Crist's property tax plan may be dead on arrival
Critics are already lining up, saying property tax cuts would gut county and city budgets.
By STEVE Bousquet
Published January 6, 2007
TALLAHASSEE — The crowd attending Gov. Charlie Crist’s inaugural cheered with joy when he renewed a campaign promise to cut property taxes.
“Just like state government, local government must live within its means, too,” Crist said Tuesday. “We must give the people the opportunity to amend their Constitution to lower their property taxes — and we will.”
Crist wants the Legislature to amend the state Constitution to allow each county to double the homestead exemption from $25,000 to $50,000.
But for Crist, this promise will be difficult to keep. In the first week of his term, he already faces strong opposition on a signature issue of his campaign.
Resistance is mounting among counties, cities, school boards, taxing authorities and business groups. Their unified opposition could be formidable in the Legislature.
Counties say doubling the homestead exemption would so sharply cut the flow of revenue that programs would have to be cut. Rural counties are most anxious because many of them already collect property taxes at the highest rate allowed by law.
Businesses say a tax break for homeowners would worsen the inequities built into a property tax system that heavily favors residential property by capping the yearly growth of tax bills at 3 percent for homesteaded properties.
Taken together, the critics of Crist’s plan say doubling the homestead exemption would not solve the tax problem but would shift more of the tax burden to renters, snowbirds who own vacation homes and to businesses.
“When a tax reduction is done for one segment, and the need for money arises, there’s one segment that has no protection,” said Rick McAllister of the Florida Retail Federation.
Less for counties
The Florida Association of Counties says a doubling of the homestead exemption would result in a loss of $582-million to the state’s 67 counties this year, based on current tax millage rates.
That figure does not include revenue lost to cities, school districts or special taxing districts that depend on property taxes to provide an array of services from health care to mosquito control.
According to the county group, Pinellas County alone would lose $32-million this year, or about 8 percent of the total tax revenue the county expects to collect in 2007 to run county government.
“That’s a real number. That’s huge,” said County Commissioner Susan Latvala, president of the Florida Association of Counties.
Hillsborough County would have $40-million less to spend. Pasco would have $14-million less, Hernando $8-million less and Citrus $6-million less.
Instead of launching new county programs in the areas of homelessness and affordable housing, “we would have to sit down and start making cuts,” Latvala said.
Wayne Blanton of the Florida School Boards Association agrees with Crist that the $25,000 homestead exemption is obsolete. But he said property tax relief must be “revenue neutral.”
That means school boards would ask the state to tap another tax source to make up the difference in dollars lost to school districts.
“That’s going to be the Legislature’s biggest problem,” Blanton said. “How do you come up with the money to plug the hole that’s just been created by property tax relief?”
Crist acknowledged the opposition and said he is open to other tax relief ideas. But he said cities and counties spend too much money, and he is committed to lowering property taxes.
“Everybody has different ways of approaching it, but I think there’s general agreement we need to address property taxes and we need to do it quickly,” Crist said.
Some legislators say spending by local governments and school boards in Florida is out of control and that it may be time to consider imposing spending caps on them.
Then there’s the business perspective:
Florida TaxWatch, which is funded in part by grants from businesses and is seen as fiscally conservative, called doubling the homestead exemption, by itself, “politically expedient.”
A December TaxWatch report said that even though the homestead exemption has remained unchanged since 1982, it makes no sense to increase it again with the 3 percent, Save Our Homes cap on the books, because it would only shift the tax burden to others. (That report also described “profligate” growth in spending by cities and counties in Florida: a 108 percent increase from 1994 to 2004.)
TaxWatch suggested limits in the amount of revenue local governments can collect. The state Constitution already limits counties’ property tax collections for operating budgets to 10 mills, or $10 for each $1,000 of assessed property value.
Leading legislators say any proposed changes in the homestead exemption must be considered as part of a broader reworking of the property tax structure in Florida.
“Any property tax we do pass must be two things: comprehensive and expedited,” said House Speaker Marco Rubio, R-Coral Gables.
Open to discussion
Next week, legislators will announce plans to hold hearings across the state in the coming weeks to solicit public opinions on how to improve the property tax system.
“Everything is on the table,” said Sen. Mike Haridopolos, a Melbourne Republican who chairs the Senate Finance & Tax Committee.
Haridopolos said he’s alarmed by the dramatic surge in local government spending in recent years, and said revenue or spending caps should be considered.
But for the moment, the skepticism that surrounds this top priority of Crist has yet to develop into wide-open criticism. That is in part because no one wants to be viewed as an obstructionist to the new governor in the first week of his administration.
“We want to be at the table with the Legislature and the governor,” Latvala said, “talking about tax reform.”
Times staff writer Will Van Sant contributed to this report.