Lawmakers pass property tax measure

By MICHAEL PELTIER
Monday, October 29, 2007

TALLAHASSEE — Responding to skyrocketing coastal property values and taxes, Florida lawmakers Monday passed a proposed constitutional amendment backers say would cut local property taxes by $12.5 billion over the next five years.

After 11 days of number crunching and posturing, House and Senate members agreed to double the state’s $25,000 homestead exemption and allow homeowners to take tax cap benefits with them when they move.

Further, lawmakers agreed to expand the tax cap concept by limiting assessment increases on commercial structures, vacation homes and investment property to 10 percent a year.

But in a late-filed counter proposal, the Senate stripped other House-backed provisions affecting low-income elderly residents, first-time home buyers and waterfront businesses.

The omissions prompted many to criticize the plan as an opportunity lost, but others saw the compromise measure as a glass half full.

Allowing homeowners to take their Save Our Homes savings with them, a concept known as portability, would help jump-start the real estate market, a major economic engine. Backers also pledged to continue reform efforts.
“Tax reform and relief is not over. We’re coming back next year and hopefully the year after that,” said Rep. Nick Thompson, R-Fort Myers. “We can always come back and address this issue. And I intend to and I hope you are too.”
Others, however, said the hit to schools and other scuttled provisions were a rallying cry for many who said the taxpayer benefits didn’t justify the cuts to schools.

“This is not even close to being good enough,” said House Democratic Leader Rep. Dan Gelber, D-Miami Beach.
Voters must approve any changes Jan. 29, when members of both parties also cast ballots in the state’s presidential primary election.

Citing polls and facing a requirement that any proposed constitutional amendment must be approved by 60 percent of voters, leaders said a more comprehensive package of savings wouldn’t pass. Instead, lawmakers accomplished what they could.

The plan increases the homestead exemption from $25,000 to $50,000. The additional exemption would not apply to taxes levied by public schools, which are required under another constitutional amendment to reduce class size.
Based on 2006 tax levies, Collier County homeowners would save an additional $140 a year. Lee County homeowners would annually save about $130.

Moreover, the proposal expands the popular Save Our Homes measure, allowing homeowners to take accrued savings with them if they purchase a new, more expensive home.

A homeowner whose current home is now worth $300,000 but is paying taxes on $200,000 because of Save Our Homes, can take that $100,000 cushion with them to lower their taxable value on their new home..
A person who buys a less expensive home will carry a portion of the tax savings with them.

Sen. Burt Saunders, R-Naples said the relief package comes at a critical time as the Florida real estate market suffers from stagnant housing stock and a foreclosure rate three times the national average. Allowing portability will help, but lawmakers must do more. “There will be other things coming down the pike in future legislatures, but this package is very good,” Saunders said.

The final Senate version removed benefits to first-time home buyers and a House-backed plan to base homestead exemption on a county’s median value home that would have provide more relief to Southwest Florida homeowners.
The portability provision by itself was enough for many lawmakers to support a plan that was much less aggressive than previous plans.

“The baby in this bathwater is portability and if we don’t deliver portability and some tax reforms to the citizens of Florida they’re going to be upset, because it’s what we need to jump-start this economy,” said Rep. Garrett Richter, R-Naples. “This is very mediocre, but it’s better than nothing.”

The tax package, which is expected to save homeowners $240 a year, would cost school districts more than $2 billion in lost revenue over the next five years.

Sen. Dave Aronberg, D-Greenacres, said the ability of homeowners to purchase new homes would help jump-start the real estate market and by doing so will further insulate schools from lost revenue.
“I think this bill will pay for itself,” Aronberg said.

Contact this correspondent at mpeltier1235@comcast.net.

Tax proposal Q&A

HOMESTEAD EXEMPTION

Q: How would the plan affect my homestead exemption?
A: The plan doubles the homestead exemption to $50,000. The second $25,000 exemption wouldn’t affect school tax collections.

Q: How much would I save?
A: Based on 2006 tax levies, Collier County homeowners would save an additional $140 a year. Lee County homeowners would save about $130 yearly.

Q: Are there additional benefits for a first-time homebuyer?
A: No

Q: Are there any additional benefits for low-income, elderly homeowners?
A: No

Q: Does the plan provide additional tax breaks for affordable housing?
A: No.

PORTABILITY

Q: Does the plan expand Save Our Homes?
A: Yes. The plan would allow homeowners to take their Save Our Homes with them when they move within Florida. For homeowners looking to purchase more expensive homes, the plan would allow them to take all the tax savings with them.

Q: What if I want to purchase a less expensive home?
A: The plan would allow you to take a portion of the Save Our Homes savings with you. The level of savings you could take with you would be based on the percentage of your current Save Our Homes savings compared with your home’s market value.

Q: I purchased a new home in April. Does the portability provision help me?
A: Yes, the proposal would be retroactive to Jan. 1, 2007.

Q: What does the proposal do for commercial property owners?
A: The proposal would cap tax assessment increases to a maximum of 10 percent a year.

Q: What does the proposal do for businesses?
A: The plan would provide a $25,000 exemption for tangible personal property. The exemption would eliminate the need for about 1 million business owners to file.

Q: I own a second home, what does the plan do for me?
A: The proposal caps assessments at a 10 percent increase a year.

A DONE DEAL?

Q: What happens next?
A: The proposal will be included on the ballot Jan. 29, when voters go to the polls in Florida’s presidential primary. To go into effect, the proposal must be approved by 60 percent of voters at the polls.

— Compiled by Correspondent Michael Peltier