Section: CAPITAL REGION,  Page: B1

Date: Monday, December 15, 1997

Almost everyone has hailed the governor's massive school tax-cut plan created earlier this year . But now some local government and school officials are wondering how much this tax break will cost them.

The program in question is the state's School Tax Assessment Relief, or STAR, program, created by Gov. George Pataki with approval of the Legislature. By lowering the assessments, or values upon which property taxes are based, STAR is expected to reduce school tax bills an average of almost 30 percent in three years. The state will make up the difference from the lowered assessments by giving money to the school districts.

School business administrators, though, are starting to worry that the program could cause a cash crunch, especially if the state's reimbursement is tied to passage of the state budget, which is traditionally several months late.

For a school district, particularly a city system walking a tight fiscal wire, the extra costs would come from borrowing money until the state budget is passed.

The program could also mean schools have less money on hand, denying them a source of interest revenue.

``That's a concern at this point,'' said Bill Pape of the New York School Boards Association. His group isn't ready to say this is a major flaw in STAR, but members want to see how much revenue will be delayed.

Then there's the Big Question: What if the state in a few years no longer has a budget surplus and can no longer afford the STAR program?

As good as a 30 percent cut in school taxes might feel three years from now under STAR, an eventual 30 percent increase would be worse, should the program falter.

``The question is, who will be left holding the bag?'' said Pape.

``That's a concern,'' agreed Gene Brousseau, who often opposes school boards as president of the Northeast Educational Alliance, a group pushing for lower school taxes. ``How long is this guaranteed for?''

Brousseau said he is concerned that the state's reimbursement will be tied to politics and the faulty state budget process.

He also fears STAR might prompt school districts to spend more, increasing costs to local taxpayers.

STAR, however, encourages residents to control spending with budget votes. If voters turn down a budget two times, school-district spending could be capped at a 4 percent increase.

STAR also will try to focus voter attention on often-overlooked school budgets by having all districts vote on the third Tuesday in May.

Despite some concerns, Brousseau, like most critics, supports the idea of STAR.

``At least we have something going,'' he said.

That, according to Gov. Pataki, who proposed it, is the point.

``Fundamentally this is unprecedented, historic tax relief that taxpayers have been calling for for years, and finally a governor is acting,'' said Pataki spokesman Chuck Deister.

The program has established a panel that includes the state comptroller, the budget director, education commissioner, a school boards association representative, and others to make sure the program is ``revenue neutral for school districts,'' he said. This panel has already met and is scheduled to deliver its first report in March, Deister said. Its job is to make sure school districts aren't harmed by STAR.

The tax exemptions will not come without administrative costs, however. In October the state Office of Real Property Services sent $2.2 million to 1,000 municipalities to help offset local administrative costs for the first year of the program, during which a fraction of the total new exemptions will be granted.

``We're getting a lot of calls about it,'' said Joseph Hesch of the state Real Property Services.

Assessors, many of them part-timers and working alone, must adjust virtually all assessments for tax purposes in their municipalities.

``It's a lot of work,'' Hesch said. ``I'm sure your assessors are telling you it's a lot of work . . . but this is big. This is going to affect every homeowner in New York state.''

In Clifton Park, a recent meeting on STAR drew 45 senior citizens. Assessor Sally Vedder said the state money to help implement STAR helped, but it's not enough now or for next year.

A rough estimate of the number of hours needed to process STAR, based on an optimistic 15 minutes per parcel, amounts to 340 work days over two years, most of which will be fit into routine duties and through unpaid hours by the salaried assessor. School districts are now buying advertisements and placing articles in their newsletters about the STAR program, as required by the state.

Applications, the RP-425 form, are now printed and becoming available at local assessors' offices or by mail from the offices.

Here's how these mailings, ads and even state Internet site postings describe STAR:

Gov. Pataki's STAR -- School Tax Relief -- program will apply to owner-occupied residences like houses, mobile homes and condos. The program will cut school tax bills by reimbursing the school districts with state funds.

Senior citizens with household incomes under $60,000 get the first shot at STAR. They must apply with a copy of their latest tax returns and proof of age and income to their local assessor by March 2 (or earlier in some municipalities). For most other taxpayers, the deadline is March 1, 1999, but residents should check with the local assessors.

These senior citizens' tax breaks -- saving them as much as $155 million -- will take effect in September 1998.

The senior citizen tax break will begin by knocking off at least $12,500 from a property's assessment. When phased in over three years, the assessment will be reduced by $50,000, resulting in an average school tax reduction of at least 45 percent a year.

STAR will be available for all taxpayers in September 1999. At that time, homeowners regardless of age and income will get the tax break for the 1999-2000 school year. The break will knock at least $10,000 off a property's full assessed value. It will grow to a $30,000 assessment reduction over three years. Properties assessed at a partial value will have their taxable value adjusted to full value for purposes of the STAR exemption.

The state estimates the average property's school tax reduction will be 27 percent, a figure that will fluctuate amongmunicipalities.

Actual savings will be noted on school tax bills.

That will be part of the job of local assessors.

``I've listened to some of the other assessors that this is a horrendous problem,'' said Waterford town Assessor Charles Ellett. ``But from my standpoint, it's one more item.''

He faces a task of processing about 300 senior citizen exemptions under STAR, verifying income and primary residence. In a year, he will make sure exemptions for the remainder of the town's 2,100 parcels in the Waterford-Halfmoon Central School District are processed.

``That may be more of a problem looking into the future,'' said Ellett, a Republican. ``It probably will be more of a problem because it will be bigger numbers.''

All of this awaits the part-time, appointed assessor in an office that's open only on Monday, Tuesday and Saturday mornings. The situation is similar in other small towns.

Still, Ellett says the ``problems'' of implementing STAR need to be kept in perspective:

``All in all it's just another thing to be done,'' he said. ``It's a good thing for the property owner, especially the senior citizen, because if we run into inflation they are going to be buried. School costs in New York state are awfully high.''