000.

Nearly 3 million households will get the STAR rebate, which is in addition to the STAR property exemption on taxpayers’ school tax bills. The program is expected to return $1.1 billion to homeowners this year.

Commercial, industrial and multi-unit housing are not eligible for STAR, nor are renters.

The legislation that created STAR carries it through 2009. However, even though the legislation is in place, the money has to be appropriated each year.

“It will be up to the Legislature to approve it after 2009,” Bergin said.

Opponents of the rebate say the program is not a tax cut, but shifts the burden from the individual taxpayer to the state, which also relies on taxpayer money.

They also say STAR encourages school districts to raise taxes, as the program provides the illusion of a tax savings.

“STAR is just an income transfer. It’s not a tax reduction,” said Edmund J. McMahon, director of Empire Center for New York State Policy, a conservative watchdog group based in Albany. “It relieves pressure on school districts to restrain their spending. That’s the perverse impact of STAR.”

Given the state’s budget situation, the expansion of STAR should stop, said McMahon, calling the rebate a “political and fiscal gimmick.”

He said most people know that a rebate is not a real tax decrease. “It’s moving money around. It’s making you feel less angry about how much money they tax you. It’s not broad-based and it doesn’t affect your incentive to save or invest. It’s income redistribution.”

McMahon said with the state’s fiscal crisis, lawmakers will have to put a stop to any and all expansion of this program.

“What we need more than anything is the broad-based property tax cap,” he said.

According to McMahon, property tax levies in New York state have risen by 41 percent since 1998, almost twice the rate of inflation.

The Public Policy Institute, an arm of the Business Council, found that since the adoption of STAR, property taxes increased 3 percent a year from 1995 to 2000, then 7 percent a year from 2000 to 2005, more than double the rate of inflation.

Average rebates

Average 2008 STAR property tax rebates, for households earning less than $90,000 a year:

Albany: $373

Fulton: $346

Montgomery: $436

Saratoga: $384

Schenectady: $442

Schoharie: $395

Source: New York State

Division of the Budget