Report: STAR Program Fraught with Abuse

3:22 PM, Mar 2, 2013   |    comments
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By Joseph Spector
Albany Bureau

ALBANY The state's School Tax Relief program is replete with duplicate and improper exemptions for property owners, costing New Yorkers $13 million during the 2010-11 fiscal year and potentially $73 million by 2016, a state audit Thursday found.

WEB EXTRA:  Click here to read the audit

Comptroller Thomas DiNapoli found that some municipalities were lax in their oversight and gave out benefits on multiple homes to the same owners. Auditors examined 6,500 parcels receiving STAR exemptions in 46 municipalities.

"The STAR program has succeeded in delivering million of dollars in tax relief, but it is difficult to ferret out abuse or even errors because it is hard to police the program. STAR exemptions could be easily gamed at a significant cost to the state," DiNapoli said in a statement.

Enacted in 1998, the STAR program provides a partial exemption from school taxes for most homeowners with incomes less than $500,000 on their primary residence. The state's enhanced STAR program provides an additional benefit for senior citizens with incomes of $74,100 or less.

The auditors found that nearly 20 percent of the STAR exemptions reviewed should not have been granted. The report came a day after authorities in Rockland County found more than 500 Rockland property owners were illegally getting STAR rebates, costing the state $671,000.

Gov. Andrew Cuomo in his 2013-14 budget is proposing a re-registration initiative for the STAR program to crack down on abuses.
DiNapoli's report found that there were nearly 2.8 million basic STAR exemptions in the 2010-11 fiscal year and 624,474 enhanced STAR exemptions statewide.

DiNapoli said some municipalities have boosted STAR oversigh, including Chili in Monroe County and Greenburgh in Westchester County. Others audited in the report included Beekman in Dutchess County; Carmel in Putnam County; Greece in Monroe County; and Yorktown and Yonkers in Westchester.

Greenburgh Assessor Edye McCarthy said the town has relationships with out-of-state clerks in the South to check on where people are claiming their primary residences. They also continually check records to see if any property owners died or moved.

"We feel here like we are investigators," she said.

McCarthy said the state should either provide funding for local governments to better oversee the program or take it over, saying it's currently an unfunded mandate.

Aimed at helping to offset New York's property-tax burden, STAR benefits -- funded through the state budget -- have rapidly increased. The state's cost grew from $582 million in 1999 to $3.2 billion in 2011, the report found. DiNapoli said the cost could grow to more than $3.7 billion by 2016.

Some school groups said the program needs to be reformed.

"I think there are huge operationally issues with star. And I think STAR has distributional issues," Bruce Fraser, executive director of the state Rural Schools Association.

DiNapoli said it is too easy to defraud the system because the STAR program applications do not require information that identifies property owners, such as Social Security numbers.

Also, assessors do not have access to state databases that would allow them to track STAR exemptions outside their towns, if, for example, someone was claiming benefits in two different towns.
Some of the problems showed that homeowners were receiving STAR benefits for their primary residences and second homes. Additionally, a homeowner may have died and a relative who inherited the property continued to receive the exemption.

The report noted that in Monroe County, a homeowner who received an Enhanced STAR exemption died in September 2009, but the property continued to receive the exemption.

DiNapoli proposed a number of steps to weed out abuse in the system. He said state leaders should require a unique identifier for each STAR recipient and to create a more useable state database so municipalities can look for duplicate STAR beneficiaries.

Jody Siegle, the executive director of the Monroe County School Boards Association, said STAR has been difficult for residents and municipalities to understand.

"There are issues around STAR, heaven knows," Siegle said. "There have been instances in the past where you have this confusion between the towns and the residents. I think it's important that everything be done properly."

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