Florida Property Tax Reform Dead ?


















































By Henry B. Nathan                                    October  1st, 2007                                                     

In the news this week:

A Judge has annulled January, 2008 referendum vote on Property Tax Reform.

A lawsuit, personally filed by Weston's mayor, Eric Hersh, and a September 24, court
ruling all but killed the property tax reform project. The issue is that the proposed ballot language is flawed and confusing. At the same time, the ruling upheld Florida legislature's right to limit local governments' spending.

A simple fix would be to clarify the ballot summary.  Make it transparent that whoever chooses the 'supersized' exemption would be dropping his or her right to the "Save Our Homes" benefits and, perhaps, in the long run, suffer the effects of an uneducated vote, in exchange for short term relief.

Hersh suggests a possible intent to deceive voters on such an important issue, and that it could have long term effects on homeowners' pockets.

Fixing the ballot language shouldn't be a difficult task, but legislators prefer to take the matter to an appeals court, where odds of defeat are very high.  That would avoid them the embarrassment of voters' rejection.  In effect,  this is a possible outcome, since recent polls showed voters' approval dropping below 50%, while 60% is the minimum needed to pass the tax reform.

One obvious blunder in the ballot summary is the promise of a minimum homestead exemption of $ 50,000 for all homeowners. This wouldn't be true for homeowners who opt to stay with their "save our homes" exemption and their present $ 25,000 homestead exemption, forgoing the new $ 50,000 'supersized' exemption.

Another evident flaw is that the ballot summary does not make it clear that the reform would eliminate the "Save Our Homes" protection for whoever takes the bait and opts for the immediate 'supersized' tax relief.  Additionally, it fails to clearly mention that the final objective is to definitely phase out "Save Our Homes", the ultimate salvation of many Florida residents.
"Save Our Homes" was instituted in 1992 and essentially keeps a cap of 3% maximum increase of the assessed value of full time residents' homes.

"Save our Homes" is apparently a thorn in the side of our government.
Removing it seems to be the main agenda of this tax ballot. Once phased out, our cities will very easily find their way to routinely raise their taxes according to their growing needs without any limit.

What better evidence than the steps that some cities are taking to override the tax rollbacks recently mandated by the legislators?  Apparently, they have done it either by having it voted off by a large majority of their commissioners or through the not-so-subtle recourse of lowering the taxes on one hand and on the other hand increase their fees for many services or charging for services that were previously free.

The "save our homes" 3% cap on increases in the assessment has been a reasonable and fair way to keep tax increases within what has been the inflation index during the last 15 years.

However, while "Save Our Homes" has protected residents in part from the government, it has established a two-tier system that puts a much heavier burden on new buyers, rental properties owners, vacation home buyers, real estate investors and commercial property owners.


- Keep the 'save our homes' exemption at its present status for homestead homeowners.

- Keep the supersized homestead exemption as it was structured in the failed proposal, i.e. 75% on the first $ 200,000 of assessed value, then 15% on the next $300,000. However, this supersized exemption would not be applicable to the present "save our homes" beneficiaries who have bought their present home before 2001 (they have already been protected from the wild home value increases during the recent 'boom').

- Extend this protection to all residential properties, vacation homes, rental properties, and commercial real estate by putting a cap on assessed value increases indexed on US inflation.

- Allow the 'portability' of their "save our homes" benefits to homeowners who are presently enjoying this protection. They are presently 'trapped' and unable to downsize after retirement age.

Of course, these reforms would not solve the immediate troubles of vacation homeowners and investors who have seen their tax bills balloon during the last 4 or 5 years.  May we suggest a temporary rollback or reduction of their taxable values in 10% during the next 2 or 3 years?

Not a perfect solution, but it would give us all at least some confidence in the future.

If the 3% 'save hour homes' cap had been applied to all types of properties, regardless of their homestead status, perhaps our cities and counties would have found some restraint in their uncontrollable appetite and their growing bureaucracies and budgets; The huge increase of their 'tax base' produced by the mushrooming development should have been more than sufficient. However the automatic 'bonanza' brought over by the wildly rising property values
was not compensated by a reduction of the tax rate. The new money just found its way in the local governments' budgets.

The present system is not really based on the government's needs or the citizen's ability to pay. It is based on the local government's authority to tax us as much as they can. The 'save our homes' protection is the only exception.

My last suggestion: Frugality. If we all want to keep our taxes low, we have to mandate our local governments a prudent and thrifty approach. Citizens must also be prepared to limit the extent of the services received, as well as require cutbacks in unnecessary bureaucracy and duplicated services.

It is evident that the property tax system needs an overhaul. A rushed and uninformed referendum, with hidden implications and unaddressed issues, is not the solution. We are sure that this is not the way our legislature prefer and that their message will not be: 'that's all we are giving you, taking or leave it'.

Not all hopes are lost. Weston's mayor has mentioned that there are other means to put a new and better proposal on January's ballot. Florida Taxation and Budget Reform Commission could eventually place tax amendment proposals directly on the ballot.

Let's hope that something will be done in time.



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