Creative options are on the table in property tax crisis

Legislators reached for creative solutions to the property tax crisis to keep both homeowners and businesses happy.

Article Courtesy of The Miami Herald

Published February 19 , 2007

After months of promising ''simple'' changes, state lawmakers today will host a tax-cutting summit where they'll be confronted by this complex reality of property tax policy: It's a zero-sum game in which many homeowners have benefited to the disadvantage of Florida newcomers and owners of businesses and second homes.

That puts legislators in a bind because any tax change could threaten a powerful voting bloc. So they're hosting a statewide listening tour of taxpayer gripes, and considering some ideas once given short shrift. For example:

 Raising the state sales tax by two to three cents in exchange for repealing the $7.5 billion state property tax that pays for schools. In the past, any tax increase -- regardless of a decrease elsewhere -- was viewed as an increase in the GOP-controlled Legislature.

 Allowing for taxable, unlimited casino gaming, from roulette to blackjack and Las Vegas-style slot machines, to offset residential property taxes -- also an idea once viewed as anathema by Republican lawmakers.

 Modifying or dismantling the Save Our Homes tax cap so that it more equally distributes the tax burden -- a change that would affect the program that, according to a new study, has kept a whopping $404.4 billion of taxable homeowner property off the tax rolls this year by shifting the tax burden to others.

 Allowing homeowners to carry part of the Save Our Homes tax savings with them to a new home -- only one time -- in exchange for a cap on tax benefits for any homes purchased in the future.

 Capping local government spending to force cities and counties to lower taxes in the face of rising growth in real estate values. Local governments are predicting cutbacks in services if they're deprived of tax money.


''Every idea delivers relief to some group,'' said Rep. Dan Gelber, House Democratic leader from Miami. ``The problem is, some of those things deliver pain to other groups and will have unintended consequences.''

But House Speaker Marco Rubio, a Miami Republican, wants lawmakers to move quickly -- in time to bring a constitutional amendment before voters this year.

''I hope we'll be a little impatient, because I know it matters to people,'' he said.

Rubio said in January that solutions would be ''simple,'' but last week acknowledged that every new idea carries with it a complex impact.

To that end, the House is hosting a tax summit today and Tuesday where they will start to hammer out proposed constitutional amendments that voters would decide in the fall.


At the heart of the problem is not just local government needs and spending, but the Save Our Homes amendment, which took effect in 1995. It caps the assessed value of a homestead property at the inflation rate or 3 percent.

A report from the state's Office of Economic and Demographic Research says the amendment has delivered on its promises: it has lowered property taxes paid by long-time residents.

According to state economists, homeowners now pay property taxes, on average, on a smaller percentage of their home's assessed value than when the amendment kicked in in 1995. That year, the measure removed $3.5 billion from the property tax rolls. Today, it has kept a quarter of the state's $1.6 trillion total taxable property value off the rolls.

The biggest beneficiaries: coastal residents of big counties, such as in South Florida. The biggest losers: those without the exemption, such as owners of homestead properties who don't qualify for a homestead exemption and commercial property.

The Florida Chamber of Commerce wants legislators to replace Save Our Homes with a package of ''sweeteners'' that would entice voters to move to a system that caps the shift in property taxes from homes to businesses.

For example, one idea is to allow homeowners to keep their current tax savings but either end or cap those same kinds of savings for future home purchases, said Mark Wilson, the chamber's chief lobbyist.

''Save Our Homes sounded good at the time, but we're paying the price now, and I don't believe Florida is going to make that same mistake,'' he said.

Without Save Our Homes, owners of homestead property would pay 40 percent more while businesses and owners of nonhomestead property would each pay 20 percent less, the state study said.


The father of the Save Our Homes amendment, Lee County property appraiser Ken Wilkinson, said he's concerned that the business lobby and some local governments want to make the homestead protection ``the whipping boy.''

Wilkinson acknowledged that owners of nonhomestead property are paying a greater share of taxes now than in the past, but he said that's because homeowners were being unfairly taxed before his voter-approved constitutional amendment took effect.

''One man's exemption is another man's inequity,'' Wilkinson said.

And Wilkinson wants to increase the exemptions by pushing for a new constitutional amendment that essentially allows a person's homestead exemption to travel with him to a new home anywhere in the state.

Without the ''portability'' measure, new homeowners now pay taxes on the full value of their new home, which is reassessed at full value. That has led many real estate agents and homeowners to complain that they're ''trapped'' in their house, because they don't want to get hit by a larger tax bill.

If voters were to approve a portability plan that had no limits, and allowed anyone to move to any home anywhere in the state and take their Save Our Homes tax savings with them, the total estimated cost for this year would be $13.6 billion. That's more than a third of the state's current $30.6 billion base of taxable property.

In four years, the cost of portability would grow to $65 billion, state economists say.

Scrapping the property tax in favor of an expanded sales tax is preferred by many House leaders, but also has plenty of skeptics. A higher sales tax could hurt the poor the most, be more vulnerable in economic downturns and is hated by retailers, said Rep. Frank Attkisson, a Kissimmee Republican and chief proponent of the idea in the House.

A two-cent increase in the sales tax would raise enough to eliminate the portion of the real estate tax bill that the state requires counties to levy for schools: $7.4 billion, state economists said.

''If you really want to do something bold, you could think what if we had a sales tax of two to three more pennies to get rid of taxes on your home,'' Attkisson said. ``I'd love to have that debate.''


Gov. Charlie Crist, who originally proposed a portability measure in addition to doubling the homestead exemption from $25,000 to $50,000, recently proposed a Save Our Homes-style cap for business real estate property, and a $25,000 cap on tangible business property, such as office computers and shelving.

He's cool to the idea of raising the sales tax right now.

Rep. Dave Murzin, a Pensacola Republican, supports the most radical proposal yet -- replacing the property tax with a doubled sales tax -- but he predicts the Legislature will approve something far more modest.

''Most people think conventionally,'' Murzin said, ``and we're probably not going to be doing something dramatic.''