WPCNR SCHOOL DAYS. By John F. Bailey. April 22, 2008: Weeks prior to the passing of the recent state budget, the legislature and the Governor’s Office agreed to cut the BASIC STAR Exemption for homeowners by 5% then cut it another 5% on the eve of passing the state budget . 

The resulting increase in the White Plains taxpayers’ school tax pays for 85% of the $1.4 Million increased in school aid touted by local legislators as helping to lower property tax increases in the city announced last week.

The legislature at the request of legislature leaders and the governor  cut the Basic and Enhanced Exemptions by changing the law previously limiting year-to-year cuts in the BASIC STAR to 5% (increasing the White Plains taxpayers’ school tax by approximately $1.2 Million, and in differing amounts for all 26 Westchester County towns, cities and municipalities), according to a spokesperson for the New York Office of Real Property Services interviewed by WPCNR today.

The effect  has White Plains School Tax Payer  is essentially paying for virtually all of  $1.4 Million in increased School Aid  through increased taxes.

When a Tax Saving Move Actually Raises Taxes.

The $1.4 Million in school aid increase was announced last week by White Plains representatives  and was reported by  the  White Plains City School District  as making it possible to lower the district tax rate and lower taxes.  Communities across the state subject to the 90% of previous year’s assessment formula face the same tax situation where a “tax savings” is actually taking the form of a tax increase.

First drop in STAR “Floor” Limit in 10 Years

“There was a statutory method put into place when star was originally enacted back in 1997, and it’s been the same method (for 10 years),” Geoffrey Gloak, Director of Public Information  for the New York State Office of Real Property Services told WPCNR Tuesday.

“The only change this year was that the floor that the minimum, or the maximum, the floor could drop from one year to another was previously 5%, it was dropped to 10% this year, that was in light of the state fiscal crisis," Gloak said. "There were a lot of difficult decisions to be made, and that was one place where the decision was made to allow the exemption to drop, rather than just 5% allow it to drop 10%, if it indicated. In other words the exemptions would probably be dropping more than 10%, but as a result of the “floor,” they’re protected from dropping any more than 10%.”

WPCNR asked Gloak who was responsible for ordering the 10% cut.

Governor’s Office, Legislature Ordered Lower “Floor.”

Gloak reported, “The proposal was put forth in  (former) Governor Spitzer’s original executive budget proposal. Then it was negotiated by the legislature and the governor’s office. Then it was agreed to in the budget.”

WPCNR asked if this meant the legislature had to have known about this when they passed the budget.

Gloak said, “One would assume that would be correct. They passed the budget. It’s not like ORPS came up with this idea. Basically we’re just computing the numbers as the law requires them to be computed.”

WPCNR contacted the Governor’s Office for the answer to this question, but as  night descended on White Plains,  the Governor’s Office has not responded on which party – the governor or the leaders of the two houses decided on the STAR cuts.

School District learned of first half of cut in March

prior to Adoption of budget April 14.

The School District received notice that White Plains taxpayers would receive less STAR Exemption March 3, prior to the School Board adopting their budget April 14.  However that in itself was not unusual. The assessed value BASIC and ENHANCED STAR Exemptions have dropped 5% each of the previous two tax years.

At that time, City Assessor Lloyd Tasch wrote Assistant Superintendent for Business, Fred Seiler, informing him the STAR Exemption would be reduced 5%,  (from $3,700 to $3,520) and leave the district with $249,519,555 assessed value after STAR exemptions. The budget and tax rate was figured on that premise and the announcement of $1.4 Million more in state aid – much praised and with much self-congratulation by local legislators who “fought” for it.

By the way….

On April 14, the New York State Office of Real Property Assessments  announced the final STAR Exemptions and informed City Assessor Tasch of the additional 5% cut in a letter on April 15, stating “As you may know, the 2008 New York State budget changes the way STAR exemptions are calculated, in that the floor value has been reduced from 95% of the 2007 exemption amounts to 90%. It further dictates that all 2008 exemptions must comply with the new level.”

In a letter of Friday April 18, three days ago, Lloyd Tasch informed the school district that the Assessed Value with STAR had increased $251,534,411 because the STAR BASIC Exemption had been lowered an additional $190, bringing the White Plains Taxpayer’s Basic Exemption down to $3,330.

$1.2 Million Additional Taxes Paid to Whom?

Mr. Seiler explained that the White Plains taxpayers would pay an additional $1 Million in taxes as a result. Seiler explained that the district for the district because he said the state by cutting the exemption would not reimburse the district for that loss.

Asked if he knew about the extra 5% prior to the approval of the budget April 14, Mr. Seiler said “Not until I saw the letter yesterday (, Monday April 21), that the Superintendent (Timothy Connors) brought up. I got the letter from the Assessor. I read through it and it looks like, I think you’re right how the state’s allocating it.”

The State Reimbursement of STAR Decreases.

To see what has really happened by the state’s quiet action, Seiler explained how STAR works:

"The amount that every taxpayer gets (reduced), BASIC STAR and ENHANCED STAR, the city tells us how much that is. We then bill the state of New York for that. And it looks like we’re going to be billing them for $1 Million less than we thought because we’re going to be getting $1 Million more from the taxpayer.”

Seiler explained that of the $146 Million in revenue expected from Mr. and Mrs. and Ms. White Plains in the new budget, that is paid by actual taxpayers and STAR reimbursements from the state. However, because of the exemption, the taxpayers will kick in more and the state pay less. “What the state will say is they are not going to send out quite as much (back) to the school district.”

WPCNR computes the estimated additional amount  the  White Plains taxpayers will pay thanks to the lowered STAR Exemptions to be between $1.1 and $1.2 Million, based on Mr. Seiler’s information.  Seiler had not figured the exact amount Tuesday afternoon.

WPCNR asked Seiler the effect on the White Plains taxpayer:  “The amount we have (receive) for property tax payments is exactly the same. The individual is going to get a little bit less, But the amount that Albany sends us (for STAR reimbursement) is reduced by an equal dollar amount. The amount we’re collecting, the amount we collect  from the individual taxpayer goes up a little bit, but the amount we get from Albany goes down by the corresponding dollar amount. The district is neutral no change for us, the individual loses out. I don’t know why Albany is doing this, whether they feel it’s more accurate accounting.”

Windfall for State? July Surprise?

Asked if this seemed like a windfall for the state, Seiler said, “It sounds like it.”

At the time the school district passed the $184.4 School Budget on Monday, April 14, the school aid was touted by the district as a boon which enabled the district to lower the tax rate and lower the tax increase on White Plains homeowners to 5.9%.

However, that is not exactly the case because the STAR BASIC and STAR ENHANCED discounts were quietly lowered by the legislature, raising White Plains taxpayers’ tax bill by a collective $1.2 Million, effectively making the White Plains taxpayer pay for most of the increased aid.

Viewed another way, by lowering the BASIC and ENHANCED STAR Exemptions, the state has increased its tax collections, by paying out less in STAR EXEMPTIONS and in the White Plains case, found a way to have the White Plains taxpayers fund more of the district budget without realizing it until they get their tax bill in July.

District keeps the difference.

The bottom line: the person owning a $700,000 home in White Plains, whose assessed value has not gone up in three years  will have their exemption cut by $370 of assessed value giving them a taxable value of $15,145. This results in a school tax for 2008-2009 of $7,618.

 In the current year, that homeowner is paying $7,012 in school taxes. The tax dollar increase to this homeowner is $186 strictly from the state cutting of the BASIC STAR.

There is a school of thought that feels that this should be balanced against the STAR EXEMPTION savings. However, the taxpayer still has to pay in the increase in taxes resulting from the 10% drop in both EXEMPTIONS.

The new 2008-2009 BASIC STAR Exemption for the City of White Plains is $3,330 (deducted from your assessed value, and $6,500 for ENCHANCED STAR.

Multiply this across the state, and it creates a school tax increase statewide.