House eases tax-cut logjam

Article Courtesy of St. Petersburg Times

By Alex Leary
Published May 12, 2007

TALLAHASSEE - The stalemate on property tax cuts broke Friday when House leaders offered a plan that does not include a sales tax increase, eliminating the primary objection of the Senate and Gov. Charlie Crist.

Instead, House Speaker Marco Rubio called for simply expanding homestead exemptions to cover as much as 80 percent of a home's value - a move he estimated could cut the average tax bill in half.

"We don't have the luxury to sit around and continue to have this ideological back and forth because in the meantime, people are on the verge of losing their homes and businesses, " the Miami Republican said.

Senate leaders, who long rejected higher sales taxes and favor a less drastic swipe at city and county budgets, embraced the new approach.

"Although there are many details yet to be worked out, I think we are on our way to having a consensus plan that will save taxpayers' money without raising taxes or shutting down local police stations, " said Senate Majority Leader Daniel Webster of Winter Garden.

The two sides called off negotiations last week and scheduled a special session of the Legislature to begin June 12.

Even if consensus is emerging, lawmakers will have to come to agreement on how much savings to offer taxpayers - a sticking point running second only to the debate over sales tax.

"I do appreciate that they've moved away from the tax swap, " said Sen. Mike Haridopolos, R-Melbourne. "But if the cuts are so dramatic that you have to raise other taxes or fees, we're going to have some difficulty."

Though it has long been clear Rubio's tax swap was faltering, he held firm to the idea. It would have raised the statewide 6 percent sales tax by as much as 2.5 percent while abolishing property taxes on primary homes.

"I'd love to pass it tomorrow, " Rubio said, "but I think we all understand where everybody's at. I think having a debate about the method will largely be unproductive heading into a special session."

Raising exemption

The new House idea is based on a proposal by Rep. David Simmons, R-Altamonte Springs. It would increase the homestead exemption by a percentage, not a fixed dollar amount as is currently done.

In the scenario, 80 percent of the first $300, 000 in assessed value would be exempt from property taxes, or $240, 000. The next $700, 000 in assessed value would have a 70 percent exemption. Anything over $1-million would get a 30 percent exemption.

Simmons had called for lower percentages, and Rubio said Friday that his figures were only an example.

Second home owners, snowbirds and commercial property owners would also get an exemption, though figures had not been worked out as of Friday.

Rubio argued that the plan provides directed cuts to the people who need it most and that the average homeowner's bill would be cut in half.

It could eliminate Save Our Homes, the 3 percent cap on annual assessments that is responsible for much of the current inequity in Florida's property tax structure. It is why two basically identical homes on the same street can carry widely different tax burdens, with newer owners paying more.

At the same time, people who have long enjoyed Save Our Homes complain they cannot move because their tax bills would shoot up. The plan outlined Friday would resolve that issue.

There are many unanswered questions, chiefly the cost to local governments. School budgets would not be affected. Rubio put the cuts in the $30-billion-plus range over five years, similar to what Crist had recently proposed.

Crist is hopeful

Crist's plan, which relied on doubling the homestead exemption and rolling back local tax bases, was pitched as a compromise between the more moderate Senate and the earlier, more drastic House plans.

"Forming consensus is critical to reducing property taxes significantly, and I'm very encouraged by what I'm seeing, " Crist said Friday evening. "We're going to achieve success."

If the Rubio plan were adopted, a rollback may not be needed, though lawmakers could impose one temporarily because a special election would have to be held to amend the state Constitution.

The House plan also loosely resembles one put forward by Democrats in that chamber. Rep. Dan Gelber, the minority leader, said he likes the direction "but until we can understand the numbers, it's hard to tell whether it's good, bad or ugly."

Another potential snag: Embedding the homestead exemption percentages in the state Constitution leaves less room for adjustment and gives the Legislature considerable influence over local millage rates.

"I think most Floridians would be very concerned, " Gelber said.

Rubio agreed that is an issue that would have to be resolved. One way would be to set the percentages by statute, not inserting them into the Constitution. But that still leaves decisions up to lawmakers in Tallahassee.

The House plans to continue to refine the plan in next week. A select group of lawmakers on both sides are to meet May 21 to discuss options. They will meet again June 4, followed by the special session a week later.