By Henry B. Nathan
October 1st, 2007
In the news
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
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
- 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
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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