Property Tax Impasse Stalls Florida Economy
Across the state, the property tax debate continues to send tremors through the economy as companies that rely heavily on government spending are suddenly seeing work dry up.
“It just seems like the whole state has taken a wait-and-see attitude right now,” said Larry Gerwig, vice president of a Clearwater company that builds schools, firehouses, jails and other public projects.
And in the road-construction industry, “growth is pretty flat,” said Bob Burleson, president of the Florida Transportation Builders Association.
“A lot of governments are watching pretty carefully what they’re doing, worried that things are going to be tough next year,” he said.
Realtors have complained that the protracted debate over lowering property taxes is adding new challenges to a stalled Florida housing market.
They say prospective buyers and sellers are simply unwilling to close deals until they learn the outcome of the session set to begin June 12.
The uncertainty not only affects individual holders of Florida mortgages, but has sparked hiring freezes in cities and counties.
A special legislative committee plans to meet today to hone a tax-cutting plan facing lawmakers, who ended the regular May session at an impasse.
But now joining anxious Florida real estate professionals is a sizable chorus of contractors, road builders, engineers and landscapers worried about cash flow.
“A lot of what we normally do is contract work, hiring people, and that pushes along the local economy,” said Bill Potter, Orange County’s manager for parks and recreation. “Everything is on hold now.”
“If the budget cuts come, we’d rather keep what we already have open and working rather than have a groundbreaking, get everybody’s picture in the paper, and then have people upset because we can’t open a facility.”
Orange’s reductions are being mirrored across Florida, according to Eleanor Warmack, director of the Florida Recreation and Park Association.
In small counties across Florida, where government spending often becomes a key economic driver, the fear of lost property tax revenue is having a more profound effect, officials said.
Rural Sumter County two weeks ago planned to hold a groundbreaking ceremony for a new 200-bed county jail. But with legislative proposals in play that could slash the county’s $29.5 million in property-tax collections by about a third, commissioners have put the jail plans on hold. A hiring freeze also has led the county to close four library branches one day a week.
“Part of me is a property owner, and I support cutting taxes,” Sumter County Commissioner Randy Mask said. “But these decisions to wait on projects or freeze hiring are being felt by people across the county.”
During the regular session, the House and Senate failed to resolve their deep differences over how to lower property taxes, which have soared along with Florida mortgage costs in a housing market that has since gone cold.
The House had pushed a plan leaders said could save property owners $40 billion to $50 billion during five years. The Senate’s modest approach would save $15-20 billion in the same period.
Gov. Charlie Crist weighed in with a split-the-difference property tax approach he said would save $33.5 billion during five years.
Since then, Crist and legislative leaders have edged closer.
On Friday, lawmakers announced they had agreed on a framework that includes rolling back property taxes and expanding the state’s current $25,000 homestead exemption.
Sen. Mike Haridopolos, R-Melbourne, co-chairman of the Joint Committee on Property Tax Relief and Reform, said it’s clear there is a rising urgency to resolve the tax standoff.
He predicted industries relying on city and county spending would follow the money to a private sector that he said is certain to surge after tax cuts are approved.
“These professions have been doing a lot of work with local governments because that’s where the money is the last few years,” he said. “But the market will correct itself when we cut these high property taxes.”
SOURCE: Orlando Sentinel
