Alternate Property Tax Reform Plan Offered By Florida House Democrats

Emboldened by virtual veto power, Florida House Democrats have offered a property tax reform plan that would extend tax breaks to Floridians who don’t own any property, the Sarasota Herald-Tribune reports.

House Minority Leader Dan Gelber (D-Miami Beach) announced Monday a set of ideas that includes giving renters up to a $100-a-month government subsidy to lease a house or apartment. Low-income homeowners would also see large reductions in their property tax bills under the plan.

“What we’re looking for is something that will guarantee the most relief for the populations that need it,” he said. “I don’t think this is a stunning or a controversial position for someone to take.”

The Democrats’ proposal to extend the benefits of tax relief to people who do not have a Florida mortgage came the day before lawmakers began their annual 60-day session, where property tax relief is expected to be at the top of the legislative agenda.

While Democrats are outnumbered in the House and Senate nearly 2-to-1 this year, they still have enough votes to derail Republican hopes of putting a tax reduction plan before voters in a statewide special election this year.

A special election requires 75 percent approval in the House and Senate.

House Republicans want voters to approve an amendment to abolish real estate taxes on all Save Our Homes-protected property, including the levies for schools, hospitals and water districts.

In exchange, the state would raise the sales tax by 2.5 percentage points, making Florida’s state sales tax the highest in the nation at 8.5 percent.

The plan would also cap local government spending and roll back property tax rates in every county to their 2001 levels, potentially giving relief to residents saddled with soaring Florida home loan payments.

While Republicans say the end to property taxes for full-time Floridians would help everyone, economists warn the shift from a property tax- to a sales tax-based system is risky and a burden to low-income Floridians.

Under the House Republican plan, the owner of a $1 million property in the Southwest Florida housing market would save about $15,000, while the owner of a $100,000 home would see about $800 in savings, accounting for the hike in sales tax.

A renter would end up paying at least $420 more in taxes a year.

Gelber said the GOP plan relies on the theory that a tax cut for wealthy Floridians will stimulate the entire economy and jump-start the slumping Florida housing market.

“I don’t know about the theory that this is going to jump-start anything,” he said. “I don’t want to rely on those theories.”

Instead, among the ideas put together by Gelber’s staff, the Democrats would:

Reduce property taxes for full-time residents based on the average home price in any given county.

If the median home price in a county is $300,000, every resident would get $150,000 - or half of the median home price - in tax breaks on top of the $25,000 homestead exemption they now receive.

Under that scenario, someone who owns a modest home in an otherwise wealthy county would pay little or no property taxes at all.

Under that same scenario, snowbirds would also receive an exemption of 25 percent of the median home value. The owner of a $300,000 second home in Florida would get a $75,000 break.

Extend the property tax break to small business owners.

The proposal would exempt 25 percent of commercial real estate values up to the first $1 million. An owner of a $500,000 business would see a $125,000 exemption.

Give renters a government rebate.

Renters would get a break based on 10 percent of the median rental price in their county. If a median rental price in an area were $800 - including apartments and homes used as rentals - the renter would get an $80 check from the government every month.

The maximum rebate would be $100 a month. Gelber said Monday the House Democratic plan is superior because it would allow the state to phase out the Save Our Homes rule and replace it with tax exemptions for everyone, not just full-time residents.

But Gelber emphasized that House Democrats haven’t officially adopted the policies yet. They are still open to other ideas.

“We’re early in the debate,” Gelber said. “This isn’t even the first day of the session.”

The Senate has not released any of its own ideas on reforming property taxes, which have become a frequent topic of debate in Florida. It is expected to do so later this month.

But Senate Minority Leader Steve Geller (D-Hallandale Beach) did say Monday that he could see Senate Democrats and Republicans clashing on property tax reforms, especially if cuts would reduce local police and fire services.

Gov. Charlie Crist continues to keep his opinions about the tax proposals to himself, refusing to comment on the House Republican plan. Monday, he gave the same vague optimism in response to the Democratic plan.

“The most important thing to me, as I’ve consistently said, is that we need to lower property taxes,” he said.