House, Senate debate property taxes

Article Courtesy of The Palm Beach Post

By Michael C. Bender And Dara Kam
Published  April 18, 2007


TALLAHASSEE The potential impact of competing tax cuts in the House and Senate deepened Tuesday, but not because of changes to the proposals.

In the Senate, the possible cuts grew from $11.5 billion to $12.3 billion over five years after senators said they fixed a math mistake in a previous estimate of their bill's effect.

Later in the day, House Republican leaders claimed their plan to drop property taxes $25 billion over the same time could actually total $35 billion in cuts.

The two adjustments in the estimated effects were the only major changes to the elaborate proposals in each chamber despite a daylong debate on the legislature's top issue.

On the House floor, Republicans closed ranks around Speaker Marco Rubio's plan (HB 7089) to eliminate taxes on primary homes, called homesteads, by increasing the sales tax.

They also prevented Democratic amendments on another bill (HB 7001) to cut local government tax bills and cap future increases.

"I don't think this is an issue where the goal is to have everyone on board," Rubio said. "This is an issue where you want to be meaningful. We can get everyone on board, but I don't think people are going to get the cut their looking for."

House leaders claimed their two bills, which received tentative approval in the chamber Tuesday, would total about $35 billion in savings over five years if voters adopted them in a referendum. They said their earlier estimate of $25 billion in tax savings had been too conservative.

Other bills in the House package include a proposal to base assessments on commercial properties on the income that a property generates (HB 261) and another to require a supermajority vote by any local government for any tax increase (HB 1483). The package will receive a formal vote today.

In the Senate, a bipartisan package of bills received their first committee votes. All four Senate bills won unanimous approval from the Finance and Tax Committee.

The Senate plan would roll back taxes less and allow greater future increases (SB 1020) than the House plan. It would also put an amendment on the ballot that would allow voters to decide whether to increase the homestead exemption for first-time home buyers and let homeowners carry some of their Save Our Homes benefits to another house (SJR 3034).

The other two Senate bills would make it easier to contest assessments (SB 560) and would create a special assessment for affordable housing (SB 1022)

The Senate proposal is scheduled for debate Thursday by the entire chamber.

The House debated its plan Tuesday.

The most significant discussion was over Rubio's proposed constitutional amendment, which would ask voters statewide to eliminate the portion of homestead property tax bills required by the state for schools and replace it with a 1-cent sales tax increase statewide.

Subsequent elections would be held in each county to eliminate local governments' property taxes on homesteads and replace them with another 1.5-cent increase in the sales tax within that county.

The state sales tax is now 6 cents per $1 spent. That could grow to as much as 8.5 cents in the counties where two-thirds of the voters approved the three referendums required under Rubio's plan.

Democrats decried the tax swap, arguing renters and business owners would pay the sales tax increase without receiving a benefit from repealed homestead taxes.

"I don't think that people who rent or own commercial property should be second-class citizens," said Rep. Ron Saunders, D-Key West.

Rep. Gayle Harrell of Stuart was the lone Republican to vote for a Democratic amendment that would have deleted the tax swap from the bill.

"I simply cannot vote to increase taxes," Harrell said. "I'm a fiscal conservative and there are other ways to give tax relief."

Most Republicans argued in favor of the sales tax increase, saying it would generate $9.3 billion in exchange for eliminating $15.8 billion in homestead taxes.

"Only in Tallahassee could a bunch of politicians declare that a $7 billion net tax savings is a tax increase," said Rep. Adam Hasner, R-Delray Beach. "This is a political stunt and it is, quite frankly, hypocritical."

Another amendment Democrats offered would have cut the sales tax proposal in exchange for a plan to make Save Our Homes benefits portable.

Two Republicans supported the change, including Rep. Carl Domino of Jupiter.

"We're trying to address everybody's concerns rather than just decide we're going to help the wealthiest homeowners and pitch that entire revenue burden on everyone else," said House Minority Leader Dan Gelber, D-Miami Beach. "That's not responsible."

But Republicans said Rubio's plan would provide the most relief.

"The taxpayers are the goose that laid the golden egg for our state," said Rep. Aaron Bean, R-Fernandina Beach. "And the goose is truly screaming for tax relief."