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STAR tax savings could be curbed under Cuomo

STAR rebates were expected to grow at 2 percent a year, but Cuomo wants to end the increase, saying New Yorkers are already getting property-tax relief through a separate rebate check program.

ALBANY -- Gov. Andrew Cuomo wants to freeze the growth in the STAR rebates that homeowners receive on their school taxes as a cost-cutting move in the state budget.

STAR rebates were expected to grow at 2 percent a year, but Cuomo wants to end the increase, saying New Yorkers are already getting property-tax relief through a separate rebate check program.

Also, he argued, the growth in property taxes has slowed with the installation of a tax cap in 2011.

“The typical taxpayer has saved more than $2,100 under the property tax cap and, in addition, the average taxpayer will save $380 from the property tax credit program this year," Morris Peters, a spokesman for the state Budget Division, said.

"These programs are having a much greater impact by controlling underlying property tax growth and targeting tax cuts to where they have the greatest impact.”

There's another change proposed: Seniors who receive Enhanced STAR would be required to participate in an annual Income Verification Program to get their benefits.

Now the verification is optional for Enhanced STAR. Seniors can currently either enroll to have their income verified automatically by the state or can apply annually with their municipality.

Moving to a mandatory Income Verification Program would save the state about $35 million a year, the budget said.

A freeze in the growth of STAR would save the state about $50 million in the coming fiscal year and $90 million if it was extended into the 2020 fiscal year, the state budget showed.

STAR is a $3 billion a year program that provides a cut in property taxes for homeowners in school taxes whose income is less than $500,000 a year. Enhanced STAR provides a greater savings for those over age 65 who earn less than $86,000 a year.

Facing a $4.4 billion budget deficit for the fiscal year that starts April 1, Cuomo proposed about $1 billion in new taxes and fees to close the gap.

Any tinkering with the STAR program, though, typically draws criticism from homeowners and lawmakers.

And legislators appeared again opposed to a freeze in STAR, saying even though a 2 percent increase would be small, homeowners could use the extra tax relief.

Cuomo has tried repeatedly in recent year to freeze the growth in the refund, but lawmakers have beaten it back. He also tried last year to switch Enhanced STAR to a mandatory income verification program, but it too was rejected.

"Each and every year, the Assembly has taken a lead to eliminate this from the budget. And I’m confident we’ll do so again," said Assemblyman Kenneth Zebrowski, D-New City, Rockland County.

The Republican-led Senate also dismissed Cuomo's proposal. The sides have until March 31 to get an on-time budget deal.

The GOP proposed a plan earlier this month to freeze and then phase out school taxes altogether for seniors.

"Senate Republicans are focused on making New York more affordable for seniors and homeowners, not less, and we remain committed to delivering all of the relief that hardworking taxpayers need and deserve," said Scott Reif, a spokesman for Senate GO conference.

Assemblywoman Sandra Galef, D-Ossining, Westchester County, said the STAR increase of 2 percent is important in the face of limited tax deductibility under the federal tax plan approved by Congress last month.

Cuomo has railed against the federal tax plan, and he announced Friday a lawsuit is being planned with Connecticut and New Jersey.

Galef said the STAR increase is important to keep because of the federal changes.

Basic STAR in 2016 averaged a $750 credit, and Enhanced STAR averaged about $1,400 for seniors.

"It’s even more important this year because we’re going to be into the new tax program for 2018, so there’s going to be, for many people, a loss or revenue or not being able to deduct your property tax and income tax to the full extend in the past," she said.

The state has sought to make a series of changes to STAR in recent years.

Two years ago, the state changed STAR so New Yorkers who bought their homes August 2015 would get a STAR check for their savings rather than as an upfront break on their school-tax bills.

Additionally, New York gives out annual tax-rebate checks to homeowners in communities that adhere to the tax cap.

Those checks are still going out and represent a portion of how much a homeowner receives in STAR based on income.

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