PROPERTY TAX REFORM: Tax-fix plan offers pains, gains
Voters have amended Florida's modern-day Constitution 109 times. But few changes have helped -- or harmed -- as many homes, lives and schools as could the Jan. 29 initiative to revamp the state's property tax system.
Voters now must ask like never before: What's in it for me?
Do they want the largest proposed tax-cut in state history -- even if it could mean big cuts for schools, firefighters, police, parks or social services?
The answer is typical of anything with the tax code: It depends. And the decision isn't without its risks to taxpayers themselves.
The proposed amendment, passed Thursday by the Legislature, seeks to gradually undo the only other constitutional amendment that rivaled it in importance: the 1992 Save Our Homes amendment, which protected homeowners but helped distort the tax system in the first place.
This year alone, Save Our Homes saved homesteaders about $7.8 billion statewide,, shifting taxes to commercial property owners and people like Maris and Maurice Bluestein. The new Pompano Beach residents pay $8,800 in taxes yearly on their oceanfront condo home.
Their taxes would drop dramatically under the new constitutional amendment, which would super-size their homestead exemption, decreasing their home's taxable value from about $420,000 to about $260,000.
For anyone who choses, the plan allows people to pay taxes on just $50,000 of the first $200,000 in market-based assessed value and $255,000 of the next $300,000 for their homestead. The Legislature could adjust the rates in the future.
But those savings would cut $9 billion to $16 billion from local governments over four years. About 40 percent is from schools.
Also facing possible cuts: Parks, police and fire services, which are funded almost exclusively by property taxes.
Maris Bluestein said her neighbors, who pay far less in property taxes than she, will likely vote against the amendment.
"There are folks around here who don't have much use for schools. But they need emergency help," she said. "Hardly a day goes by without an ambulance going up and down Ocean Boulevard. There are lots of old people here."
But Bluestein said she's disappointed with the plan. It doesn't do enough, she said.
The super-exemptions do not apply to non-homesteaded properties, so the Bluesteins will get no relief from the $8,000 tax bill on another condo they own but have been unable to sell.
Commercial properties also get next to nothing under the amendment. They've been among the hardest hit by tax-value run-ups.
But voters tend to be homesteaders, so legislators are offering them the lion's share -- about two-thirds of the savings.
SOME SAVINGS FOR ALL
Every class of property-taxpayer, though, should save this year in the first stage of the two-step tax plan. It rolls back, caps and cuts tax rates for local governments, which may override some limitations only by super-majority votes.
Stage one also punishes local governments that spend more tax money as compared with a statewide average over the past five years.
Price tag: $15.6 billion in cuts over five years, with schools exempted from the cuts, for an average 7 percent taxpayer savings. The measure passed the Legislature almost unanimously, and needs no voter approval.
The second stage, the amendment, cuts the tax base, not tax rates. Democratic lawmakers and unions oppose the amendment, which needs 60 percent voter approval to pass.
The amendment wouldn't do much for about half of South Florida homeowners who do better under Save Our Homes, which limits taxable-value increases to a maximum three percent annually. If the amendment passes, homeowners may make a one-time "irrevocable" choice at any point to keep Save Our Homes or use the new system.
Bluestein predicts her neighbors who pay far less in taxes will vote no, responding viscerally to police and fire unions' predictions of layoffs and degraded services.
Gov. Charlie Crist and House Speaker Marco Rubio have promised huge tax cuts to help fix Florida's economy. But they've also maintained that police and fire services will be fine because local governments will prioritize spending. Crist, criticizing widespread waste, said "dog parks" are likely goners.
The Republicans made much of the first phase's caps and rollbacks, saying they will help restrain the tax-and-spend powers of local governments, many of which gorged on massive property-tax collections during the real-estate boom.
The new tax rates may increase, but they are limited by the growth rate of new construction and average personal income, which generally rise at higher rates than the Save Our Homes cap. Senate President Ken Pruitt predicted homesteaders will pay more attention to city and county hall once their tax bills increase at the same rate as everyone else's.
Save Our Homes would disappear in the coming years as homeowners move or die.
NEW VOTER HURDLE
But the Republican-led Legislature's Save Our Homes phase-out could fall victim to another initiative approved in 2004: The 60 percent voter-approval threshold for constitutional amendments. It was placed on the ballot after citizens approved initiatives loathed by many GOP leaders, from reducing class sizes to banning indoor smoking.
In 1992, Save Our Homes passed with slightly more than 53 percent of the vote.
Rubio, of West Miami, said he doesn't "see an irony" in the fact that the Legislature's plans could fall victim to its own effort to make changing the Constitution harder. He said changing the state charter should be tough.
Though Rubio has said Save Our Homes has "failed miserably," longtime homeowners such as Thomas Hardt of Fort Lauderdale disagree. His tax bill has decreased. He said he is opposed to the amendment because it will erode government services.
The father of Save Our Homes, Lee County Property Appraiser Ken Wilkinson, said he favors the new amendment. It doesn't force people out of Save Our Homes and seeks to help affordable-housing providers, marinas and poor seniors, he said.
Wilkinson said he's not sure if his citizens group will drop a petition drive for November 2008 to allow homeowners to transport their Save Our Homes protection to a new home. Known as "portability," the savings-transfer was partly addressed by the new super-exemptions.
Wilkinson acknowledged a major failure with Save Our Homes: The amendment worked almost too well. Home values and taxes were kept so low that owners stopped paying attention to city and county hall.
Wilkinson said he heard all the local government "fear tactics" about school kids and emergency services in the Save Our Homes campaign, including a TV commercial of a schoolbook cleaved by an ax. He expects more of the same now, to the new amendment's detriment.
"Negative impressions last a lifetime. Positive ones only last 90 days," Wilkinson said. "There's an old saying: When you don't know, vote no."
Miami Herald, The (FL) 2007-06-17 - Marc Caputo