The state tax department is about to embark on a months-long effort to ascertain whether all of the 2.8 million property owners annually reaping upwards of $3.2 billion in benefits from the School Tax Relief program are deserving of them. Then, after it verifies the information, it’s going to let local assessors use the information without bothering to have it verified again for an indefinite period. That’s not a great example of learning from past mistakes.
STAR is a political shell game that, for the past 15 years, has enabled school districts to cut the taxes of homeowners’ primary residences. It’s mostly a gimmick, though, because the state makes up for the school districts’ losses — averaging $700 per homeowner — and guess who pays for that? (Taxpayers, through their income taxes.)
Even worse, a lot of New Yorkers have been cheating on STAR — people who own a second home but (wittingly or unwittingly) declare them both as principal residences, thus double-dipping. Then there are landlords who do the same with several properties they might own in different communities.
When it started up STAR, the state never bothered to assemble a database so an assessor in one community might know whether such a mistake, or fraud, may have been committed. Comptroller Thomas DiNapoli estimates the state lost $13 million in improperly granted exemptions in 2011-12, but a more recent statewide audit indicated the loss could be as high as $600 million!
Recertifying everyone is a good idea (though dropping STAR entirely would probably be a better one). But even with a new database, the state should do more to ensure, annually, that taxpayers aren’t claiming more than one exemption. Perhaps making them sign something to that effect on their tax return every year — and vigorously prosecuting violators — would help.