Are property tax cuts doomed to fail?

The Florida Legislature will meet next week in a Special Session to pass a property tax reform package. I am certain the Republican leadership of both chambers will have the votes to pass some measure of reform.

However, consider two interesting items:

First, The Buzz is reporting that Senate Minority Leader Steven Geller is the first to talk about not having specific numbers from the most recent proposal by House Speaker Marco Rubio and Senate President Ken Pruitt:

“I thought the deadline was today, but we can’t get up there on Monday and have nothing to discuss,” Geller said. “If we don’t have a plan by today or tomorrow, I think we have to postpone the session, at least until Thursday or something.”

The session is scheduled from June 12th – June 22nd, so they do have some time to delay and still pass meaningful reform.

However, another set of interesting facts has arisen from a Quinnipiac University poll:

  • Only 53% expect “the state legislature and Governor Crist will be able to agree on a plan that will significantly cut property taxes” – down from 60% in March;
  • The definition of the term “significant” splits at 20%, with 43% saying up to 20% is “significant” and 43% saying 21% or more is “significant;”
  • As household income increases, support for giving larger tax cuts to less expensive properties drops off significantly – go figure;
  • 71% think that local governments have not done a good job of balancing taxes and services — this number has an interesting affect based on income lower income people feel more strongly about this than higher income, which means that some feel that local government could be doing more with what it collects; and
  • Other than police and fire services, support for cuts has a direct and dramatic relationship to household income, with household s with incomes over $100,000 supporting cuts by 15 – 21% more than households with incomes under $30,000;
  • 55% would be willing to accept fewer services in exchange for cutting taxes (and increase from 49% in March).
  • Here are the things local governments can not cut without some backlash: Police and fire services (85% oppose cuts), Programs for seniors (77% oppose), Public health clinics (77% oppose), School crossing guards (74% oppose), Libraries (73% oppose), and Parks & recreation (58% oppose). The only area included in the poll where there is supports for cuts laying off government employees – 47% to 45%.

    The poll did not ask about things such as planning, zoning, permitting, code enforcement (although that is defined as public safety), neighborhood and public relations, affordable housing, child care licensing, and – a big one – transportation/transit services.

    The most interesting number out of all of these was the 55% number. The question was: “In general are you willing to accept fewer local government services in exchange for lower property taxes?” Fifty-five percent said “Yes” and thirty-six percent said “No.” The St. Petersburg Times, at the end of today’s article turned it around to say: “55 Percent who support tax cuts even if services are cut” – which is not technically true.

    But more important than an error by a newspaper is the number 55. You see, there is another number that will come into play early next year: 60. Part of the tax reform package will be a sweeping change to the homestead exemption law – further reducing property taxes. All amendments to the Florida Constitution require 60% to pass. The Legislature will put the proposed amendment before the voters during the January 29, 2008 presidential preference primary.

    Now because the Legislature will cut taxes immediately, for the local fiscal year which starts in October, local governments will have to make some cuts. (How much is to be seen, as Geller noted above). So the voters, who barely support cutting both taxes and services, will be asked to pass more tax cuts after services have already been cut.

    If I were a betting man, I’d be putting my money down that the amendment will fail… and we’ll still have our “Save Our Homes” problems.

    About Jim Johnson

    Editor and publisher of The State of Sunshine.
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    9 Responses to Are property tax cuts doomed to fail?

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    3. Chris W says:

      For those of us who *have* Save Our Homes, it isn’t a problem at all. The whole point of SOH was to protect homeowners who own their homes for the long haul from tax increases caused by real estate “investors” who buy and flip houses and drive prices way way up.

      The thing that would provide immediate relief to small business owners would be replacing “highest and best use” with “current use” when computing assessments. More businesses could afford to stay *in* business, and fewer would have to sell out to developers .. and on the coast, that means we’d still be able to get to the beach when we wanted to instead of having to gaze at it between condominiums.

      The second thing that would ease peoples’ pain would be creating an exemption for people who want to downsize their homes – make the SOH tax cap portable from one primary residence to another, as long as the new residence isn’t sold within some fixed time period (2-3 years, I would say). This would cut out the real estate speculators and put those late-night Carleton Sheets wannabes out of business.

    4. Jim Johnson says:

      Chris,

      Thanks for the comments. Two things –

      1) Property appraiser Rob Turner said that most properties are already at their highest and best use. He suggested a ‘legacy exemption’ would correct some of the problem. So would a Save Our Businesses cap – St Pete Mayor Rick Baker has suggested 8% per year. Regardless, the legislature has put off until next year any discussion about the methodology for valuing property.

      2) You are right that portability would be needed. It was a central theme of the campaign. There are some Constitutional problems with portability, however, as it could violate the 14th Amendment right to equal protection.

    5. Chris W says:

      Jim:

      Thanks for the reply. The examples cited in the media for the “highest and best use” problem have all been on the coast, not in Hillsborough County. It seems that a more relevant comment would come from the Property Appraiser in Pasco, Pinellas, Manatee, or Sarasota counties.

      Chris

    6. Fred says:

      The probleme with today’s proposal on tax releif is that it does not reverse the runaway spending programs of our local gernments and schools. From 2003-2006 property values soared, and while tax rates generally remained stable with only minor increases, local tax revenues skyrocketed. Now our local politicians who went on a drunken spending spree for three years tell us we will lose critical services. Nuts! is a famous reply from WWII and exactly what we taxpayers should be saying to our local governments.

      Based on the current proposal, Flagler county would be require to reduce it’s spending by 9%. Even though this is a fast growth county, I’ll bet it’s per capita spending increased 40% in the last three years. Nuts!

      Any tax relief plan should include roll backs to 2003 per capita (per citizen)spending levels adjusted for inflation plus 1%. Future local spending increases should also be limited to the rate of inflation on a per capita basis.

    7. Rich says:

      Fred,

      This is not just a 5%-7% tax cut the first year…. DO the math. First, they have to FREEZE spending to the 2006-2007 year, THEN cut an additional 3%-9% off of the spending.

      Hillsborough county assessments that came out April 2007 had total tax assessments 13% higher than 2006. And they are forced to cut to last years spending PLUS an additional 5%. That is about a 16% cut in spending THIS YEAR.

      THEN, if we pass the super homestead exemption, it will create easy portability, and tax fairness among “homesteaded” property owners.

      The non-homesteaded owners will STILL see the 16% cut, PLUS the county will only be able to increase spending in the future as incomes grow.

      For those who think homesteaders should pay as much as businesses and non-homesteaders, dream on. EVERY state has some policy that has homestead homes paying less than non-homestead homes. Even the federal govt subsidizes primary home ownership thru tax deductions on taxes and mortgage interest.

      My opinion is that this plan is good primarily b/c it caps revenue now and forward, AND deals with easier portability. It also phases out the current unfair SOH.

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