Property Tax Relief - Yes or No?

By Sid Riley

Some Direct Questions and Answers on the Property Tax Amendment

In a few days voters across Florida will step into voting booths and make a decision which will dramatically impact several aspects of living in our state. In discussions in coffee shops and on the street we hear differing opinions, pro and con, on this complex legislation that will appear on the January 29 ballot.
We know property owners across the state are suffering from property taxes which escalated dramatically during the nation wide housing boom experienced during the years of 2002-2006. County and municipal governments suddenly found themselves “flushed” with windfall revenues as the assessments soared and tax monies rolled in.
This heavy property tax burden combined with dramatic increases in insurance costs and a deluge of disastrous mortgage failures caused by variable rate loans that created monthly payments that surged upwards as the Federal Reserve forced interest rates to rise all contributed to the sudden and disastrous failure of the housing market. Governor Crist as part of his campaign for his position promised to get property tax relief legislation passed for Florida’s property owners. This amendment is the result of his effort.
Confusion around this new amendment was increased when the Legislature initially came forward with an approach which made the issue an option for taxpayers to choose or not choose, created a situation where the 3% assessment increase cap on homestead properties would be lost if the increased deduction was chosen, and had no provision for tax relief for property owners when the property was not eligible for homestead classification. A state judge ruled that the original proposal was improperly worded and could not be placed on the ballot. The legislature then revamped the initial approach to finally create the amendment now before the voters.
In a discussion with Sharon Cox, Jackson County Property Appraiser, we attempted to ask questions which would create a clearer, better defined picture of the features of the proposal so our county voters can make a better informed decision next week.

Question: If the amendment is passed will property owners still have the option to keep their existing level of exemption, or will every eligible piece of property automatically be put in the “double homestead” program?

Sharon Cox: All eligible properties will automatically be under the new system. The existing homestead exemption will be applied to the first $25,000 in assessed value as under the old system, then the second $25,000 in value up to a total assessment of $50,000 will be taxed, and then for properties with assessed values of over $50,000, the second (new) homestead exemption up to an additional $25,000 will be applied. It should be noted that in Jackson County, of the 11,000 homesteads now on our books, only 5,100 of these would have enough value to create any savings in taxes from the new rules. It should be noted the second homestead exemption does not apply to the school district portion of the property tax computation. I estimate that the average savings per household for county residents would be approximately $183.00.

Question: If a property owner qualifies for the new “second exemption” of an additional $25,000, will they lose the 3% maximum increase per year protection they now have on future assessment increases under the “Save Our Homes” law?

Sharon Cox: No, the 3% annual cap on increases in assessed value will remain in effect. The original legislation which was considered did create a loss of this cap, but the new amendment retains the protection. This new legislation also provides for the transfer of this cap to any new homestead eligible property the homeowner moves into in the future, up to a $500,000 CAP transfer. Starting from 2007, homeowners would have up to two years after selling their original home to transfer the cap to a new property.
Additionally, the new legislation provides for a 10% cap on non-homestead eligible property owners who fill out the necessary applications and meet designated qualifications. This exemption would not apply to the school district portion of the property taxes.

Question: What about the tangible taxes now assessed on business equipment.

Sharon Cox: For the first time, this new legislation would provide a $25,000 exemption for those commercial operations which are required to complete a Tangible Personal Property Tax Return.

Question: How much revenue will county and municipal governments lose if this amendment is approved?

Sharon Cox: At this time I can only make an estimate of the net impact. I only have data to assist me in making an estimate from two of the four revenue generating areas impacted by this law. From available data it appears the combined impact of the proposed amendment would be a reduction of just under $1.5 million dollars for the county government. The additional reductions at the municipal level would vary relative to the millage rate for each municipality.

(Editor’s Note: This amount of reduction in revenues would put the tax rolls at just under the 2006 revenue level.)
Some property owners argue that this new legislation does not go far enough in reducing the burden of government on property owners, and they plan to vote no in order to force our legislators to come up with more meaningful reductions. Others feel we should take what we can get, and then try to get more in the future.
Some people fear that the reduction in revenues will force governments to reduce services needed by the public. Others argue there is enough fat and waste in the budgets of all levels of government to absorb this slight reduction.
We hope this presentation helps you make your choice on Tuesday, January 29.