Democrats propose STAR restoration

PHOTOGRAPHER: Michael Lamendola

Democrats in the state Legislature are trying to bring back the middle class STAR rebate program, but one Republican senator is predicting the measure will be a one-house bill.

Gov. David Paterson and the Legislature eliminated the program in the 2009-10 budget passed last month, part of an effort to close a $17.7 billion budget gap.

Under the discontinued program, homeowners received a rebate worth between $200 and $900 off their school property taxes. The program returned $1.2 billion to homeowners in 2008 and almost $3 billion since enacted in 2006. It was the state’s largest tax rebate program.

On Friday, state Senate Deputy Majority Leader Jeff Klein, a Democrat representing Westchester and the Bronx, introduced legislation to restore the program. The legislation also contains a circuit breaker tax credit and mandate relief for school districts. Assemblyman Richard Brodsky, D-Greenburgh, is sponsoring the bill in the Assembly.

State Sen. Hugh Farley, R-Niskayuna, called Klein’s measure “smoke and mirrors, because I don’t think the Assembly has any intention of passing it.”

Farley said Klein’s measures take several Republican proposals, which failed by one vote to pass as amendments to the current budget, and seek to use dubious revenue sources to pay for the rebate.

“He talks about getting money from the Indians but we have not been able to get any,” Farley said.

Klein’s measures would tap these potential sources to pay for the $1.5 billion rebate program: cigarette tax revenues from Native American tribes; the state’s Rainy Day Fund; revenues from new video lottery terminals; upfront payments for terminals at Belmont Race Track; revenues collected through a tax amnesty program; and $7.9 billion in federal stimulus money.

Under Klein’s legislation, homeowners would receive full rebates in 2009, but starting in 2010, they would receive the difference remaining after collecting a circuit breaker tax credit.

The circuit breaker would kick in when households earning up to $250,000 a year pay more than a certain percentage of their income on local taxes. Homeowners in these categories would then receive tax credits of 6 percent, 7 percent or 8 percent of their income.

Klein’s school mandate provisions would require mandates not authorized by federal law or initiated by local request to contain detailed cost estimates and proposed sources of funding. He also is proposing that new state mandates not be allowed to take effect in the middle of a school year and made to wait until they are funded in the next state budget.

Klein’s legislation also authorizes boards of cooperative educational services to form health insurance trusts with component school districts, which can purchase and administer employees’ health insurance and workers compensation insurance, and to offer educational and administrative services, such as human resources and billing, to component districts.

Dave Albert, of the New York State School Boards Association, said Klein’s legislation would greatly help school districts and taxpayers.

“We do support a circuit breaker as opposed to a tax cap. A tax cap is unworkable when state aid is staying flat, and who knows what will happen when the federal stimulus money ends?” Albert said.

Klein’s mandate relief measures are a step in the right direction, especially by requiring that revenue streams be identified up front, Albert said. He said giving BOCES the ability to pool resources is a good way to drive down health insurance costs, “which are very big-ticket items in school district budgets.”

Albert said the measures appear to offer changes that can provide relief to school districts for years to come. “These initiatives will help school districts down the road. It is important for the Legislature to take action now, because we are in the situation where there is tremendous uncertainly when the federal stimulus money runs out,” he said.

Assemblyman George Amedore, R-Rotterdam, said he supports the restoration of the middle class STAR rebate program and other measures that bring “true property tax reform.”

Amedore said the removal of the rebate program “was a slap in the face to all property tax owners in New York. That was the only form of any type of reduction off our property tax bills.”