The missing factor in tax cut debate

Published June 8, 2007

So far, the property tax debate has focused largely on the amount of tax relief and what the cuts could mean for popular local government services, from parks and libraries to police and fire protection. But little attention has been paid to the impact on special taxing districts, which are not expected to be spared from tax rollbacks in a legislative package that could be released as early as today. These districts rely on property tax revenue to operate bus systems and libraries, serve at-risk children, protect the environment and battle public health threats. Many of these obligations could fall to local governments just as their own budgets are cut, and it is not entirely clear that lawmakers have anticipated all of the consequences.

To be sure, many of these authorities, such as the water management districts, could tighten their belts. The debate also could be an opportunity to discuss which taxing districts are essential and whether some of their work should fold into more efficient regional efforts. But these taxing districts perform a variety of government functions, from operating intercity transit service to protecting water supplies and rebuilding derelict, urban neighborhoods. Do we really want to impose tax cuts that reduce bus service, risk the financial viability of fire districts and undermine redevelopment efforts?

Pinellas has more than 45 different taxing authorities. Many fund public safety and social services that the average citizen might assume are funded by the general government. In Hillsborough, special districts fund children's services, mass transit, the port and the county library system. Others in Florida protect river basins, purchase environmentally sensitive land and fund public health.

Any rollback that significantly cuts their funding means these services will either lose out or fall to cities and counties, which already stand to lose significant revenue under several tax-cutting proposals. Any rollback also could hurt a taxing mechanism increasingly used by communities to rebuild their inner cities. These "redevelopment areas" channel property taxes from a specific area back into that area's needs. Nearly 180 such districts exist across the state; many bond their taxes for the long term to build major capital improvements such as roads, sidewalks and parks in hopes they attract investment to the area. Should the Legislature roll back the tax base, some local governments might have to find extra money to pay the outstanding debt.

The point is that the budget cuts being floated by cities and counties are only part of the actual picture. Already, officials say, the idea of rollbacks has shaken the bond market, which is conservative by nature, meaning that future debt to finance urban renewal will likely get more expensive. That will make it harder for cities to build their tax base, recover their losses and reduce the need for future tax increases, especially in this declining real estate market.

Lawmakers and the public need to be clear that tax relief will require sacrifice. Legislators should not underestimate the level of service the public has come to expect, and they need to be mindful that a heavy-handed approach could produce unintended consequences to taxing districts that have received little attention.