Despite promised cuts, Broward governments to collect more in property taxes

Article Courtesy of The Sun Sentinel

By Scott Wyman, Brittany Wallman and John Maines

Published September 9, 2007


This month was supposed to be historic, a time when local governments would deliver taxpayers their first relief in years. But a South Florida Sun-Sentinel analysis found that Broward County property owners likely will pay an additional $63 million in property taxes this year.

That will bring to $3.5 billion the total property taxes paid for schools, county, city and other local services -- a 2 percent jump over last year.


That will bring to $3.5 billion the total property taxes paid for schools, county, city and other local services -- a 2 percent jump over last year.

Taxpayers started complaining last month when they opened their tentative tax notices. Some -- particularly business owners, landlords and snowbirds -- saw another tax increase. Many others considered their savings paltry.

Why aren't the savings larger? A dozen of Broward's 31 cities are considering taking advantage of a little-known opt-out clause in the tax relief plan that the state Legislature approved in June. School taxes weren't covered by the law and are going up. And, the taxable value of property continued to increase dramatically last year.

Michael Ettus of Hollywood was stunned when he learned he will likely owe $7,000 in property taxes on a condo he purchased last year for $440,000. He doesn't know how he can afford it along with the tax bill on his old home. He has been trying to sell the old place, and unload its $5,600 tax bill, to no avail. He already works two jobs.

'Drop like a rock'

Gov. Charlie Crist promised that property taxes would "drop like a rock." In this May 4 photo, Senate President Ken Pruitt, R-Port St. Lucie, holds a rock in reference to Crist's comment during closing ceremonies of the Legislature on May 4. At left is House Speaker Marco Rubio, R-Coral Gables.

"They did nothing to help," Ettus said of the Legislature. "They have destroyed the state and are chasing everyone out. There will be a mass exodus and people will be giving their property back to the bank as they leave."

Under the tax relief plan, local governments were supposed to roll back property tax collections at least to last year's levels. Some were required to cut an additional 3 to 9 percent. Tax collections in recent years have ballooned because of higher property values, and governments that cashed in the most were required to cut the most.

Loophole used

But a loophole in the tax relief law allows local governments to avoid making large budget cuts with the approval of two thirds of its commission, though in some cases a unanimous vote is required.

Broward's second largest city, Pembroke Pines, is among the communities that may opt out of the state-mandated cuts. So may Coconut Creek, Hillsboro Beach, Lauderdale-by-the-Sea, Lauderdale Lakes, Lazy Lake, Lighthouse Point, North Lauderdale, Parkland, Pembroke Park, Sea Ranch Lakes and Southwest Ranches.

Pembroke Pines wants to collect $5.5 million more than the $48.7 million it took in through property taxes last year, a 11 percent increase. Lauderdale Lakes wants a 20 percent increase over last year's $7.2 million property tax collections, while North Lauderdale is seeking a 17 percent increase over last year's $9.8 million collections.

Pembroke Pines City Manager Charlie Dodge said his proposed increase likely won't stand at this month's hearings because it would require a unanimous vote by city commissioners. But the level of cuts sought by the state won't happen either, he said.

"We've grown our staff and grown services and paid for things with cash as the tax base increased," Dodge said.

Pembroke Pines' tax base has increased from $5.9 billion to $11.8 billion since 2001. Dodge said commissioners don't want to reduce "quality of service" and aren't fond of layoffs.

Larry Tibbs, finance director in Lauderdale Lakes, said his city held five or six budget workshops and found residents didn't want the steep tax cuts if it meant "any kind of cuts in police and fire."

"If you're talking about cutting my taxes 30 or 40 dollars, that may not be worth what we're giving up," said Tibbs, recounting the public sentiment.

But some residents of those cities are not happy with what their governments are doing. "If all homeowners are forced to trim their budgets as smart as possible to get by, I think the city should too," North Lauderdale resident David Wright said. He will save $26 off last year's bill of $1,961.

Tax relief advocates are warning that government officials who don't cut spending will face consequences. Gov. Charlie Crist has said anyone raising taxes this year should be voted out of office. County Mayor Josephus Eggelletion accuses cities not following the state tax relief plan of violating their public trust.

"It is a mistake for those cities that are not complying," Eggelletion said. "I hope the voters hold their elected officials accountable."

The dozen cities stand to collect an extra $12.5 million, while their counterparts are cutting $31.8 million. Fort Lauderdale is cutting taxes even further than the state mandate.


Spending cut

The cities following the state mandate have been cutting services and raising other fees to pay for tax relief. Some are freezing staff sizes or laying off employees. Others are eliminating special events and park programs or cutting back on landscape maintenance work in parks and medians.

The biggest cuts are in Lauderhill, Miramar, Davie, Tamarac, Weston and Plantation. Tax collections in each are dropping at least 6 percent.

Broward County government will collect 3 percent less in taxes, $862 million compared with last year's $888 million. County commissioners have delayed opening a new jail, cut aid to urban redevelopment, ended assistance for single parents to collect child support and raised bus fares.

The cuts, though, are minuscule compared with the boon that rising real estate values meant to local government coffers.

The unprecedented surge in the real estate market between 2001 and 2006 brought an extra $1.4 billion in tax revenue to the county and its 31 cities. If they stick with their proposed tax rates, they'll lose about $45 million in the 2007-08 budget year.

Seth Kuker of Hollywood is among those who think the relief is far from what taxpayers need. The taxes on his $550,000 house in the Hollywood Hills neighborhood are slated to drop from $10,300 to $9,500.

"In the scheme of life, this savings is nothing," he said. "I'm paying $10,000 a year in taxes and my insurance is $5,000 to $6,000. That's a lot of money. These politicians have a responsibility to help the citizens. They should find a way to make sure everyone pays no more than a reasonable amount and that is not happening."

Another factor preventing more tax relief is the school system. The Broward County School District will collect up to an extra $110 million beyond the $1.2 billion raised last year in property taxes.

State legislators, who have major control the tax rate for schools, dictated the increase this spring even as they debated tax relief for residents. How school taxes are set is different because spending on education must be largely equal per student across the state.

The average savings countywide would have doubled if schools had been held to the same standards as other governments.

Scope of relief

Overall, Broward homeowners should fare slightly better than the rest of the state while snowbird, investors in residential property and landlords are worse off here.

Legislative analysts estimated the average homeowner statewide would save $174. The Sun-Sentinel found the average Broward homeowner will save $190.

The savings is higher on single-family homes, an average of $229, and less on condos, an average of $95.

And while the legislative analysts estimated owners of non-homesteaded residential property would save an average $199 statewide, the Sun-Sentinel found such owners in Broward will pay an average of $35 more this year. The reason for the difference: property values jumped 10 percent in Broward last year and landlords, snowbirds and investors are taxed at the full value of their property while state law limits how much the tax value of a resident's primary home can increase each year.

The hit was greater on those who own a single-family home lacking homestead, an average increase of $47. Those owning a condo will pay an average of $28 more.

Crist touted the state legislation as ensuring property taxes would "drop like a rock." His spokeswoman, Erin Isaac, defended that view, saying a referendum scheduled in January would bring more relief if voters agree. "This is just the first step," Isaac said.

That referendum would launch a second phase of tax relief by overhauling property tax breaks for permanent state residents even though a Sun-Sentinel analysis last month showed most homeowners in Broward would not save any money. Businesses and others who are not eligible for those homestead protections also wouldn't benefit.

County Commissioner Stacy Ritter, a former Democratic state representative, is fearful that the limited savings will fuel public support for draconian tax-cutting efforts. She foresees the Legislature either forcing deeper cuts in local spending next year or the public backing the January referendum, a move that she and other county officials think would hurt government and many residents.

"Most people thought their taxes were going to drop like a rock and they aren't," Ritter said. "I understand they are frustrated because they expected the Legislature to solve their problems, but they should have known better given this Legislature's track record."