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BC News

August 11, 2011

A Note about 2011 changes to the state's STAR program

When the district estimates tax rates at the time of the budget vote, it does not take into account potential savings from the State’s STAR (School Tax Relief) program.

STAR generally works by exempting a certain amount of a property owners’ assessed value for the purposes of their school tax bill. Enhanced STAR is for senior citizens with incomes below a certain level; Basic STAR applies to all other households with incomes below $500,000.

In recent years, the state had been reducing the amount of the STAR exemption. (Exemption levels vary by municipality.) This year, the state announced that the exemption levels would be increasing. However, it also announced that the growth in the value of the exemption (i.e. how much the exemption actually reduces your tax bill) would be capped at 2 percent.

Generally speaking, the bottom line is that for most residents in the Basic STAR program, the value of the exemption will increase 2 percent from last year. Taxpayers may notice a slight redesign to their tax bill to reflect these changes.

The $500,000 adjusted gross income threshold for Basic STAR is also new this year. Previously income was not a factor in program eligibility.

STAR is beyond the district’s control. For eligibility guidelines, exemption amounts, enrollment information and FAQs, visit the New York State Office of Real Property Services' website at http://www.orps.state.ny.us/star/index.cfm for more information. 

District sets 2011 tax rates

Rates close to May projections

At its August 10 meeting, the Board of Education adopted 2011 tax rates for Bethlehem and New Scotland, the two towns in the district.

Due to changes in assessed property value, the final rates differ slightly from the rates estimated at the time of the budget vote, which is not unusual.

The final rates are: $20.1059 per $1,000 of assessed property value for town of Bethlehem property owners, and $20.3151 per $1,000 of assessed value for New Scotland property owners.

Tax bills should be mailed by Labor Day, and are due by September 30 without penalty.

The tax rates differ between the two towns because properties in different communities are often assessed at varying levels in relation to full market value. The state assigns each town an "equalization rate" in an effort to fairly apportion the share of taxes paid by each town.

In Bethlehem, the tax rate is increasing 2.34 percent from 2010; in New Scotland, it is increasing 0.22 percent. The total amount the district will collect in taxes next year — known as the tax levy — is not changing from the 2 percent increase contained in the budget approved by voters in May.

The final rates mean that the owner of a property assessed at $250,000 in Bethlehem would pay approximately $115 more in property taxes next year prior to any savings from the state’s STAR program. In New Scotland, the owner of a $250,000 property would pay $11 more prior to any STAR savings.

In the town of Bethlehem, the final rate is about 5 cents per $1,000 of assessed value higher than what was projected in May. This is primarily due to some major reductions in the assessed values of five commercial properties in town through an established process property owners use to contest their assessed valuation with the town.

New Scotland’s tax rate increase is less than that of property owners in Bethlehem because its total assessed valuation has increased from last year. The final tax rate itself is a little more than 5 cents per $1,000 higher than what was projected in May.

Because of the uncertainty that surrounds final assessments and equalization rates until well after the budget vote, the district emphasizes the tax levy (versus the tax rate) in budget meetings and informational materials leading up to the vote. The levy is the figure the district controls, and is the true indicator of how much the district is increasing taxes from year-to-year.

At the same time, estimated tax rates are often the first item residents ask about after the Board of Education adopts a budget for voter consideration. The district projects these rates based upon the prior year’s equalization rates — the best and only information it can use at that time to estimate changes to the tax rate.

At the August 10 meeting, Chief Business and Financial Officer Judith Kehoe noted that this year provided a good example of how individual tax bills may change at different rates than the state's newly adopted property tax levy cap.

Although the property tax cap has been advertised at 2 percent, that figure is likely to differ district-by-district as a result of exemptions and adjustments built into the formula, including for capital improvements and some pension costs. The cap will apply to the property tax levy.

But even as the BC Board of Education limited the property tax levy increase to 2 percent for 2011, changes in assessed values and equalization rates, caused the final tax rates — and ultimately tax bills — to increase by different percentages.

Because the state has not yet finalized the equalization rate for the town of Bethlehem, the approval of the tax rates was based on the expectation that this would happen in the next few days.

 

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