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SPECIAL REPORT: Your neighbor's tax bill

Feeling a bit burned at the beach

Even some St. Pete Beach higher-ups find taxes painful (try $12,000). Renters can't escape, either.

By PAUL SWIDER
Published March 26, 2006

ST. PETE BEACH - Taxes always seem to be the burden of the average guy, but skyrocketing property values in beach communities mean resident elected officials face the same issues.

I can certainly sympathize," said Commissioner Ed Ruttencutter, noting that his initial taxes for a duplex he bought in 1988 for $172,000 were $1,625. Now he pays $6,807.

"I see mine go up a bunch every year," he said. "The mayor is going to see it this year."

Just a few blocks down the street, Mayor Ward Friszolowski will indeed be feeling a tax crunch after moving from a Belle Vista home to a waterfront house there last year. He said his taxes for the 43rd Avenue home he shared with his wife for 11 years were about $1,600, with the Save Our Homes cap and homestead exemption, but he expects to pay eight times that on the new house of similar size.

"It almost stopped us from buying the house," he said of an anticipated tax bill of about $12,000. "Psychologically, we had to think about what we would have to give up, now and forever more, just because of our taxes."

Friszolowski bought his new house as an investment. The 1954 two-bedroom home, for which he paid $600,000, gave him a few more square feet but one fewer bedroom than his old house, built the same year. Being on the water, in sight of the Pinellas Bayway bridge and with quick access to the Gulf of Mexico meant the property would always grow in value. But it was a painful choice.

"It was our decision," he said. "We chose to move. But our tax bill in this house will be more per month than our mortgage was in our old house."

Ruttencutter has made a choice, too, one that he's considering changing. He gets the Save Our Homes benefit only on the half of the duplex he lives in. He wants to be able to rent the other half.

He already saves $4,000 a year in taxes with the tax cap, but if he alters his designation to cover the whole building, his taxes will go down even more. Doing so would remove the property's grandfathered rental status in his neighborhood, so he'd never see any rental income again. Then again, he hasn't rented the property in four years, in part because it's not as economical as it used to be.

"What my renter would have to pay for the property to pay for itself was going up faster than the property was worth to rent," he said. "I don't know what we do about that."

Ruttencutter said renters are the ones who bear the biggest tax burden in Florida, because owners of rental property get no exemption so they pass along tax increases in the form of higher rents. Buyers also get hit, as Friszolowski is, but over time they can recoup while taxes are capped amid rising values. The rapid property appreciation lately in Florida makes it difficult to make a lateral move.

"It's inherently unfair to have your neighbor receiving the same services but you're paying more in taxes," Friszolowski said of the disparities when a new owner moves in near a neighbor whose property has been capped for years. "The cap was a good idea, but 10 years ago, I don't think anyone projected it would get where it is."

Ruttencutter said the other end of the danger is that governments relying on property taxes see revenues rise while tax rates remain steady or drop, meaning elected officials can say they cut taxes even while homeowners actually pay more. Extra money goes into projects residents want, but sometimes those projects have ongoing costs that outlive a property tax windfall.

Friszolowski agrees that government has to reconcile situations like what is happening in St. Pete Beach, where a reduced tax rate this year will still increase revenues more than 15 percent.

"At some point in time, cities and counties are going to have to look at freezing or lowering millage," he said. "We'll have to look at it and say, how much do we need to keep operations going?"

Paul Swider can be reached at 892-2271 or pswider@sptimes.com or by participating in itsyourtimes.com.

[Last modified March 25, 2006, 04:27:24]