Three Property Tax Plans Debated
With Florida mortgage costs rising throughout the state, and taxes causing an even heavier burden on homeowners, the time for action is now. Sadly, this fact is about the only thing agreed upon by the lawmakers.
Heading into a special June lawmaking session on cutting property taxes, state legislators held a warm-up meeting Monday that ended much the same way it began - with no agreement on how to cut property taxes, how deeply to do so or how to tax properties to pay for schools.
Instead, they spent three hours listening to a PowerPoint presentation of data, much of which they already knew: that longtime homesteaded property-owners have such a good tax deal, it is shifting more of the tax burden to owners of commercial real estate and second homes.
The Republican chairmen of the Joint Legislative Committee on Property Taxes, Sen. Dan Webster of Winter Garden and Rep. Dean Cannon of Winter Park, lauded their agreement to give homeowners a super tax exemption and said they’ve narrowed down how to do it to three options.
They insisted they were optimistic about a solution and have plenty of time to do all the figuring before the 11-day special session starting June 12.
But rather than work out the details on which of three approaches to take, they concluded that it’s “a complicated issue” - just as they did during the regular session when negotiations ended in stalemate - and promised to be back for another meeting in two weeks.
“How are we going to solve a problem at this rate?” asked Rep. Dan Gelber, the House Democratic Leader from Miami Beach after the meeting ended early.
“I’m shocked at how little we got done today. It’s irresponsible to think something that requires a lot of effort is going to fall into place at the last minute.”
The three property tax options lawmakers identified for giving homeowners a super-sized exemption are:
- A tiered approach that gives homeowners a percentage tax break based on the value of their homes. For example, homes with a fair market value of $600,000 would pay property tax on 30 percent of the first $200,000, 40 percent on the next $200,000, and 10 percent on the last $200,000.
- A flat percentage exemption on all homesteaded property regardless of the value.
- A percentage based on the median value in each county. Under this option, homes could be taxed at 50 percent of the median value in a county.
“There isn’t a favorite,” said Cannon, the House’s lead negotiator. “There are pros and cons to each one.”
Webster said he prefers the tiered approach to the flat percentage, but also likes giving more flexibility through the county-based percent that can account for differences among counties.
Also undecided is what to do about property taxes that pay for schools.
House and Senate leaders want to leave them untouched, but don’t know how to do that while lowering the tax burden. And they are still negotiating whether to create a tax cap for commercial and non-homestead property.
Because the super-exemption requires voters’ approval, state lawmakers also must decide whether to require a permanent or one-time rollback in city and county tax collections to give property owners an immediate tax help.
The legislators got a report from staffers about the property tax structure in Florida, which is playing an increasingly big role in residents’ lives as Florida mortgage loan costs have risen this decade.
Though homesteaded properties should account for 45.5 percent of the tax base, they only account for 32.1 percent of the $30.5 billion paid thanks to the Save Our Homes protection that caps assessed value, said Alan Johansen, staff director for the Senate Tax and Budget Committee.
Commercial property owners and second home buyers “pick up 25 percent more of the tax burden than they would be if there had been no Save Our Homes,” he said.
The result is homeowners are enjoying historically high tax savings, paying on average of 29 percent less than they otherwise would, Johansen said.
“We’re at a very unique point in time,” Johansen said, referring to the fact that home values are at a historic high while the Save Our Homes cap gives people the greatest benefit.
As the Florida housing market adjusts, property values will drop or rise at a slower rate, and the tax savings will also decline as a percent of value.
“It is going to unwind on its own naturally, but maybe not terribly rapidly,” Johansen said.
He added that the average Save Our Homes tax savings, combined with the current $25,000 homestead exemption, will be closer to 40 percent of the value by 2011 if trends continue, rather than the current 50 percent.
Legislators said they can’t wait for those market adjustments and are focused on helping homeowners because it’s the most difficult piece to solve.
Their goal is to unlock the pent-up demand in the housing market and allow those people who feel trapped in their homes to consider a Florida refinance or a move to a different place altogether.
“We’re trying to get oxygen to the canary,” Cannon said. “And we believe the canary is going to be happy.”
SOURCE: Miami Herald
