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Davis would spread property tax cut

The Democrat’s plan is in sharp contrast to that of Charlie Crist, which would benefit only homeowners.

By ALEX LEARY and JONI JAMES
Published October 3, 2006


TALLAHASSEE — Democrat Jim Davis unveiled a plan Tuesday for a broad-based, $1-billion property tax cut, hoping to help his bid for governor by tapping into growing outrage among property owners.

The congressman’s plan, coming months after Republican Charlie Crist proposed a $2-billion property tax cut, would benefit all property owners, from businesses to homeowners, by cutting the tax rate for schools. It could take effect as early as next fiscal year.

Davis said state government would compensate schools by paying its “fair share,” reversing a trend that has shifted more of that burden to property owners.

He also wants to cap — at 10 percent — how much non-homestead property owners will see their individual tax bills increase each year. The plan is similar to, but not as generous as, the annual 3 percent cap provided under the Save Our Homes amendment for homestead property owners.

Davis’ plan is in sharp contrast to that of Crist, which would benefit only homeowners and would require a voter-approved constitutional amendment, delaying relief.

“There is such a clear choice between me and Charlie Crist,” Davis said during a news conference coordinated with the release of his first general election TV ads, two 15-second spots that cover education and property taxes.

Crist, the state attorney general, called Davis’ plan “too little, too late,” adding, “I’m glad he’s finally decided to talk about cutting taxes after a career of raising them.”

The Republican’s plan, which he says would cut $2-billion in taxes, calls for doubling the $25,000 homestead exemption for owners who live in their house. Crist also wants to allow homestead home­owners to transfer tax savings accumulated under the Save Our Homes amendment to new homes.

Save Our Homes caps the growth on taxable property value to no more than 3 percent a year for homesteaded homeowners.
Neither candidate has detailed exactly how they would pay for their tax breaks. Davis acknowledged Tuesday that he might have to raise other taxes to fund his plan, saying he would look at billions in “special interest” tax cuts enacted in recent years.

 He did not mention the option of cutting state spending in other areas. Crist’s plan would come at the expense of local governments and schools. He has not said what services he would recommend those governments cut.

Davis’ plan takes a cue from Gov. Jeb Bush, who pushed unsuccessfully last legislative session to rollback the state’s property tax rate for schools to save property owners $570-million. But lawmakers, led by Senate Republicans, rejected the tax cut, providing a record increase in school funding this year.

Bush stopped short of embracing either Davis’ or Crist’s ideas Tuesday, instead commending both candidates for talking tax cuts. And he suggested they follow his latest tax effort: studying how to overhaul the state’s entire property tax system.

“The best thing to do is a thorough review of the property tax situation, commercial and residential,” the governor said. “Look at the impact of economic development on cost for homeowners. Consider the proper role of local government in society today. Is it appropriate for them to have double-digit increases in spending?”

Studies, however, don’t play well on the campaign trail, and Davis suggested Tuesday that he might look to Bush’s own tax cuts over the past eight years to fund his plan, including the intangibles tax Bush finally succeeded in phasing out this year.

But Davis’ plan marks a reversal of sorts. During his primary campaign against state Sen. Rod Smith, D-Alachua, Davis said reinstating the tax was not politically feasible. Smith had proposed doing so to increase teacher pay.

As governor, Davis would have a tough time getting the Republican-controlled Legislature to reinstate the tax. He played that reality down Tuesday, saying widespread discontent among taxpayers would spur lawmakers of both persuasions to act.

Davis also took aim Tuesday at the estimated annual $700,000 tax break awarded to Pinellas-based direct mailer ValPak and similar businesses, and said he would seek to curtail abuses of the state’s “greenbelt law,” which allows for property tax breaks on land designated for agricultural use. Those breaks were estimated to amount to more than $1-billion this fiscal year, according to state economists.

Davis said he supports continuing the state’s retail sales tax holidays for back-to-school supplies, hurricane preparation and energy-efficient products.

His plan brought mixed reaction  from those who argue the Save Our Homes amendment has shifted too much of Florida’s tax burden on non-homestead property owners.

Kurt Wenner, senior research analyst at Florida TaxWatch, said the plan seemed feasible and that Davis’ broad approach was best. “The problem with property taxes right now isn’t homestead owners,” he said. “It’s everybody else: second-home owners, business owners, landlords.”

Bob McKee, fiscal policy director for the Florida Association of Counties, was more cautious. Some of his members have expressed concerns that Crist’s plan would require them to cut vital services, including law enforcement. But Davis’ proposed 10 percent cap on increases on non-homesteaded property could also negatively impact local governments, he said.

Alex Leary can be reached at aleary@sptimes.com.