Delegation Meeting on Property Taxes

Okay, I attended the Hillsborough County Legislative Delegation Meeting on property tax reform tonight, and it was an interesting experience.

Local governments attempted to rationalize why they have grown as big as they have. Legislators suggested they have grown to big for their britches.

Some good suggestions… some unbelievable moments… some salient points… a lot of hot air.

The room at the University Area Community Center Complex was ready for about 300 people, with only about 100-125 showing up. A large number of those in attendance were staffers for various governments (state, county, city, etc) and a handful of lobbyists. A few local media stations were there too, and the whole thing was televised live on Hillsborough County Television.

Here are some of the more interesting points:

Temple Terrace
Temple Terrace Mayor Joe Affronti started with a presentation that included some PowerPoint slides – and actually said the problem is not one of taxes, but one of over-valuation of property. He then went on to decry how the thought of cutting property taxes would force the City to make major cuts, including 10% of its police force.

He also mentioned how the Legislature this year actually raised property taxes through the “required local effort” portion of the Florida Education Finance Program.

Representative Kevin Ambler asked if there could be agreement on what the real problem is:

  • Lack of portability, and
  • The impact on commercial and non-homestead properties.
  • Property Appraiser
    Hillsborough Property Appriaser Rob Turner was invited because of his current position, as well as his service on the Governor’s Tax Reform Committee. Turner noted that this is not an easy discussion, calling it “property tax at the graduate level.” And it is a complicated issue.

    He noted that homestead owners represent about 50% of the state, but only pay 32% of the property taxes. This imbalance may be corrected with the most recent property tax reform proposal. Turner noted the portability issue may also be corrected under the most recent proposal.

    Finally, he described issues related to “highest and best” use, noting very few properties are affected. Most properties in Florida are being used in the highest and best way. It is not a well-understood issue, and Turner recommended providing a “legacy exemption” for those properties who remain under the highest and best use while their surrounding neighborhood has developed (such as a waterfront home that could be a condo building).

    Plant City
    Plant City Mayor John Dicks actually described how his City was able to rework their budget to make the necessary cuts – $1.8 million out of $8 million. However, they had to factor in cost increases for fuel, asphalt, and all types of insurance – reducing the savings down to $800,000. Any additional cuts require either alternative revenue streams or cuts to essential services.

    Answering a question from Rep. Ambler, Dicks offered two options to help offset harsher cuts to local governments:

  • Eliminate a significant number of the exemptions to the sales and use tax, adding the new sales tax revenue to the existing local government revenue sharing program, and
  • Eliminate the required local effort from the school finance program, perhaps from the state’s reserve fund.
  • (This last line drew significant applause).

    In response to Representative Faye Culp, Mayor Dicks said the City would not want to impose user fees, primarily because of the difficulty in determining the place of residence (for example, Plan City parks are enjoyed by people who live outside the City limits). However, he noted that implementing user fees is preferable to cutting essential services.

    City of Tampa
    Tampa Mayor Pam Iorio provided the City of Tampa’s presentation. According to one PowerPoint slide, police and fire comprise 50% of the operating budget, and the parks and recreation department is another 14%. She talked about the City’s shift to be more neighborhood centric – clean and resurfaced streets, more parks, reduced crime.

    She gave a lengthy discussion about the City’s nine CRAs – noting the incremental property tax revenue from properties in CRAs remain within the CRA — and can not be used to cover the operational costs of city services offered within the CRA.

    70% of the residents of Tampa have a homestead exemption — compared to 40% of Miami.

    She described the 1992 debate that lead to the passage of the Save Our Homes amendment. At the time, the hue and cry was property taxes forcing people out of their homes. Now the debate has shifted to say property taxes are trapping people in their homes.

    Mayor Iorio noted that, unlike in 1992, the problem has not been adequately identified. She proposes that commercial and non-homestead properties should have a cap on valuations, suggesting St. Petersburg Mayor Rick Baker’s proposal of 8% per year.

    Finally, she said the best way to provide property tax relief to people is removing the required local match. In Hillsborough County the match is 5 mills, a full 25% of an individual’s property tax bill.

    Hillsborough County
    Hillsborough County Board of County Commission Chair Jim Norman started the presentation suggesting the legislature should cut the state budget as much as they demand from local governments. (Representative Trey Traviesa later offered his first bill slot to Norman for a proposal to do this.)

    Norman also described the County’s efforts to curb its own growth – not allowing their revenue to grow beyond population and inflation.

    Pat Bean took over and went through a lengthy proposal, attempting to convey how the County has been fiscally sound:

  • The County is one of 2 in the state and a handful in the nation to have a “AAA” bond rating;
  • Hillsborough County has not raised its communications services tax to the maximum allowed by law;
  • Hillsborough County does not levy the 10% utility tax; and
  • The county has not imposed the 5-cent gas tax.
  • This is true. I would add the county has also not had the courage to ask the voters if they want to have a 1-cent sales tax increase for roads (Charter County Transit Surtax). If the county had imposed these taxes, maybe they would have been able to lower their property taxes…

    Bean also noted how Hillsborough County has lowered its millage rate fourteen straight years – a total of 1.58 mills (from just over 8, that’s a reduction of about 20%. Okay, some credit here — but from 2000 to 2007, county property tax revenue grew by 93% while growth (population and inflation) was about 32% — so despite a 20% cut in the rate, the total collected grew at three-times the rate of growth in the county. Hmmmm…
    (hat tip to Greg Truax for these numbers).

    Rep. Ambler asked how the county’s cap would affect the millage rate for commercial properties. County budget director Eric Johnson said it would be about a .4 (four tenths) of a mill — or $40 per $100,000 of value.

    The Ambler asked about something I had written down earlier — why can’t the county sell naming rights for some of it’s projects (I would expand that to include other forms of advertising). Norman noted that county attorneys cautioned against it – the county could be liable for discrimination.

    It was an interesting meeting… and all of the local governments mentioned the required local effort — where the legislature tells the school districts how much property tax to collect.

    It seems to me the legislature should heed this advice. The Legislature RAISED property taxes for schools by more than 7% this year (that’s more than growth from inflation and population, by the way). Seems a bit hypocritical to raise property taxes in Tallahassee while expecting local governments to cut them at home.

    Mayor Iorio and County Commissioner Rose Ferlita both cautioned that any reform should be phased in … well, it will.

    Phase I – roll back millage rates and cap revenue – will take place immediately (for the 2007-2008 fiscal years starting in October). Phase II – bigger homestead exemptions – will take place next year, if the voters pass any proposed amendment at the January 29, 2008 special session.

    The Special Session begins next week — and there are still a lot of questions. For now, at least, we know that local governments are trying to minimize their effect.

    About Jim Johnson

    Editor and publisher of The State of Sunshine.
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