Will tax values' hike bring tax cuts?
Soaring property tax values in Hillsborough last year present a challenge to local leaders.
By BILL VARIAN
Published July 1, 2006
TAMPA - Hillsborough County taxable property values climbed 22 percent last year, the greatest increase in at least a decade, according to preliminary estimates from the Property Appraiser's office.
The surge is driven largely by rising purchase prices for existing homes and businesses, along with the continued boost from new construction, according to an analysis by the office.
It follows five years of back-to-back double-digit or near double-digit increases in value, as well as taxes for property owners already having to cope with steep hikes in gas, home and insurance prices.
So government officials face the prospect this summer of returning some of that money to taxpayers in the form of property tax rate cuts, or using the windfall to meet the county's own rising costs while playing catch up on pressing needs, such as improving transportation.
"I challenge the taxing authorities during this period of time when there is such an increase in revenues to not look for ways to spend the revenue," Hillsborough County Property Appraiser Rob Turner said Friday, "But to look for ways to significantly reduce expenditures."
The resulting increase in property taxes for local government in Hillsborough is staggering. Hillsborough can expect an extra $145-million in property tax revenue compared with last year, even after a proposed one-tenth mill decrease. The city of Tampa is expecting an additional $28-million.
County Commissioner Brian Blair has proposed cutting the tax rate by another one-tenth mill, with each one-tenth representing about $7-million. He would like to see another $10-million dedicated annually toward road work.
"It's unprecedented, this amount of money," Blair said. "In this time of unprecedented growth, with as much money as we have, it's time to help the people."
Even with the proposed cut, the budget commissioners are considering would boost county spending 10 percent next year.
Tampa City Councilman Shawn Harrison sought a similar cut as Blair's when the city's budget was presented last month. That was rejected by a majority on the board, some of whom said the cut would result in very small returns for taxpayers at a time when the city is facing higher insurance costs and other challenges.
Harrison heard the latest numbers Friday, showing city property tax values climbed 21 percent, and was floored. So he plans to bring his proposal back as the budget is negotiated through the summer.
His tax rate cut proposal would cost the city $2.8-million in revenues, he said.
"Can we not give 10 percent of that found money back to the taxpayers?" asked Harrison, who is running for another seat on the council after being forced by term limits from his current one. "I think it's imperative that we have this debate. I'm not going to go quietly on this issue."
Doug Johnson said even that would be a token amount. An architect, he owns a 3,500-square-foot office building with three others in the Channel District. Two years ago he said his taxes climbed three-fold to $10,000.
He called the county to complain. The response he got was that the county had cut the tax rate, as it has for several years. But Johnson said the small cut to the rate hardly offset his skyrocketing bill.
"It's a bunch of lip service," Johnson said. "It's going to reach a point where Florida becomes an unattractive place to move because of the property taxes and property insurance."
In the quickly developing unincorporated parts of the county, the increase in taxable value of property climbed 23 percent. It's an exceptional jolt even in boom times. Since 1999, property values across Hillsborough County have climbed 78 percent.
Property taxes have climbed with them, except for those who have lived in the same home and claim a homestead exemption, which keeps their tax hike capped at no more than 3 percent a year. Even with the county's proposed tax rate cut of .2-mills, a person living in a homestead protected house will pay more in taxes, since all other local governments propose keeping their tax rate the same.
The owner of a home located in Tampa valued at $275,000 this year, who claims the $25,000 homestead exemption and whose tax increase is capped at 3 percent, will still pay an additional $165 dollars in taxes next year due to rising values. The proposed county tax rate cut would shave $50 from that.
Business owners or people who own homes they don't live in full time will get much higher tax bills.
Should Hillsborough County commissioners vote to cut more?
That's a political question, says county Management and Budget Director Eric Johnson. But he said there are trade-offs.
"The challenge that you have is that, outside of a short time period each year when people become particularly sensitized to taxes, all you hear are rest of the year are continued demands for better service," said Johnson.
City of Tampa Finance Director Bonnie Wise told council members last month that the city must spend $1.1-million more next year for insurance on its buildings and get considerably less coverage, requiring that more money be set aside in the city's rainy day fund.
The rising cost of gasoline will cost the city $1.8-million more than last year to keep its fleet of police cars, fire trucks and other vehicles running, Wise said Friday. The city's situation is further complicated because $4.5-million of its $28-million windfall can be spent only inside several redevelopment zones, mostly near downtown and central Tampa. And the cost of construction is rising sharply.
"As we build our budget, we look at the needs of the city," Wise said.
Dominic Calabro, president of the statewide fiscally conservative watchdog group Florida TaxWatch, said local governments around the state have not properly used these boom times to ease the burden on taxpayers. At 21 percent growth, Hillsborough County government is spending at six or seven times inflation. "It's phenomenal and unsustainable," Calabro said.
He applauds an executive order by Gov. Jeb Bush creating a tax force to examine the state's property tax structure and ways to improve it. Calabro said the current system, which shields homeowners who stay put from a property tax bill that rises with their homes true value, also acts to keep them from challenging government spending.
Property Appraiser Turner said that spending should be challenged. Since taking office in 1990, he said he has cut the number of full-time employees from 198 to 155. His proposed budget for next year includes a 2.1 percent increase in spending, largely for raises.
"We're finding ways to do more with very nominal increases in our budget," Turner said. "Those are the sort of steps I think the taxing authorities need to look for in order to help property owners in our community."
[Last modified July 1, 2006, 07:36:43]
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