Article Courtesy of The Sun Sentinel

By Linda Kleindienst and Mark Hollis
Published June 15, 2007

TALLAHASSEE -- Florida legislators Thursday night gave the final nod to a multi-billion-dollar property tax-cut package they hope will kick-start Florida's sluggish real estate market and boost the state's faltering economy.

The two-pronged plan first offers immediate relief by forcing cities and counties to roll their taxes back to the 2006 level and then cut up to an additional 9 percent, depending on how much they've raised taxes over the past five years.

Tax bills this November should reflect a savings of $15.6 billion to owners of all properties – homesteaders, snowbirds, landlords and business owners alike. The average homeowner is expected to save $174 this year.

The House approved the rollback measure by 117-1, with the lone "no" vote cast by Rep. Jim Waldman, D-Coconut Creek. The Senate passed it 37-0.

In January, voters will be asked to approve the second element of the plan, an amendment to the state constitution that establishes a "super size" homestead exemption for permanent state residents.

Lawmakers hope the new exemption will reduce the tax burden enough to make homes more affordable, especially for first-time buyers who have had trouble getting into the state's high-priced housing market.

The amendment, which passed the Senate on a 25-12 vote and the House, on a 74-43 vote, will be decided on Jan. 29, coinciding with Florida's presidential preference primary.

If the amendment passes muster with voters, the average homeowner is expected to see a $1,306 tax break by fall of 2008.

"What does it mean? When you talk about $1,200 to $1,300 in savings…it means that if you have a child in first grade and you want to buy a pre-paid scholarship so he can go off to college, you can now pay for it with this tax relief," said Senate Finance and Tax Chairman Mike Haridopolos, R-Melbourne. "This is real. That's what $100 a month means to a family."

The price tag of the tax-cut package was initially estimated to exceed $31-billion over the next five years. But a late change to the tax package, crafted by Senate Republican leaders, blunts the overall financial impact, reducing it to about $24 billion.

Democrats opposed the change in the homestead exemption, arguing that it will lead to budget cuts at the city and county level that could decimate needed services like fire rescue and law enforcement.

"I don't want the people in Century Village who get sick to have to wait for an ambulance to get there because there are fewer firefighters," said Senate Democratic Leader Steve Geller of Cooper City.

It's also estimated that public schools could lose more than $7 billion over five years if the amendment passes.

"The real tragedy of this proposal is that it's the single largest cut to education spending ever in the United States, and the people who will pay the price for this fix are the kids in school," said Rep. Shelley Vana, D-Lantana, a former president of the Palm Beach County Classroom Teachers Association.

Hoping to allay fears of longtime homeowners worried over how a new super-sized homestead exemption could affect their tax bills, lawmakers decided to give taxpayers a choice.

Originally, homeowners would have been forced to drop their Save Our Homes protection – which limits increases in their home assessment for tax purposes to 3 percent a year - and switch to the new homestead exemption plan if they saved even $1 a year under the new plan.

But no one could tell homeowners whether they'd still be better off under the new system just a few years down the road.

"The people at home who have Save Our Homes say they like what they've got and they don't know what will happen to them," said Sen. Jim King, R-Jacksonville. "Give us a chance to make our constituents a little more comfortable.

The amendment would allow homeowners to keep Save Our Homes. They will have the option of switching to the new homestead exemption system at any time – but once they switch, they wouldn't be able to go back to Save Our Homes protection again.

Early Thursday, Gov. Charlie Crist signaled that he was happy with legislator's progress.

"I'm not saying that it's perfect, but I think that it's important to cut taxes, and the consequences of not doing something are significant,'' Crist told reporters.

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