0 The Unintended Consequences of Property Tax Relief: New York’s STAR Program

New York’s School Tax Relief Program, STAR, provides state-funded property tax relief for homeowners. Like a matching grant, STAR changes the price of public services, thereby altering the incentives of voters and school officials and leading to unintended consequences. Using data for New York State school districts before and after STAR was implemented we find that STAR resulted in small increases student performance and school spending, significant increases in property tax rates, and moderate reductions in efficiency. These tax-rate increases are likely to magnify existing inequities in New York State’s education finance system