By MARC CAPUTO AND GARY FINEOUT
Published July 17, 2007
The Florida Legislature passed the biggest property-tax cut in state history Thursday amid partisan quarrels about relieving over-taxed citizens and gutting schools and emergency services.
The first stage of the complicated two-part plan should save the average taxpayer about 7 percent this year by rolling back, cutting and capping local-government tax collections.
The second stage will ask voters on Jan. 29 to amend the state Constitution and super-size tax exemptions by as much as $195,000 for a home with a market value of $500,000 or more.
Though large, the savings could be smaller than originally billed for the plan, which comes after four months of intense and at-times-secretive legislative haggling.
The $31.6 billion price tag was watered down by as much as $7 billion over five years Thursday when Republicans reduced cuts to some fire-rescue districts and changed the proposed amendment to ensure homeowners could keep their existing Save Our Homes tax cap.
Unchanged: as much as $7.2 billion in cuts school districts could face if the amendment passes. If the amendment fails, schools would be unaffected.
Democrats opposed the amendment on a party-line vote. But fearing the label of "obstructionist, " they abandoned plans to push the vote to November 2008. They predicted voters won't approve the controversial measure anyway because of its "devastating" consequences.
House Speaker Marco Rubio, a West Miami Republican, downplayed the troubles and said he and most taxpayers want more tax cuts, not fewer.
"This is about people's pocketbooks. And people will always put their pocketbooks ahead of politicians, " said Rubio, who proposed about $44 billion in tax cuts this spring. "Ultimately, property-tax reform was something that had to happen, and nothing could stand in the way of it."
The amendment needs 60 percent of the vote to pass. Opponents -- and even supporters like Republican Sen. Jim King of Jacksonville -- say the unknown risks are many: The tax cuts might not live up to their billing, or they could be too deep and hurt local government, or the overhaul could be ruled unconstitutional.
If the amendment fails, legislators will have a shot in the spring 2008 session at getting another proposal on the November general-election ballot.
Possibilities then would include expanding taxable gambling -- a long shot -- or resurrecting Rubio's original plan to lower property taxes by raising sales taxes, which could pay for schools, said Miami Republican Rep. David Rivera, Rubio's lieutenant.
The state Taxation and Budget Reform Commission, which meets every 20 years, may propose an amendment of its own when it gets together this summer. And a group backed by the housing industry is planning an amendment.
Gov. Charlie Crist, who has sharply criticized "wasteful" government spending, praised legislators for passing the plan and ending a special session eight days early. He and Rubio plan to campaign against unions representing firefighters, police, nurses and local-government workers who predict dire consequences.
"It's guaranteed layoffs, " said Al Cruz, a Miami-Dade fire-rescue captain. He said firefighters were pleased, though, that the Legislature reduced mandatory cuts from 9 percent to 3 percent on fire-rescue taxing districts.
Broward County Commissioner Kristin Jacobs said both stages of the plan were "devastating, " like "the difference between death by the knife and death by the gun."
It's not clear how much the super-exemption would cost local government because legislators aren't sure how many homesteaded homeowners will choose to keep Save Our Homes.
Homeowners who opt into the plan -- or sell their homes -- would lose the Save Our Homes protection. Legislators want to get rid of the 14-year-old tax cap because it shifts the tax burden to nonhomesteaded property owners and new home buyers. They said the new plan gives home buyers a type of "portability" that helps dramatically lower the tax shock for new homeowners.
The plan originally sought to force about 72 percent of Floridians out of Save Our Homes, but that would have doomed it at the polls. So Republicans chose a voluntary opt-in system and estimated about half of homeowners would stick with Save Our Homes.
House Democratic Leader Dan Gelber of Miami Beach said the amendment is doomed because "people are going to go to the polls and say: What kind of choice is this, take money away from school children?"
Republicans said they'll find the money for schools in future years because the state Constitution states that education is of "paramount" importance. Sen. Mike Haridopolos, the Melbourne Republican who leads the Senate tax committee, said people will have to "trust" the Legislature to continue its education spending increases. He issued a pledge to properly fund schools "by any means necessary."
Noting Florida's low graduation rate and low education spending compared to other states, Democratic Sen. Ted Deutch or Boca Raton bristled at Republican claims that Democrats were exaggerating the effects of the tax cuts.
"There is certainty in this bill: that there will be a $7 billion cut to education over four years, " Deutch said, noting that emergency workers painted a dire picture during a Wednesday meeting with Democrats.
"We heard yesterday from the firefighters and from the police that in fact there will be layoffs, " he said. "We don't believe them? Is that the argument?"
Deutch had wanted the amendment to be on the November 2008 general-election ballot, when far more independents and Democrats are likely to go to the polls. But the Senate Democrats switched to the January presidential primary ballot after House Democrats unanimously supported it.
Rep. Jim Waldman, a Coconut Creek Democrat, cast the lone dissent in the 117-1 vote on the rollback plan.
Voting no is "the right thing to do. What they're proposing is to devastate local government, " the freshman lawmaker said, calling the Legislature "hypocritical" for raising school property taxes in next year's budget while cutting those taxes for local government.
Senate President Ken Pruitt of Port St. Lucie pointed out that local governments collected property taxes at a far higher rate than the growth in their bottom-line budgets themselves or Floridians' personal income during the now-ended real-estate boom.
"This will never happen again. There's going to be discipline, " he said of the historic cuts. "It is so big that the impact on Florida's economy will be incredible. It will kick start the economy."