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Here's a bit of news: New York's reputation as a high-tax state may not last much longer.

It's under assault in the Capitol, where Gov. Pataki and the State Legislature have followed state-tax cutting with an unprecedented assault on ever-growing local property taxes.

New York has lived too long with the damaging label of "highest-taxed" in the nation. Now, Pataki boasts, it leads in cutting taxes. For image value, it's a better spot for leadership.

In truth, it is a revolutionary thing the Albany powers have done with the STAR (School Tax Relief) program, proposed in January by the governor and approved by the Legislature as part of the 1997-98 budget. STAR has gotten too little public attention. It directly touches the personal finances of millions of New Yorkers.

If STAR runs its course as promised in four years, it should bring property-tax relief to every homeowner in the state. It can be expected to encourage home ownership. It might help stabilize some Buffalo neighborhoods. And it will surely encourage at least some people to remain in the state -- especially retirees.

STAR will only achieve its full promise, however, if both the state government and local school districts resist all temptation to shift tax burdens around in a way that dilutes or negates its effects. And the best safeguard against that is a simple one -- voters have to keep watch and demand that they get what they've been promised.

Winners and incentives

STAR is especially generous to senior citizens with incomes at $60,000 or less, a group where most retirees fall.

A substantial number of those, the ones who live in modest homes in low-property-value areas, will end up paying no school taxes at all. Seniors at the lower end of the income scale will have a better chance of keeping their homes.

Meanwhile, seniors who are better off but still short of the $60,000 mark might decide it's a pretty good deal to spend retirement years in New York after all. They come out major winners.

STAR is a commendable effort to shift more school financing away from property-tax revenue -- an unevenly distributed resource and one based on a relatively regressive tax -- and onto broad-based state revenues.

Existing state school aid has much the same effect, but the significant expansion from STAR is still a landmark change in education financing.

STAR has an element of unfairness, however, because the benefits apply only to one category of property, an owner's primary residence. Businesses are left out. Apartment buildings with more than three units are left out.

If there's a consolation, it's that STAR, unlike other property-tax exemptions, does not shove the relief it provides onto those not included. The state has pledged to make up the money. Albany has pledged that tax money lost by local school districts will be made up by aid from Albany's coffers on a dollar-for-dollar basis.

How the promise could be broken

The state's ability to carry through on its financial support of STAR, set to be fully phased in by 2001-2002, appears to be predicated on continued growth in state revenues, fueled by Wall Street's good times. Perhaps the state analysts also expect welfare reform to free up cash. But in any case, the future can't be predicted.

Has the state overcommitted itself? That question can only be answered over time, but the risk is there. STAR is fixed in law, but it could be reversed by a new law, as final implementation of the 1980s state income tax was when the economy turned down.

Citizens have a right to expect that their officials have planned ahead well enough so that they will be able to carry through.

The biggest threat to a realization of STAR's promise is the potential for growth in the school tax rates at the local level.

Essentially, STAR is a challenge to local school districts to keep spending increases at the rate of inflation so that homeowners gain the relief the state is paying for. For some districts, that may mean a much tougher approach to union bargaining than they have shown in the past.

School districts are fortunate that, in addition to STAR, the state has made a major multiyear commitment to increase financial aid that can go to new and expanded school programs, including prekindergarten.

But STAR, for its part, is clearly meant by Pataki and the Legislature to help homeowners by easing their tax burden. That's what the state wants. School districts must be diligent in seeing that it happens the way the state intends. STAR is not an excuse for a new round of pay raises.

Homeowners will have to stay vigilant about school tax rates to make sure their savings aren't put into one pocket only to be removed from another. If, lulled into ease by STAR's promise, they let down their guard, this game could be lost not long after it starts.

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