The STAR program looks good from inside the City of Buffalo.
It might even, as one state tax official speculated, make city living a lot more attractive. But only as long as not too many people want to move in.
The city's advantage under STAR is only an extension of a selling point Buffalo already has: Good houses can be obtained for relatively low prices within the city limits. And everywhere in the state, STAR cuts taxes by the biggest percentages on the lowest-priced homes.
If demand pushes the values of the city houses up to suburban levels, though, the STAR tax breaks will be more like those in the suburbs, too.
Buffalo already has low property taxes in comparison to the suburbs. STAR will cut them further. Look for some pleasantly low tax bills, especially on the city's East and West sides, as STAR gets fully phased in four years from now. After all, when you chop the same $30,000 off every non-senior school-tax payer's assessment, the effect is going to be much greater on a lower-priced house.
Actually, it's a bit more complicated for Buffalo, since there's no separate school tax bill in the city. But the state's financial wizards have corrected for that.
Buffalo, as one of upstate's "Big Four" cities with more than 100,000 population, has a school system that is funded out of the city budget. School taxes are billed together with city government taxes in one rate.
So Buffalo has an extra step under the STAR tax-cutting program. An extra calculation is needed.
After the STAR exemption of $50,000 or $30,000 has been fed through the state equalization rate in the same way it would be in other places, the equalized exemptions are reduced by multiplying them by .67.
The theory is that two-thirds of the combined city and school property tax money goes to schools. After the extra calculation, the reduced exemption is then applied to the combined tax bill. So Buffalo's tax reductions apply to both the city tax and the school tax -- but that's balanced out by reducing the dollar amount of the exemption.
The two-thirds figure looks like a pretty sound correction for fairness. If anything, though, Buffalo may come out a bit better than Albany planned because, in reality, two-thirds of the tax money the city collects has not been going to schools.
That's Albany's problem, of course, because the governor and Legislature has promised the city -- just as it promised every school district -- that it will make up the money lost at the local level because of the STAR tax reductions.
Three Buffalo examples show clearly how the STAR tax breaks, though not that different in dollar amounts, have their most dramatic effects for lower-priced homes. To see how they were calculated, look at the boxed explanation on this page.