Florida's 'tax reform' commission

Happy Monday to everybody. Hey, I got burglarized over the weekend; what did YOU do for fun? Sheesh. Around midnight Friday I'm sitting on my back screened-in patio working on my laptop, when a guy rings the front doorbell claiming to be asking for directions. In the few seconds it takes me to get rid of the guy at the front door, his accomplice barges into my patio, snatches my computer and runs. Looks like a mini-gang working the neighborhood, since there were a couple other break-ins and a little vandalism too. The little $#$%s.

Anyway, my print column for tomorrow will be about the final work product of the Taxation and Budget Reform Commission, which meets every 20 years to "reform" Florida's tax structure. I gotta tell you, this edition of the commission ended up being fairly puny and small-bore. We will be voting on seven proposals that the commission voted to put on the November ballot.

The one big structural tax change the commission proposes is a "tax swap" in which we would get rid of most of our school property taxes. To replace the money, the Legislature could raise the state sales tax and close existing tax loopholes. But this amendment doesn't say HOW to fill the gap and I think it has a lot of problems.

The other proposals range from rinky-dink to political axe-grinding. There's a special-interest tax break proposed for "working waterfront property." Large landholders could get a tax break for declaring their property to be conservation land. One idea would allow a local-option sales tax to support community colleges and another would grant a tax break to homeowners for hurricane improvements.

The most controversial two ideas would reverse Florida's long-standing separation between using tax dollars in support of religious institutions. One ballot measure repeals Florida's existing overall ban, and a second makes it clear that tax dollars can be used for school vouchers to give money to private schools, including religious schools.

This is small-time political axe-grinding, tax-break-seeking stuff. It was not the idea behind creating this 25-member commission every two decades to take a deep-thinking look at Florida's tax structure. As I've written before, this body, appointed by the House speaker, Senate president and governor, is acting more like a "second Legislature," with all its petty failures.

Heads they win, tails you lose

See Will Van Sant's article this morning about the fact the tax roll has taken an unprecedented plunge in Pinellas County. It's a combination of two factors: the economy itself, and the new tax exemptions passed recently in Florida.

But I wanted to call special attention to a quirk in Florida law that Will mentioned in his article as well -- if you have a Save Our Homes tax break, the government will still be able to INCREASE your tax assessment, by up to 3 percent next year!

That's because Save Our Homes was originally intended as a "speed limit" on how fast the government could increase home values. Unfortunately, its framers didn't realize that when values were going down, the government would still be able to impose that 3 percent hike!

Two ways to look at this: Save Our Homes homeowners are still getting a big tax break; this 3 percent increase only allows the government to "catch up" a little. The other way is that it's perverse that the government can still increase taxable values when market values are going down.

I wrote a column about this last year.

Column: Not much 'reform' in timid tax panel

Every 20 years, a group of smart people is supposed to get together in Florida to decide whether to overhaul our state's taxes, budget and spending.

This outfit is not just some "blue-ribbon" study group, either. It has real power. It can put its ideas directly on the statewide ballot.

This is the year. The group, called the Taxation and Budget Reform Commission, is meeting now to decide what we'll vote on in November.

But I gotta tell you, anybody looking for the Thoughtful Big Picture out of this current crop is going to be disappointed.

Keeping track of all the tax-cut ideas

The news this morning is that a vote has been postponed on the "Taxpayers' Bill of Rights" (TABOR) in the state Taxation and Budget Reform Commission. The "bill of rights" included another kind of tax cap. It would limit the increase of a local government's revenue, from year to year, to the rate of population growth, plus inflation, plus 1 percentage point on top of that. The idea also requires voter approval for new taxes and fees. The idea was strongly criticized in the Times' lead editorial this morning.

But by this point, it's hard to keep track of all the different tax ideas that have been passed and that are still being proposed. So here are the major items:

* EXISTING ANNUAL CAP. Last year, the Legislature ordered a one-time rollback of property taxes and created a new year-to-year cap on how fast  local government revenue can rise. That's the law on the books now. The cap is tied to the growth of per capita personal income in Florida. The "bill of rights" cap would be more severe.

* BIGGER, MORE 'PORTABLE' HOMESTEAD. On January 29 the voters passed Amendment 1, which creates a bigger Homestead Exemption for homeowners, allows them to carry their existing tax break to a new home, puts a 10 percent annual cap on the tax valuation of non-homestead properties, and gives business a tax break on the first $25,000 worth of tangible property.

* SCHOOL TAX 'SWAP' PROPOSED: The tax reform commission, which meets every 20 years and can put things directly on the ballot, has tentatively proposed for this November's ballot a major change in school property taxes. Most school property taxes would be abolished, and replaced by a 1-cent increase in the state sales tax, and other sources of money as the Legislature chose. The commission's decision to put this on the ballot is not yet final.

So, those are two big things that have happened, and one thing that might happen. Meanwhile, there are two other big ideas floating around out there, one of them being the "bill of rights" discussion that has been delayed for today.

The other one is simply to cap all property taxes at 1.35% of a property's value. Here's a link to a group supporting this idea, and which is trying to get it on the Florida ballot via citizen petition. This would be a pretty big cut in current taxes. This also is the approach favored by the tax protesters who were just in Tallahassee, and who got a warm reception from House Speaker Marco Rubio, with their meeting in the House chamber pictured above. [Times photo | Alex Leary]

Thursday column: A tax on land, or at the register?

Here's today's column -- tell me if you think it was or wasn't useful. It ended up being a little more of an explainer of the tax swap than a complainer about the commission's rejection of a services tax...

* * *

Hey, if you're a property owner, how'd you like to pay a lot less in school taxes - way less than half of what you're paying now?

Wait. Here's the flip side of that same question:

No matter who you are, how'd you like to pay a higher state sales tax?

That's the latest tradeoff being proposed for Florida.

This is a different idea from Amendment 1, which the voters passed in January for a higher homestead tax break.

Instead, this "tax swap" is one of the ideas being kicked around by a group called the Taxation and Budget Reform Commission, which meets every 20 years to recommend changes to our tax system.

[Link to entire column]

A tax question

I'm wondering what happens if I change homes and use portability, then  portability is struck down by the courts...what happens to mah taxes??? -- Bob V.

Dear Bob V: The answer to your question is: Who the heck knows! It depends on what kind of remedy the court ordered. It could simply strike portability from that point onward. It could strike portability and kill everybody's tax break. It could strike Save Our Homes entirely and kill everybody's tax break. It could order the government to PAY BACK everybody who got an unfair deal in the past, which would cost a bazillion dollars and probably require some kind of emergency assessment. Or any combination of these things, or something entirely different...

A tax talk worth revisiting

My blog post in the wake of last week's election on Amendment 1 provoked a lively exchange that's still in progress (70+ comments so far). Here's the link to the post; the comments follow it.

What next on taxes?

Florida voters spoke loudly and clearly Tuesday when they approved a higher tax exemption for owner-occupied ("homestead") homes. The old tax break was simple -- no taxes on the first $25,000 of a home's value. The new tax break is a little more complicated, but it works out to about, heck, let's call it a tax break on about $40,000 worth a home's value.

The other big changes in Amendment 1, don't forget:

-- Portability of your tax break when you move to a new home. From now on, you can take the same tax break that you've built up over the years under the Save Our Homes rule in Florida.

-- A 10% annual cap on how fast NON-homestead property values can increase. That is not as good a deal as homeowners have, but it still is protection against the big double-digit run-ups in taxable values that occurred in recent years.

-- A business tax break that protects the first $25,000 of equipment ("tangible personal property") against taxation.

Now that we've done that,  what else should we do? Florida still has big tax problems. The existing system is unfair and Amendment 1, if anything, only increases that unfairness.

Some have suggested that Florida simply abolish property taxes on all homesteads. Admittedly, that has the virtue of simplicity, but it hits everybody else even harder.

There's also this interesting "1.35% solution" that is gathering support. The basic idea is that property taxes in Florida could not exceed 1.35% of a property's taxable value each year. This would require a real cut in local revenues -- I've seen estimates that local taxes currently average between 1.65% and 1.8%... a cut of something like $8-billion out of the roughly $30-billion collected in property taxes annually in Florida. On the other hand, all existing tax exemptions are preserved, and hence the existing inequities in the system as well.

Here's the group's web site: http://www.saveourhomesforever.com/index.htm.

Comments? What do YOU think we should do now?

Thursday column: Better than nothing; is that good enough?

Maybe you are thinking:

"Thank goodness that the holidays are over! Now I can turn my full attention to figuring out this property tax thing on the Jan. 29 ballot."

Hey, that's just what I was thinking, too! This is a big decision. So, let's take a look.

Amendment 1 would do four things:

(1) It would increase Florida's "homestead" tax exemption. The way it works now, we don't tax the first $25,000 of a home's value. The new total tax break would vary, but a typical figure is $40,000.

(2) The amendment also would change the rules for the "Save Our Homes" tax break for homesteads. The tax break would become "portable," or transferable to a new home. [rest of column]

Last tango in Tallahassee

It's easy to be disappointed in what appears to be the final product of this special session of the state Legislature. Lawmakers have added a couple more tax breaks for homeowners, who already have the best tax deal, and paid a little lip service to non-homeowners.

No fundamental reform, no sweeping changes, not even some of the other ideas (low-income seniors, "highest and best use," etc.) originally proposed for this session. Maybe it was too much to ask. After all, the Legislature was meeting only to decide what to do about the "super-homestead" exemption that a court had thrown off the Jan. 29 ballot.

So we end up with a mini-menu of a few more tax breaks:

* "Doubling" the homestead exemption from $25,000 to $50,000. I use the quote marks because school taxes aren't affected. But saying "double" is easier than saying, "increasing the exemption by roughly 60 percent."

* Making the homestead tax break "portable" when an owner moves to a new home, for tax breaks of up to $500,000. This does address one of the biggest complaints about our existing set-up, than people feel "trapped" in their current home.

* Putting a cap of 10 percent on how much property values can go up each year for non-homestead property. This cap is a lot weaker than originally proposed. Supposedly, this at least gives business owners some stability -- but this cap doesn't cover school taxes either. So your value increase would be capped at 10 percent for NON-school taxes, but uncapped for school taxes...

* A tax break for the first $25,000 worth of tangible personal property, which would primarily benefit business in the state.

If you're looking for a deeper, systemic reform, then look either to the annual session of the Legislature in the spring, to see if Speaker Marco Rubio has deeper ambitions, or else to the state's tax and budget reform commission.

This Legislature, at this time, has proved either unable or unwilling to do anything further.

Column: The Senate takes its ball and goes home

I went to a school that once had an unusual strategy in basketball: It tried not to score many points.

Instead, the players used up the clock by passing the ball back and forth, and driving the opponents crazy while keeping them from scoring.

This "four corners" strategy was eventually outlawed - in basketball, anyway.

But in our Florida Legislature, the four-corners tactic is alive and well.

Our state Senate does not like what our state House has done with property taxes.

So the Senate has decided simply not to show up all this week in Tallahassee. It will return Monday at the earliest.

Can you believe it? The one time we want our Legislature to meet, and half the outfit refuses to show up! [entire column]

House v. Senate (so, what else is new?)

For the new few days we'll hear a lot of posturing between the House and Senate over their different ideas for changing Florida's property taxes.

The Senate's plan is closer to the original deal. It includes a doubled homestead exemption, a "portable" tax break for moving to a new house, a tax break for first-time buyers, and a bunch of other stuff.

The House's plan is still in flux. As written, however, it includes one huuuge difference from the Senate -- it creates a 3 percent a year cap on the value of non-homestead property in Florida. That's kind of like the "Save Our Homes" cap for homesteads, with a couple of important differences.

Just for starters, I hope nobody cares in the slightest about the Senate's complaint that the House "broke the deal" that was made before the session. I don't care. The taxpayers don't care. Nobody cares except the Legislature. So if Senate President Ken Pruitt and Sen. Daniel Webster think they are getting any sympathy on that, boo freakin' hoo.

What matters is the merit of the House ideas -- and there the Senate might have a better case. As appealing as a 3 pct non-homestead cap might be, if it's that low it will cost a lot of money -- and the local govt's will just make it up by raising their millage rates. In that case, this "reform" could actually end up hurting homestead owners -- wait'll THAT gets understood after the session!

On the other hand, the proposal from House Democrats not to "double" the homestead exemption, but peg it to 40 percent of the median home value in each county, is interesting to the House Republican leaders and is not something the Senate will automatically rule out. So the main sticking point is probably the cap on non-homestead property....

Hey, sounds like a Sunday column topic! Happy weekend and good luck.

Thursday morning: taking a break

Soon after the House convened at 10 a.m. this morning, Speaker Marco Rubio answered the phone on his lectern and answered it, "Gelber! I'm up here working, man." It was a relaxed little exchange with the leader of the House Democrats, Dan Gelber, calling from his desk at the back of the chamber.

No wonder Rubio was relaxed -- a few minutes later, he announced that the House would recess until 3 p.m. Monday so members will have more time to think about the property-tax bills. Rubio said members would be provided with information about the effect of the proposed cuts on their local governments and schools, and would have time to mull them over and talk to the folks at home.

Also, everybody is getting kicked out of their hotel for the Miami-FSU game this weekend anyway, so...

The brief House session was a nice little lovefest between the Republican leaders and the Democratic minority. Rubio told the House that the Democrats had come up with some good ideas in the session, changing the original proposal somewhat, and that "our ideas led to your ideas, which makes them our ideas."

Kum ba yah! The atmosphere in the House is almost entirely different from the tax session earlier this year -- bipartisan so far, more deliberative.

There was total silence at the other end of the fourth floor, where the Senate had already sent its members home after passing the original tax deal on Wednesday. The Senate president, Ken Pruitt, issued a statement that on the surface looked like a basic rah-rah, but when you read it closer implied some disapproval of the House's changes. Pruitt said the Senate had negotiated "in good faith" and had passed a plan "in keeping with the special session call."

The biggest difference, remember, is that the House plan creates a new protection for all NON-homestead property in Florida -- an annual cap on value increases. The House also is thinking about giving homeowners a tax break that's 40 percent of the median home value in their county, instead of simply doubling the existing homestead exemption.

The Senate's plan sticks closer to the original script, with a doubled homestead exemption, letting homeowners move their tax break to a new home, and a break for first-time home buyers.

Lots of speculation here that the Senate will wait for the House to finish its gyrations and then shoot the thing down.

I'm outta here and heading back to St. Petersburg, looking forward to watching some football and baseball in my own home... more on the blog tomorrow and in Sunday's print column.

Thursday column: Wham, bam, and thank y... no, wait!

TALLAHASSEE -- Hey, if you don't like the Legislature's plan for changing your property taxes, guess what?

A lot of members of the Legislature don't like it either.

So by Wednesday afternoon, the Legislature - at least, the House - had put away its rubber stamp.

They're were going to think about it some more, kick around numbers. Democrats and Republicans were talking to each other about new terms. Nobody knew what exactly was going to happen.

And you know, maybe that isn't so bad... [entire column]

Wednesday afternoon: hold on a sec, would you?

My print column tomorrow is going to talk about the fact the Legislature has slowed down -- at least in the House -- this plan for cutting property taxes.

At the beginning of this week, it sure looked like business as usual, that they intended to zip the thing through with a lack of debate and examination as early as today. The original plan on Tuesday in the House was to allow only two hours -- two hours! -- for the committee to pore over the whole thing. And even on Wednesday morning, a Senate leader confidently said the first bill would be passed "within the hour."

Wrong. A lot of members had something to say, and the leadership in both chambers has been letting them say it.

From the perspective of the taxpayer, two major points, plus a bunch of minor ones:

* There's some kind of new tax cut for homeowners still in the works. The original plan was to double the existing homestead exemption to $50,000. But now the House is at least thinking about the alternate idea put forth by Democrats, to give homeowners an exemption worth 40 percent of the median home value in their county.

* Now there's also news for non-homestead owners, who might get some kind of annual cap on how fast their property value can grow for tax purposes. Whether that's 3, 5 or 7 percent, or nothing at all, is still up in the air.

The rest of the original components of this tax-cutting plan are still in the mix, one way or the other... low-income seniors, "working waterfront" property, workforce and affordable housing, etc....

I see from the comments that some folks this is nowhere near enough, some are critical of the process. Many existing inequities in Florida's system are not fixed by this.

I also hear the conspiracy theory that the House leadership actually doesn't care whether this deal gets done or not -- if the real agenda is to force deeper, more sweeping tax cuts instead. I dunno; they seem sincere enough to me...

Comments? Questions? Post 'em here and I'll try to answer. Talk to you later.

Hey, wait a minute, a legislative process might be occurring here

While the Senate stayed on script this morning and dutifully plowed through its property-tax amendments, there might be some interesting doings in the state House.

A few minutes ago, there was a meeting in the fourth-floor Capitol office of state Rep. Dean Cannon, R-Winter Park, who is the House Republicans' point guy on property tax reform. Cannon and other top Republicans met with the leader of the House Democrats, Dan Gelber, and some of his colleagues. They talked about making a new deal on the property-tax plan.

It tweren't no secret meeting, either -- a bunch of reporters jammed into Cannon's office to watch the whole thing. The talk seemed fairly friendly and cooperative. After all, the Republicans do need the Democrats' votes to get something on the Jan. 29 ballot, and everybody seems to be thinking it would be nice to get along.

As a result, things in the special session have become a lot more fluid. The House is in recess now and may not come back into session today, while everyone looks at all the numbers flying around. What had seemed like an imminent passage of the original plan suddenly might be pushed back by days.

Biggest change proposed by the Democrats: instead of just doubling the existing homestead exemption, the Democrats would give every homestead property owner a tax break that's 40 percent of the median home value in their county. (If your current Save Our Homes tax break was bigger, you'd keep it.)

This "40 percent for everybody" approach solves several problems, the Democrats say. It solves the problem of portability, since you don't lose your tax break by moving from one home to another. It solves the problem of first-time homebuyers, too. Cannon, sipping on a Diet Coke, nodded as he listened to Gelber and said he had liked a percentage-based homestead exemption all along.

Another big change the Dems proposed: a 7-percent annual cap on ALL property values in Florida. Remember that yesterday the House council had voted for 3-percent, and this morning the Senate said that idea was totally dead. Now this revives the possibility that all property owners, not just homesteaders, would get a tax cap.

Even under the Dems' deal there would still be tax breaks for working waterfront property, affordable and workplace housing... not clear on what would happen to the part about letting the Legislature set an annual cap on local millage rates.

Wheee!

Wednesday morning: goodbye, 3-percent cap

Ken Pruitt, put the kibosh on the House's idea that all property in Florida -- not just homesteads -- should get an annual cap on the growth of their value of 3 percent a year. [Scott Keeler | Times]

Good morning from Tallahassee... the full House and Senate are in session this morning and are taking up the three bills of this special session -- a constitutional amendment on property taxes, a law to carry out the details of that amendment, and an act to put the amendment before voters on the Jan. 29 ballot. Both chambers will go through a list of proposed changes filed by individual members.

One piece of news this morning is that the Senate president, Ken Pruitt, put the kibosh on the House's idea that all property in Florida -- not just homesteads -- should get an annual cap on the growth of their value of 3 percent a year. Pruitt said the 3-percent idea is outside the "call," meaning that it's not on the list of permitted topics in the proclamation that called this special session.

So, if you're a small business owner, an owner of rental property or anybody else who liked the news from yesterday, sorry. Either the full Senate now would have to rise up against Pruitt (unlikely), the House would somehow have to ram the 3-percent cap down the Senate's throat and force it to agree (unlikely), or else the idea is going to die.

Lots of folks here think the whole 3-percent thing was a sham in the House council yesterday anyway, since they passed it on the fly without any prior notice and without the slightest financial analysis. This theory was that somebody else would step in to kill the idea later. Cue the Senate.

A few senators this morning did express unhappiness on the Senate floor with the deal being debated. Some Republicans want deeper cuts. Some want more numbers. "We're not going to be in a hurry about this," Pruitt said, saying the Senate would stay in session all day to hear amendments if needed.

Weirdness in the Capitol

It is 6 p.m. Monday and the day's work is done in Tallahassee -- with two or three big, important surprises.

The NON-surprise is that all the committees today approved the entire property-tax package, setting the stage for the full House and Senate to take them up starting tomorrow. All the major points we've talked about so far are in there.

Except...

The House council today, out of the blue, voted to add a 3-percent annual cap on the values of all NON-homestead properties in Florida. Under this idea, all property in Florida would benefit from the same protection that homeowners now get under the Save Our Homes cap.

This is a huge step, and a big departure from the previous plan. The council acted almost on impulse, with no financial analysis of the impact on local government.

Everybody is saying that this was a fake vote and that they don't really mean it. It was an act of gamesmanship between the Democrats, who had proposed a 7-percent cap, and the Republicans, who said, oh yeah? We'll see your 7 and raise you to 3.

But if they don't mean it, that means somebody's gotta take it back out. Either the full House has to do it, or the Senate has to do it. And now that this gi-normous vote has been taken, which will get the attention of every business in the state of Florida tomorrow morning, how do they get out of it?

Wait, one more "little" thing in the House -- do you want to pay a higher sales tax? Also at the last minute this afternoon, the House put in a proposed 1-cent increase in the state sales tax to make up for the lost revenue to schools.

Another big change was over in the Senate committee, which put a limit on the proposed tax break for low-income seniors -- they would only get a break on the first $100,000 of their home's value, instead of a total free ride. This, too, is a pretty big change. And since the low-income senior tax break included school taxes, this change would reduce the hurt to education.

So now there is a two-way jam here. Either the House and Senate have to strip out these changes on the floor so they are passing the same thing, or else pass conflicting bills and send the thing to a conference committee.

Moving right along....

Hi everybody. Today I watched part of a workshop in the state Senate to go over the property-tax bills, and then I wandered over to the House just in time to watch those bills pass unanimously in their first vote in a House council.

In other words, things are moving right along without any big surprises. Some House members and senators say they would like to add or change things, and the leaders say those members will have a chance to be heard, but the major pieces seem to be holding up.

As I described in more detail in my previous post, those major changes include doubling the homestead exemption, a tax break for first-time home buyers, making Florida's existing tax break for homeowners portable when they move to a new home, and several other new tax breaks for various kinds of property.

The most unhappy folks in the Capitol today are the lobbyists for Florida's local governments, the cities and counties, who do not like the fact that the proposed constitutional amendment would give the Legislature permanent say-so over setting a cap on local taxes. They call it a usurpation of home rule.

My print column tomorrow will try to focus on some of the criticisms and questions about this plan, which is likely to be on the books by the end of this week.

For starters, lots of critics don't think this goes far enough in cutting local taxes. Others think it doesn't do enough to protect non-homestead property owners, such as businesses and owners of rental property.

And although the main tax breaks for homeowners are popular, there are some interesting questions about the rest of the deal. Some readers already have posted some of these questions on this blog, and I have others from reading the bills...

* How to combat fraud in the tax break for first-time home buyers. Under the bill they would sign an affidavit and be subject to penalties, but...

* The significance of this tax break for "working waterfront" property. What the heck does it mean? It means, for starters, commercial fishing and water-related businesses... but the details would still have to come in a bill to passed next spring.

* Whether the idea of a "portable" tax break is even constitutional. As some readers have pointed out, this whole plan seems to make existing inequities worse, not better.

There's lots of rhetoric from the Republican leadership here that this is only a beginning, not the last thing the Legislature is going to do on taxes. The House speaker, Marco Rubio, is the loudest of those voices, saying he's not satisfied.

More in tomorrow's column -- I also hope you will consider stopping by for tomorrow live chat here on TroxBlog. Bring plenty of questions and comments about the plan.

Monday morning: the bills explained

I’m in Tallahassee for the Legislature’s special session on property taxes. Here we go again.

There are three “pre-cooked” bills on the agenda for this session, already worked out by the Powers That Be and ready to go. There are many elements and complications, but as usual, they are all thrown together into the same big pot.

Today’s scheduled action is an 11:30 workshop to present the bills on the Senate side, and a noon meeting of one of the big House “councils” –- a super-committee that is one of the hurdles the bill must clear. More committees meet on Tuesday, and then the full Senate and House are scheduled for session Wednesday and Thursday to pass ‘em.

Here’s the Senate link to the bills. Here’s the House link.

The three measures are:

* A joint resolution calling for an amendment to the Florida Constitution. Because our Constitution says that property usually has to be assessed for tax purposes at its “just value,” we have to amend the Constitution to create any new exemptions or tax breaks.

* A new law, or statute, that would carry out the details of the constitutional amendment.

* A resolution putting the amendment on the Jan. 29 ballot. This is a separate step that would take a three-quarters vote of the House and Senate. Without that level of support, the amendment would not appear on the ballot until November 2008. (If it passes in January 2008, it applies retroactively to Jan. 1, 2008; if it passes in November 2008, it takes effect Jan. 1, 2009).

In the order that they are mentioned in the amendment, the elements are: a $25,000 exemption for all tangible personal property, “portability” for moving your tax break to a new home, a tax break for affordable housing, a tax break for commercial waterfront property, a doubled homestead exemption from $25,000 to $50,000, a new tax break for first-time home buyers, a tax break for low-income seniors, a limit on the growth of future local taxes, and a requirement that all property appraisers be elected (this is aimed at Metro-Dade).

There are many more details in the proposed change in state law. One would take away the “presumption of correctness” of a tax appraisal if it is a bigger increase than the average increase for that category of property.

Overall, we’re talking about a statewide property tax cut of $9- to $11-billion over five years, compared to a cut of about $16-billion that would have occurred under the “super homestead” tax break that has been thrown off the Jan. 29 ballot. Some critics think this isn’t enough. Local governments, which already have been through a first round of tax cuts this fall, don’t like the new cuts and tax caps.

Updates later today.

Tally ho

For the next few days I'll be in Tallahassee for the special session of our state Legislature dealing with property taxes. The Legislature is probably going to pass a new proposed amendment to our Constitution for the Jan. 29 election and some kind of statutory change as well.

The major points will probably be a doubling of the homestead exemption to $50,000, the ability to move an existing tax break to a different home ("portability"), and a new tax break of up to 25 percent for first-time home buyers.

There also are proposed tax breaks for low-income seniors and affordable housing, a tax break for tangible personal property that mostly helps business, and some new limits on how much local governments can raise taxes. As for the effects of these tax cuts on local government, and what will have to be cut from local budgets as a result -- hey, that's not the Legislature's problem.

So far there seems to be a pretty good consensus on these ideas. But as always, there's a chance that some or all of the deal could fall apart, or for the addition of last-minute changes. It will be interesting to see how much these ideas are actually discussed, considered and debated, and how much the Legislature simply ratifies a deal made by a few insiders in advance.

I'll be posting frequent updates and observations here on TroxBlog. And Tuesday's weekly live chat will be a special two-hour edition, from 11:30 a.m. to 1:30 p.m. focused on the tax proposals. I hope you'll consider stopping by to contribute a comment or question to our talk.

Best wishes for a good week...

Thursday column: Do you want it fixed, or by Friday?

I went to pick up my car from Charlie's Quickie Fix-It Service.

But when I got there, my car was still up on the lift. Parts were strewn all over.

"I just brought it in for a little budget cut," I protested to Charlie. "What gives?"

"Since you were here anyway," Charlie said, "we figured we'd go ahead and give you that big tax overhaul we've been talking about."

"Can I at least get an estimate?" I asked. Sure, said Charlie, handing me a piece of paper. It said... [rest of column]

The Senate on the tax plan

Here's the full text of an announcement from state Senate President Ken Pruitt, outlining the major points of the property tax plan the Legislature is likely to pass in the next few days:

---------------------------------------------

To:                   All Senators

From:              Ken Pruitt, President

Date:               October 10, 2007

Subject:          Summary of Proposed Property Tax Plan

 

As I mentioned in my earlier e-mail today, I am sending an outline of the Senate’s proposed property tax plan. For your convenience the text is both attached and pasted below. We expect to have drafts of the bills and joint resolutions on Friday.

Outline of the Proposed Senate Property Tax Plan

Doubles the homestead exemption by providing an additional $25,000 exemption for assessment amounts between $50,000 to $75,000.  This increased exemption will not apply to school millages.

Provides portability of Save Our Homes tax breaks by providing 100% portability of the SOH differential, up to 1 million dollars, for homeowners who upgrade to a more expensive home, and proportional portability for homesteaders who move to a less expensive home.  This increased exemption will not apply to school millages.

Provides a $25,000 exemption for Tangible Personal Property.

Creates a new exemption for first-time homesteaders that equals 25% of the just value of the property, capped at 25% of the prior year’s residential median just value for the county, but which is phased out as the new homesteaders’ Save Our Homes differential increases.  This increased exemption will not apply to school millages.

Grants “low-income seniors” a significant new exemption with eligibility based on household income and home values. This provision will apply to school millages.

Affordable housing.   This provision will allow property utilized for affordable housing to be assessed at less than just value.  To qualify the property will have to be subject to rent restrictions imposed by a government authority.  This provision will provide protection to renters from dramatic increases in rent attributable to rising property tax assessments.  This provision will not apply to school millages.

Working waterfronts.   This provision will allow property located on the water and used for commercial activities, also known as “working waterfronts”, to be assessed at less than just value instead of the “highest and best” use.  Presently, a waterfront marina may be assessed as if it were a high-rise condominium because that would be the “highest and best” use of the property in the context of generating property taxes.  This provision will allow the marina to be assessed at something other than just value and more akin to the property’s actual use, not its potential use. This provision will not apply to school millages.

Presumption of Correctness/Burden of Proof .  This provision will remove the presumption of correctness given to property appraisers for challenges to assessments involving properties whose just value increases more than the county average for their class.  This helps level the playing field for property owners so that the property tax assessment process is not tilted in favor of the government.  This provision may affect school millages.

Elected Property Appraisers.   This provision will require that all property appraisers in the state be elected by the voters.  This will address concerns in those jurisdictions where the property appraisers are hired by the mayor or commissioners and make sure that the property appraisers are accountable to the voters.   

Taxes: The roller-coaster ride continues

[Wednesday afternoon update: The Legislature will extend its special session until midnight Oct 22 to take up property-tax reform. In addition to the governor's proposal outlined below, the House and Senate will generate their own plans. Wheee!]

You might have noticed that our Legislature is in special session to cut the state budget. Our governor, Charlie Crist, figures that since they're in Tallahassee anyway, why not do something about property taxes in the next few days? And so the delightful roller coaster ride that is Florida's public policy continues on its merry way. [Times file photo | Melissa Lyttle]

Remember that a court has thrown out the Jan. 29 election on a "super homestead" amendment previously proposed by the Legislature. There's an appeal under way, but right now that means the only tax relief that's taken place is the earlier law that created a one-time rollback of property taxes, which has left a lot of Floridians not very impressed.

What to do, what to do? Well, the Legislature could simply fix the wording of the flawed Jan. 29 amendment. It could try to put together some other kind of tax cut. In that spirit, the governor has come up with a new program. Overall, Crist's plan would cut $6.3-billion over the next five years, which is not nearly the $15-$16-billion that the "super homestead" amendment would have required. To be fair, Crist is saying this is just a starting point and there should be more cuts later.

Here is a copy [Download cristtax.pdf ] of a worksheet showing the effects of the governor's proposed plan, along with the actual text of his proposed amendment to the Florida Constitution. (Hey, at least he has actual wording, which puts us ahead of the game by Florida policy-making standards).

The governor's main ideas:

* Doubling the existing homestead exemption in Florida from $25,000 to $50,000, except for school taxes, which would not be affected. Unlike the existing $25,000 exemption, this new benefit would increase over time with inflation.

* Giving first-time buyers an extra tax break of 25 percent over their home's value as a new tax exemption.

* Creating a "portable" tax benefit so that homebuyers could take their existing Save Our Homes tax cap to a new home. When you moved into a more expensive house, instead of getting socked for the full value, you'd start with the same dollar tax break you had in the old house.

* A tax break for all taxpayers on the first $25,000 of "tangible" personal property. This is a tax break that largely benefits businesses.

* A new cap on the annual revenues of local government, which could not grow faster than inflation. Any excess revenue would be set aside, and if the surplus grew large enough, it would be refunded to taxpayers. As with the existing law, local governments could override this cap by an extraordinary vote.

There's also talk of whether to change Florida's existing law that includes the "highest and best use" of property as a factor in setting its value. That's been a problem for, say, mom-and-pop beachfront hotels worried that they are being taxed as if their land was being used for million-dollar condos.

Big, big ideas, and sure enough, they address some of the problems with the existing tax structure. As to the overall effect, as to whether there are unintended consequences, as to a detailed analysis of the fiscal impact on the state of Florida -- well, if you think the Legislature can responsibly hash out all that in the next few days on the fly, you have more faith than me.

More in tomorrow's print column.

Column: Casinos Are No Way To Balance The Budget

I figure on gettting a lot of disagreement over today's column. After all, if there are going to be casinos anyway, why not tax them? I'm sure not opposed to gambling, but I think counting on it to pay for government is a bad idea. Here's why.

There's exactly one good reason to legalize casino gambling:

People ought to be able to gamble if they want to. It's fun. Why not?

That's a fine, libertarian position.

All the other arguments for expanding gambling in Florida are bull.

Economic development?

Yeah, sure, I suppose casinos are "economic development." If you want to turn the state into a garish dump. I mean, more than we're already doing.

Job creation? Yeah, that's the new economy I want to see. Dealers and cocktail servers, bouncers and bartenders.

No offense to dealers, servers, bouncers and bartenders. It's just that when we're talking about the economic future of Florida, I would aim higher.

Most tempting of all, there's the "free money" claim. [rest of column]

The (Bleep)-You Rule

If you're a homeowner, be sure to read Alex Leary's story this morning about a loophole in our "Save Our Homes" rule in Florida that lets the government keep taxes at a higher level on some homes even if their taxable value goes DOWN.

Save Our Homes is a cap on a home's taxable value -- it can't go up more than 3 percent a year. Lots of folks in Florida own homes that are getting taxed way below their market value.

The loophole that Leary wrote about deals with what happens when a home's taxable value goes DOWN. This is starting to happen in Florida now, for the first time since Save Our Homes was passed in 1992.

If you are getting a tax break under Save Our Homes...

... and your house's value goes DOWN...

... then the government is entitled to "recapture" its lost taxes by re-setting your home's taxable value back up the Save Our Homes limit.

In short, if your home's value goes up, your taxes go up, by 3 percent a year.

And if your home's value goes down, your taxes stay the same. Very nice.

Mr. Leary keeps giving me column topics...

Sunday Column: Don't Tax My Money. Yours, However...

One of the first things I learned in Tallahassee was a rhyme about tax politics:

Don't tax you, don't tax me,
Tax the fellow behind that tree.

It's always been that way. It's that way right now, in our debate over property taxes and who should pay them.

Really, there are two separate questions. We keep mixing them up.

The first question is simply how much government should tax, period. Most folks lately agree that local taxes have risen too much.

The second question is who should pay less and who should pay more. This is where it starts getting harder.... [rest of column]

Tax Questions & Comments, Part IV

My question is, who will determine the "true value" of a property as this point in time in order to determine the possible tax cuts.  With housing values continuing to decline--what will be considered the taxable value? -- Shelley T. Del Castillo

Same as always, the county property appraiser. For a lot of critics, this is a weakness in the deal -- nobody is insulated against future unreasonable spikes in property values that drive up taxes, even if the tax RATE goes down. There is a substitute protection in that local government has an overall cap on TOTAL tax collections, but that still allows for individual fluctuations in assessments.

I read somewhere (TBT Times, I think), that the $25,000 homestead exemption would go away if you
elected to retain the SOH.  If that were the case, wouldn’t I be getting a tax increase and not maintaining the status quo. -- Larry Geiger

No, if this constitutional amendment passes in January, you would have a choice. You could keep the existing Save Our Homes cap as long as you own your current home -- including your existing $25,000 exemption. Once you elected to switch to the new, higher appraisal, you couldn't go back. For some homeowners, the math works out -- either in the long run or the short run -- that the higher tax break would be wiped out by higher home values.

The cap should be fixed or tied to inflation at worst. How does the "growth of the average income" in Florida have anything to do with the needs for government spending? Sounds Marxist....."from each according to his ability" to pay. This reads that the simple fact that people are earning more gives reason for collecting more taxes.  -- Jim Nannen

Good observation, Mr. Nannen. This is a question of basic philosophy about how people should be assessed for taxes. The Legislature's thinking was that taxes should not rise faster than people's ability to pay them. I am sure that being "Marxist" was the furthest thing from lawmakers' minds. But indeed, this change separates the VALUE of the thing being taxed from the INCOME of the person who owns it.

I noticed ... your disdain of the Save Our Homes Cap and that when you state that Homeowners whose tax bills are lower under the existing Save Our Homes program would keep the lower tax bill.  You fail to mention for how long, I think that is an important fact. The Legislature is doing this for one reason, to get rid of the Save Our Homes Cap, so in the future they can collect even more money.  -- Joe Magilligan

Well, I do think that Save Our Homes has created terrible unfairness between homesteaders who have stayed in their homes for several years versus everybody else -- both non-homestead property owners and more recent home buyers. But under this new deal, homeowners could keep Save Our Homes for as long as they stay in their current home. How long would you keep a lower bill depends on each person's individual math -- but it looks to me that in the long run homeowners might actually pay MORE under the new deal, as property values keep going up. Hence the last-minute change made by the Legislature to let everybody choose to keep SOH indefinitely.

Tax Questions & Comments, Part III

More excerpts from reader comments and questions about the tax plan just passed by the Legislature -- see the previous two posts for more.

See if you like this simple solution:  A flat 1 ½  maximum residential property tax , based on a rolling 5 year average  assessed value , with any homestead deduction the legislature sees fit (the one suggested is not bad). For commercial property a 2 ¼ % tax , based on a 5 year rolling assessed value with value set a current use only. -- Knut Horneland, Tampa

The idea of a rolling average does insulate us from short-term spikes in the market. Dunno how your figures work out otherwise... but the deal is done, at least for now. If the constitutional amendment for a bigger homestead tax break fails in January, we might be back to the drawing board.

Police, fire and education aren't so sacrosanct that they should be immune from cuts. In each case the public really doesn't know what value each currently delivers and whether the a cut will impair that value. Credible proof and analysis would help. -- James Gillespie

Mr. Gillespie makes a relevant point. Police and fire enjoy tremendous political support -- especially since 9/11 -- and much of the rhetoric so far has been about keeping them as insulated as possible from the cuts. But they ARE government agencies, after all, and vulnerable to the same tendencies as the rest of government... nothing wrong with taking a hard look at them, anyway, as part of the process.

Today (Sunday) you wrote: [if a person is]"...unlucky enough to get another big hike in your property's value." Working down at Pravda-on-the-bay must be such a through-the-looking-glass experience that I can understand how a columnist might come to hate all forms of capitalism so completely as to disdain
increases in one's homeowner equity. -- Jim Parker, Tampa

Ooh, a Pravda joke! Good one! Now, now, Mr. Parker, you know full well that my "unlucky" comment was in the context of how the government could still try to jack up our taxes. It's not unlucky for one's property to rise in value, but it IS possible for the government to get around the tax "cut" that way by what IT says the value is.

My question to the leadership in St Petersburg is; how many teachers, firemen and police officers can you employ if the taxpayers were not footing the bill for the Tropicana Stadium? Pinellas County School Board; How many teachers could you employ if you didn’t spend $2.2 million on a figure print scanning ID system on school buses that didn’t work? Tampa; How many police officers can you employ if you didn’t spend $1.2 million on a fountain (currently under construction) in Ybor City. And this is just some of the big stuff. Every time we elect a new government official, how many hundreds of thousands of dollars are spent redesigning websites, business cards, etc. Yeap, those medians sure looks nice, exotic trees, flowers, plants, sprinkler system and the tax dollars it takes to maintain it. A couple of trees and some kind of recycled or no maintenance ground cover would work for me. - -Jeff Pettay

Tax Questions & Comments, Part II

As I said in my previous post, the mailbox is filled with questions and comments about the property tax deal passed by the Legislature last week. Here are some more excerpts:

One- there has been a lot of posts on the [Orlando] Sentinel bulletin boards about a citizen's initiative  called the 30-40-50 plan. I'd love to have my taxes reduced by 50%, but wouldn't this be deemed unconstitutional before it even makes it to the ballot--since it sets up 3 distinct categories of taxpayers? Second---when it says the new constitutional amendment must be approved by 60% of the voters--does that mean 60% of all registered voters? What if only 20% of the voters turn out that day? -- Nancy Webb

Second things first -- it's 60 percent of those casting a ballot in the election, no matter the turnout. You are right in pointing out that if it were 60 percent of ALL voters, nothing would ever pass. The 30-40-50 plan is the idea of a group called Citizens for Property Tax Reform (http://www.citizensforpropertytaxreform.com/) that proposes a constitutional amendment -- senior homesteaders taxed on 30 percent of their assessed value, other homesteaders 40 percent, non-homestead property at 50 percent. As for whether it's unconstitutional for treating people differently, the same risk is true of our existing Save Our Homes cap and for the new plan just passed by the Legislature -- it's just that no court has ruled that way yet.

I haven’t seen anything written about what will be the net effect.  That is, are we going to be paying less taxes than we did 5 years ago (before property values spiked) or will we still be paying more but not as much more?  -- Andy Durey

Here's the net effect. Your local government has to CUT its property tax collections next year by up to 9 percent from this year, depending on where you live. Your own tax cut might be a little more, or a little LESS, depending on your property value. This covers ALL property, not just homesteaders. Then in January we'll vote on a much bigger tax break that would cover homesteaders only. Today most homesteaders get a $25,000 tax exemption. The new one would be for 75 percent of their home, up to $200,000 in value, and 15 percent above that, up to a total home value of $500,000 (all value above $500,000 being taxed at 100 percent).

That works out to a total possible exemption of $195,000 -- 75% x $200,000 = $150,000, plus 15% x the remaining $300,000 = $45,000).

Howard, can you address these issues in your column: Existing homeowners who elect to keep SOH remain trapped in their homes.   No portability of existing benefit.
SOH’s constitutional CAP on value increases replaced by statutory spending CAP based on growth.
New spending CAP can be overridden by taxing authority super majority, so there goes the CAP.
Re-set homestead value of up to $195,000 benefit will begin to decline as property value increases by whatever property appraiser says its worth.
No relief to non-homesteaders.
No relief for businesses.
Thanks -- llihtcman

Well, you just did a good job of it, but I touched on those points in my Sunday column as well. There is SOME indirect "portability" to the extent that everybody gets the new, bigger homestead tax break as soon as they move. But as you point out, even a $195,000 tax exemption can be outweighed by whopping new tax assessments on full value. See previous post on the override issue.

Tax Questions & Comments, Part I

Happy Monday. I'm back from a week in Tallahassee and the mailbox is filled with questions and comments about the deal just passed on property taxes by the Florida Legislature. To get right down to business with a difficult one about the annual cap on tax increases for local government:

what is the procedure for local authorities overriding the cap? have seen majority vote, or super majority, or unanimous, or referendum! what are the details? this bothers us since we don't envision local officials voting against override. -- Evan Adams

Ah, you caught me -- I've been fuzzing up the details 'cause it's too danged complicated. But since you asked...

Depending on how much a local government wants to raise taxes, there are THREE levels of override. The lowest takes a 2/3 vote of the board (City Council, County Commission, whatever). The next level requires a UNANIMOUS vote. The next requires an ELECTION to approve the tax increase. Sometimes there can be EITHER a unanimous vote or an election.

So, what are the levels? That ain't simple, sorry. There's one set of rules that applies for this fall. There's one set for the year the constitutional amendment kicks in (if it passes). Then there's one for the years after that.

Here's how it works this fall. Each year there's a "rolled back" millage rate that lets a government collect the same dollars it did the year before. Remember, too, that under this deal everybody is supposed to have a cutback of up to 9 percent off that rolled-back rate. So let's say they didn't want to make that cut, but just keep the rolled-back rate -- that would take a 2/3 vote. If they didn't want to roll back their millage to the rolled-back rate, that would take a UNANIMOUS vote. And to go above that would require an election.

Now, let's say the constitutional amendment passed in January and homesteaders get an additional big tax break, which means another big loss in revenue. Couldn't the locals just jack up their tax rates to make up for it, while still staying under their cap? Nope, the Legislature thought of that. It would take a 2/3 vote to recapture anything up to 67 percent of that lost revenue. It would take either a unanimous vote, or a referendum, to go above that.

Lastly, once the amendment kicks in, it would take a 2/3 vote for locals to exceed their annual tax cap by up to 110 percent. It would take a unanimous vote or a referendum to go above that.

Apropos Of Nothing...

A Republican friend suggested to me yesterday -- I don't think he was entirely joking -- that Florida property owners ought to get the tax breaks just passed by the Legislature only if their legislator voted for it.

Being the practical guy I am, I immediately thought of several mechanical objections. But, you know, it would make the individual decision of each legislator a lot more relevant. And it would be fun to watch.

Goose and gander, though. It seems to me that if this constitutional amendment for an even bigger tax cut passes in January, then the lost revenue ought to come entirely from the districts of members who voted for it.

The Special Session

So that's it. Seven days ago, the leaders of the Florida Legislature announced the major points of a deal to change property taxes in Florida. Just three days ago, the actual bills to carry out those changes were filed, when everybody could see their wording.

Today, those bills are official acts of the Legislature, and a proposed amendment to our state Constitution. They represent the final result of a tax frustration and a political issue that has been building in our state for years. On Thursday, the Florida Legislature gave the people of the state its answer, for better or worse.

The leadership of the Republican majority, under House Speaker Marco Rubio and Senate President Ken Pruitt, held the deal together under a lot of criticism. They admitted that it had weak points but said it was better than the system Florida has now. Some people will disagree with that.

Who benefits now? All property taxpayers get some benefit in the coming year, as local governments have to cut their total tax collections by up to 9 percent from this year -- with whatever consequences those cuts bring at the local level. All property taxpayers also get the protection of a an annual cap on the growth of future tax collections. (However, local governments will be able to override those caps by an extraordinary vote, which will create a whole new class of political controversy in Florida.)

But beyond the tax cut and tax cap, which are now part of Florida's law, Florida's homeowners -- some of whom are the best-off under the old system -- will have the option of claiming a much, much biggest tax exemption -- up to $195,000, depending on the value of a house, as opposed to the current $25,000 most homeowners have.

The fallout from here will be enormous. Local governments across Florida must immediately turn to cutting their taxes and budgets for the coming year. We'll have to gear up for the debate over the Jan. 29 election, and whether giving homeowners a bigger break is the best way to go.

If voters approve the constitutional amendment, the total tax cut over the first five years will be as much as $32-billion, according to the Legislature. More than $7-billion of those tax cuts involve education, and the Legislature will have to debate in the future how to make up the difference for education, as its leaders have promised to do.

In The House

Democrats in the House at this moment are waging a doomed fight over the constitutional amendment for a bigger homestead exemption in Florida. They want some kind of formal assurance that such a large tax cut would not hurt education -- given that more than $7-billion of the tax cut would come from school taxes over the first five years. There was an amendment from Rep. Shelly Vana, D-Lantana, to that effect.

The floor maneuvering was interesting, as the Republican leadership moved to "lay the motion on the table,'' avoiding a vote. That motion passed 74-42, killing Vana's effort. House Democratic Leader Dan Gelber had strong words for the majority about the motion to table: "You can't stand up for children when you're hiding under your desk from a vote."

By the way, the main screen in the Senate chamber is tuned to the House debate, as senators mill about waiting for the House to finish....

'The Hon. Ken Pruitt, President...'

The Florida Senate reconvened at 4:11 p.m., minutes after the House passed the tax rollback. The secretary of the Senate carried the bill into the chamber and to the desk in front of the podium. A clerk read aloud the first sentence, addressed to Senate President Ken Pruitt, formally informing the Senate that the House had passed the bill. With no fanfare Pruitt immediately ordered the Senate voting machine unlocked. The bill passed the Senate 37-0. The Senate now has completed the work of the special session. The House reconvenes at 4:30 p.m. to finish. After the House finishes both chambers will formally adjourn the special session.

Almost Over

[4:00 p.m. -- The state House of Representatives passes HB 1B, a statutory rollback of local property taxes in Florida next year and an annual cap on tax growth after that. The vote was 117-1, with Democrats joining in.]

The fourth-floo