Critics say a doubling of the homestead exemption, likely to pass if it makes the ballot, threatens services or could force other tax hikes.
By JONI JAMES
Published May 30, 2004
TALLAHASSEE - It's the biggest proposed tax break you've probably never heard of.
It would slash an average of $500 from a homeowner's property tax bill and cost local governments across Florida more than $2-billion in lost revenue annually.
But it's not Florida's Republican leaders pushing this plan. Instead, it's a citizen initiative financed by a little-known Vero Beach millionaire. If it makes the November ballot, it's almost sure to pass, political experts say.
The constitutional amendment would double the amount of a home's value exempt from property taxes, from $25,000 to $50,000.
Supporters need 488,722 signatures to get on the statewide ballot. They have 40 percent of that already verified by the state.
The proposal is causing consternation among officials statewide, even among those who usually staunchly support lowering taxes.
"We're talking a $2-billion impact," Gov. Jeb Bush said last week. "There is no amount of waste, fraud and abuse at the local level or the school district level that one could envision would exist in that regard. So there is going to have to be cuts in services or higher taxes . . . I have real concerns about it."
But supporters say it's time to rein in property taxes.
Jeffrey Saull, a little-known import magnate who made money selling office chairs to Wal-Mart and candles to Target, says the plan is a logical reaction to property taxes that have grown far faster than the population because of a boom in real estate values.
An 11-year-old state constitutional amendment called Save Our Homes caps the increase in assessed value for homeowners who stay in their homes at 3 percent. Despite this, Florida's property tax revenues have nearly doubled during the same time.
Cities, counties and schools collected about $20.4-billion in property taxes in 2003, nearly double the $10.6-billion collected a decade earlier. The state's population increased 22 percent during that time.
Both Saull and his wife Karen, a Republican U.S. Senate candidate, have declined repeated requests for interviews. Jeffrey Saull's name is featured prominently on TV and radio advertisements trumpeting the plan statewide, and the couple have spent at least $1.1-million of their money on the effort.
"People in Florida are concerned about the economy and are feeling a real pinch in their family budgets since Sept. 11," Saull said in a December statement announcing his plans. "Meanwhile, government budgets continue to rise and many counties are wasting millions from the property value windfall on unnecessary projects."
Saull supporters say the $2-billion in lost revenue is a fraction of local spending.
In Hillsborough County, the anticipated $58.8-million loss is equivalent to the county's entire parks and recreation budget. The county's overall budget is $3-billion.
"You have to put it in context," said Rep. Stan Mayfield, R-Vero Beach, who supports the proposal. "Government has an irresistible appetite to spend as much money as it can get. I think some of these local governments need to go on a diet."
Saull, Mayfield and other supporters don't list the services they would cut.
Pinellas school officials say the system could lose $20-million a year, equivalent to a 4 percent pay raise for teachers.
"It's just huge," said Pinellas school superintendent Howard Hinesley. "When you consider that $20-million is about what we get each year to deal with growth, inflation and class size (reductions), I don't know how you do it."
Saull's opponents say the campaign is misleading. Floridians for Responsible Tax Reform, a Boca Raton political action committee that announced its formation Friday, contends it's likely that many local governments and school districts will raise tax rates or implement user fees to avoid service cuts.
The result: Homeowners would see far less of a tax break while a greater tax burden would shift to non-homestead property, including rental housing and commercial property.
"This should be called a tax hike on Florida's renters," said Pinellas Property Appraiser Jim Smith. "If you vote for this and you're a renter, you're just skewering your own heart."
But getting that message out will be hard, said pollster Rob Schroth of Washington and Miami. "Voters have always acted in their own best interest and left it to politicians to decide a proper remedy."
Opponents acknowledge they have an uphill battle if Saull's plan makes the ballot. "They have a 10-second argument that is easy to understand," said Slade O'Brien, a spokesman for the new group, which is expected to draw support from the business community. "To tell the other side (of the issue) can take five minutes, and that doesn't bode well when you're going to the polls."
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In 1980, voters raised the homestead exemption to $25,000. So the owner of a home assessed at $100,000 pays property taxes as if it were worth $75,000. The owner of a $100,000 home pays an average of $1,518 annually in property taxes in Florida.
Saull's amendment would lower that tax bill an average of $506.
But there's no guarantee local officials won't raise the tax rate to compensate for the lost money.
And many lawmakers are concerned about the proposal's effect on 14 small rural counties where local governments are charging the maximum tax rate allowed by the state Constitution because property values are so low. Bush and other state leaders say those counties might turn to the Legislature to help fund local services.
Mayfield says the proposal is worth doing even if tax rates rise to make up for lost revenue.
"Let's say everybody raises their rates and homeowners save just $1-billion," Mayfield said. "That's still a $1-billion of economic incentive package. They're going to buy clothes for the kids."
But most officials, including Bush, don't buy it. The runup in property tax revenue, particularly when it comes to school taxes, has allowed the state's Republican leaders to offer $10.7-billion in tax cuts elsewhere during the past six years, from sales tax holidays to corporate income tax breaks.
"You compare Florida to any other state that is like Florida in size, and elected officials here have done a very good job of limiting the size of government and spending," said Sen. Ken Pruitt, R-Port St. Lucie, who chairs the state Senate's budget committee. "If this passes, it's just going to exacerbate the fiscal problems the state is already facing."
The potential impact dwarfs other key voter mandates that Bush and other state leaders oppose. The 2002 voter mandate to reduce public school class sizes has increased operating costs by about $500-million annually. The estimated cost for the high-speed train voters approved in 2000, which Bush wants them to repeal Nov. 2, range from $75-million to $140-million annually.
But Saull and his supporters say none of that helps homeowners in a state where property changes hands constantly. While the Save Our Homes amendment has kept assessed values far lower than market forces for longtime homeowners, the cap is lifted when a property changes hands.
"Values everywhere in this state are just going through the roof," Mayfield said. "People need some relief."
