House clears tax overhaul

Article Courtesy of The Palm Beach Post

By Michael C. Bender
Published  April 19, 2007


TALLAHASSEE House Republicans pushed through their dramatic overhaul of the property tax system Wednesday, but it could be a short-lived victory.

Many lawmakers agreed that the real debate would start next week when House and Senate lawmakers meet in hopes of resolving differences between their competing plans to solve the legislature's No. 1 issue this year.

And, those lawmakers said, a mostly partisan vote (78-40) on House Speaker Marco Rubio's proposal for a constitutional amendment to eliminate homestead property taxes by increasing the sales tax - the most elaborate proposal in the House Republican tax reform package - signaled trouble for the amendment when the two chambers meet.

But Rep. Dean Cannon, R-Winter Park, who will head the conference committee for the House, said, "It's way too early to tell where any of the variables will end up."

Three other bills (HB 261, HB 1483, HB 7001) making up the House GOP package, including one that would provide immediate relief by cutting local property tax bills in 2007-08 and capping future increases at the rate of inflation, sailed through the chamber Wednesday.

Two Republicans, including Rep. Gayle Harrell of Stuart, joined Democrats in voting against the proposed constitutional amendment largely because of the $9 billion increase in sales tax it could generate to help offset the estimated $16 billion in property tax cuts.

Rubio had hoped that the measure would win the 90 votes, or three-fourths of the chamber, needed to put it on track for a special election this year.

But the measure (HJR 7089) did receive more than the 60 percent it needed to put it before voters in November 2008.

That means that part of the House Republican package would not affect tax bills until 2010.

Rubio said after the vote that a 2008 referendum was his goal for negotiations with the Senate and that he was not concerned about the partisan vote against his proposed constitutional amendment.

"The bigger the savings, the less consensus there will be," Rubio said. "It's never been our goal to have consensus. Our goal is to make sure the next time that the next time taxpayers of this state get a property tax bill, it's one they can afford to pay."

Rubio did win over three Democrats, but lawmakers said the West Miami Republican and other House leaders worked hard just to consolidate the majority party, including members such as Rep. Carl Domino of Jupiter.

Domino, like Harrell, was wary of the sales tax increase, but ultimately supported the amendment after learning a plan he supports, to make accrued benefits from Save Our Homes cap portable when homeowners move, would receive a committee hearing this week.

"The speaker deserves a lot of credit for getting us this far down the field," Domino said.

Most Democrats rallied against the amendment, arguing the sales tax portion would hurt renters and business owners.

They said both groups would pay the new sales tax without benefit from the property tax cut.

"We must be fair and equitable," said Rep. Priscilla Taylor, D-West Palm Beach. "I do not feel that this resolution delivers either."

But Republicans repeatedly countered that eliminating homestead taxes would make homes more affordable.

"Let's give teachers, let's give firefighters the opportunity to buy their home," said House Majority Leader Marty Bowen, R-Winter Haven. "Let's give our public servants the ability to live and work in the same city."

Democrats, however, saw a different outcome.

"No matter what you say ... there will always be renters," said Minority Leader Dan Gelber, D-Miami Beach. "And none of them will feel anything from this other than ... a sales tax.

"That's a lot of pain to put on the backs of our most vulnerable citizens."

The House tax plan

The tax reform package the House passed Wednesday consists of these four bills:

HJR 7089: Approved 78-40.

Would cut the portion of property taxes on homestead property that the state collects to pay for schools - about 30 percent of all property taxes on homesteads - and replace that revenue by increasing the state sales tax from 6 cents to 7 cents per dollar spent. This would increase state tax collections about $700 million.

Would require each county to put two questions on the ballot, one to determine whether to eliminate county and city government property taxes on homesteads by increasing the sales tax in the county by another 1 percent, and the second on whether to eliminate the remaining school property taxes on homesteads by increasing sales taxes in the county by half a cent. These would eliminate all other property taxes on homesteads and would decrease local government and school revenues by $2.1 billion.

Would cut local property taxes on other types of property, such as commercial and second homes by an average of 15 percent statewide by using 2003-2004 as a base year for a tax roll-back. Also would cap tax increases at a national rate of inflation.

HB 7001: Approved 118-0.

Would cut local property tax bills by an average 18 percent statewide by using 2000-2001 as the base year for a tax roll-back. Also would cap future increases beyond revenues attributed to new construction by a national rate of inflation.

HB 261: Approved 117-1.

Would reduce assessments for deed-restricted property used for affordable housing, rental properties, marinas or mobile homes. Assessments would be based on the income a property generates instead of on the greatest potential of a property in an assessment method known as 'highest and best'use.

HB 1483: Approved 98-18.

Would require three-fifths approval from county, city and school boards to increase taxes or fees.