Print

Email story

Comment

Email editor

Politics

Senate unveils property tax cuts

State lawmakers set up a multibillion-dollar showdown with the House.

By ALEX LEARY
Published April 13, 2007

TALLAHASSEE - The Florida Senate on Thursday proposed cutting property taxes by $11-billion over the next five years by forcing local governments to slash budgets.

A competing plan in the House would cut a lot deeper.

The Senate plan does not eliminate existing property taxes on owner-occupied homes, as the House plan does. Instead, senators want to force cities and counties to roll back their property tax base to 2005 levels. The House would roll them back to 2001.

In addition, the Senate plan would:

- Allow homeowners to carry the Save Our Homes benefit to new dwellings anywhere in the state.

- Increase the homestead exemption to $50,000, for first time home buyers only.

- Exempt the first $25,000 of business equipment from a tax on tangible property.

- Limit commercial property assessments to current use, not its highest market value.

Senate President Ken Pruitt called it a "a thoughtful, responsible and bold plan - a plan to bring measurable tax relief to property owners, to ease the tax burden for businesses and assure the American dream of home ownership is attainable.

"To be clear," he concluded, "this was no easy task."

It is about to get much harder.

Session end nears

With a May 4 end to the 60-day session looming, the Senate and House now need to work out the vast differences in their plans and arrive at a compromise that will satisfy Gov. Charlie Crist.

The House calls for a deeper rollback, trimming up to $6.3-billion next year from local governments, and eliminating all property taxes on primary homes, in exchange for a 2.5 percent increase in sales tax.

The Senate rollback next year would cut just over $1-billion. That would result in a savings to the average taxpayer of about 6 percent, according to some estimates. The House claims its plan would cut the average bill by 19 percent.

Both plans would exclude schools from the rollback.

House Speaker Marco Rubio and other key Republicans had little direct comment on the Senate's ideas.

"We want people to get a property tax bill they can afford to pay," Rubio said.

For some taxpayers demanding dramatic relief, the Senate plan came as a big disappointment.

"What's it going to save us, $200 a year? That's nothing," said Sergio Martinez, 40, of Miami, who was one of a handful of homeowners who met with Rubio on Thursday.

The House plan would eliminate Martinez's $6,900 property tax bill by increasing the sales tax.

"It's a lot fairer because everybody pays the sales tax," Martinez said.

But Rubio does not have even the full support of House Republicans for his tax swap and local governments have mounted significant opposition.

The Senate proposal, by contrast, has bipartisan support. It also got cautious encouragement from Crist, who promised during the campaign to make Save Our Homes portable and to double the homestead exemption.

Local government was also warmer to the Senate plan.

"We don't know all the nuances, but we're cautiously optimistic," said Pinellas County Commissioner Susan Latvala. "It's certainly a step in the right direction."

Local cutbacks

The rollback would cut, on average, 10 percent of local property tax revenues. The Florida Association of Counties, of which Latvala is president, said it could live with that kind of cut.

In Pinellas, the budget would take a $49-million cut, she said.

"We won't die, but the public will still feel the cuts," she said, adding code enforcement officers and animal control could be trimmed. The House plan would cut $341-million from the Pinellas budget.

Many questions remain about the Senate plan as financial impacts were not provided other than the $11-billion estimated savings. A workshop this morning is expected to hash out details.

Here is what known about various components:

After rolling back tax levels to 2005, the Senate plan would implement a one-year freeze on any increase. Then future budget growth would be tied to population and family income growth.

The Save Our Homes portability would allow a person to carry savings to new dwellings, but the annual assessment could to up to 10 percent, not 3 percent. Over time, as the savings accumulated, the assessment cap would fall back to 3 percent.

Sen. Steve Geller, the Democratic leader, said the higher assessment is necessary to counter constitutionally issues that have been raised by plans for straight portability since it gives an unfair advantage to one class of homeowners.

Senators are calling the $50,000 exemption for first time home buyers "Homestead Plus." It would gradually reduce back to the standard $25,000 as the Save Our Homes benefit kicked in.

The Save Our Homes and homestead exemption change would require a constitutional amendment. Senate leaders are unsure whether a statewide vote could be held this fall, delaying the full benefits of the plan. The House plan has similar challenges.

The Senate plan has various other provisions. One calls for affordable housing complexes to be taxed based on the rent collected, not market value. Similarly, commercial property would be assessed on what is currently permitted for, not what its potential use would be.

"That's 100 percent fairer. It's wonderful," said Katrena Hale-Claver, owner of Sand Glo Villas on Indian Shores. Taxes on her small resort have skyrocketed to $60,000 annually in a few years because, she said, the appraiser told her the property could be used for a high-rise condominium.

The plan also calls for a "Taxpayer Bill of Rights," which calls local governments to list expenditures on the Internet. It would also give people who lose homes to eminent domain the ability to take their Save Our Homes to new property, and it seeks to improve the citizen appeals process for property assessments.

Times capital bureau chief Steve Bousquet contributed to this report.

The property tax plans

THE SENATE

Total savings: $11-billion over five years

-Roll back property tax revenues for cities and counties to 2005-06 levels, where they would freeze for one year. After that, budgets could grow with the population.

-Double the homestead exemption to $50,000 for first-time buyers but then cut it half when homeowners a "reach significant levels of savings" under Save Our Homes.

-Allow homeowners to take the tax savings they have built through Save Our Homes to a new property. The new home value would rise 10 percent a year until "normal Save Our Homes benefit is reached."

-Exempt the first $25,000 of business equipment from tangible property tax.

-Limit commercial property assessments to permitted use, not its highest market value.

THE HOUSE

Total savings: Up to $25-billion over five years

-Voters in each county would choose: Either eliminate property tax on primary homes and raise sales tax 2.5 percent, or roll back tax revenues for cities and counties to 2000-01 levels. Budgets could grow with the population.

[Last modified April 12, 2007, 23:50:36]