Property tax measure is wrong for Florida

Article Courtesy of The St. Petersburg Times

By A Times Editorial

Published December 30, 2007

Over the next four weeks, Floridians will hear Gov. Charlie Crist, real estate agents and other supporters of the property tax amendment talk about how it will help homeowners, revive the housing market and jump-start the slumping economy. Do not be fooled. This state and its residents are facing serious economic challenges in 2008, but the amendment on the Jan. 29 ballot is not the answer.

The amendment would double the $25,000 homestead exemption and allow homeowners to take up to $500,000 in Save Our Homes benefits with them when they move. But state economists this month cut the amount they project the amendment would save taxpayers over five years by 25 percent. The main reason: Far fewer homeowners are expected to move even with the new tax breaks. So even though this amendment primarily benefits taxpayers who theoretically need the least help -- homeowners with homestead exemptions and Save Our Homes benefits - the changes are not enough to ease the housing crisis and revive the state economy.

An unfair property tax system undoubtedly contributes to the stalled housing market, but other factors may be more significant. Housing prices around Tampa Bay and elsewhere soared too high too fast, and the median sales price of a single family home in the last year has dropped 14 percent in Pinellas, 18 percent in Pasco and a more modest 5 percent in Hillsborough. Now too many recent homebuyers find their houses are worth less than their mortgages -- and many of those mortgages had adjustable rates that are scheduled to rise. The number of foreclosures are setting records. The property tax amendment is not going to help homeowners who bought more house than they could afford and now can't sell.

First, the housing supply far outstrips demand. As the New York Times recently reported on the situation in the Fort Myers area, once one of the fast-growing in the country, more than 19,000 single-family homes and condos are on the market. Investors are leaving behind vacant houses, and builders are slashing prices and stopping work in developments that aren't finished. But even if prices are falling back to Earth, the subprime mortgage mess has tightened the entire mortgage market. It is much more difficult for many to obtain home loans they once would have easily gotten with few questions asked.

There are many good reasons to vote against the property tax amendment. It provides little help to businesses and owners of second homes or investment properties who need the most relief. Instead of creating a fairer property tax system it adds to the unfairness by allowing Save Our Homes benefits to be taken to a new home. And even with its projected reduced savings, the amendment still would cut funding for education and local government exactly as their revenues will be dropping because of other tax reforms and the slumping economy.

But perhaps the most important reason to reject the amendment may be the easiest one to grasp: It won't solve Florida's real estate problems. Remember that as the governor and the amendment's other supporters crank up their sales pitches after New Year's.