A tax plan with specifics
Legislators propose rollbacks and expanded exemptions.
By ALEX LEARY and JENNIFER LIBERTO
Published June 9, 2007
TALLAHASSEE -- Top lawmakers proposed the largest tax cut in Florida history Friday, a sprawling $31.6-billion plan that would trim the average bill by 7 percent this year and give homeowners significantly lower taxes in future years.
The five-year plan -- a blueprint for the special session that begins Tuesday -- was released just before 6 p.m. as a blizzard of numbers that seemed more reasonable than many had expected.
"You always fear the worst, but I'm pleasantly surprised and optimistic," said Pinellas County Commissioner Susan Latvala, who as president of the Florida Association of Counties has been a leading voice against drastic tax reductions.
"I think they listened to us, and they realize local governments provide vital services," she said.
The plan has two major components. One is a rollback of tax revenues for local governments, and the other is a sharp expansion of the state's homestead exemption.
The two pieces represent a hard-fought compromise between Senate President Ken Pruitt, who wanted to cut taxes more modestly, and House Speaker Marco Rubio, who wanted to swing a meat cleaver.
Gov. Charlie Crist praised the effort.
"It's looking very good to me," said Crist, who had earlier called for about $30-billion in cuts. "I'm very pleased and very grateful."
But the early optimism did not mask a concern, especially among business owners, that the plan is designed to give the biggest cuts to homesteaded property owners, who already enjoy exemptions under the current system.
It was commercial landowners, snowbirds and landlords who cried the loudest last summer for a break in property taxes because their bills have risen fastest. Yet, almost two-thirds of the new savings go to homesteaders.
"It seems that the leadership in Tallahassee is unable to grasp a simple principle," said 60-year-old Marty Altner of Clearwater, a landlord and tax reform advocate. "An EMS worker helps someone who is bleeding to death before someone with a flesh wound. It's idiocy."
And there were new fears Friday about cuts to local school budgets. While Pruitt and Rubio pledged to hold schools harmless in the tax deal, the proposal would cut school budgets by $7.1-billion over the next five years. Lawmakers will have to find a way to replace that money.
"This is very unsettling and gives us a queasy feeling," said Mark Pudlow, spokesman for the Florida Education Association. "It's kind of 'trust us' deal."
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The biggest challenge politically will be winning approval in the Legislature for the new "super" homestead exemption. Tinkering with the homestead exemption, available only to primary residences, means changing the state Constitution. That requires a three-fourths majority in the House and Senate, plus voter approval.
Under the proposal released Friday, the current $25,000 flat exemption would be replaced by a system that provides a 75 percent exemption on the first $200,000 in home value. The next $300,000 would get an additional 15 percent exemption. So a home valued at $400,000 would be taxed on only $220,000.
A minimum exemption of $50,000 would be guaranteed.
Longtime homeowners who already have especially low tax bills because of the Save Our Homes cap on annual assessments would be allowed to keep their existing tax bill.
But passage is hardly a done deal. If lawmakers can agree during the special session, the proposal must still get 60 percent approval in a statewide referendum, tentatively scheduled for Jan. 29, the day of the presidential primary.
The heavy focus on homestead property owners could give rise to opposition from business groups who feel slighted. Aside from the local government rollback, businesses get relatively few benefits, including an exemption of $25, 000 in taxes on equipment.
The local government tax rate rollback will be easier to enact because it requires only a straight majority vote of the Legislature before being sent to the governor. Under the proposal, property tax revenues for city and county budgets for the coming fiscal year 2007-2008, which begins Oct. 1, would freeze at the current year's level.
Each local government would also have to make additional cuts to their property tax revenues of either 3, 5, 7 or 9 percent, depending on how much they had raised taxes between 2001 and 2006.
The rollback plan would generate an average saving for all property owners of about 6 or 7 percent in the first year.
Future tax revenue growth would be capped by the rate of personal income growth and population in a city or county. City and county elected officials could break the limitations through a supermajority vote.
While supporting the homestead exemptions, Democrats said the plan could still be doomed if the school budget problem isn't fixed.
"Now the state is going to step in and do the right thing?" asked Rep. Jack Seiler of Wilton Manors. "You're asking the taxpayers to take a leap of faith."
Times staff writers Steve Bousquet and Will Van Sant contributed to this report.
Fast facts: Homestead expansion
Lawmakers are proposing a new "super" homestead exemption. Here's how it would work:
- Primary homes would get a tax exemption of 75 percent of the first $200,000 of the home's value, with a minimum exemption of $50,000.
- The next $300,000 in value will get an additional 15 percent exemption.
- Other details: homeowners whose tax bills are lower under the existing Save Our Homes program would be "grandfathered in" to keep the lower tax bill.
Fast facts: Proposed rollbacks
Lawmakers propose creating a five-tier system for rolling back city and county government budgets that follows a basic principle: The more a local government allowed taxes to rise with property values between 2001 and 2006, the steeper the rollback. Here's where local counties and cities would fare:
0 percent rollback: St. Leo, Belleair Shore and Temple Terrace
3 percent rollback: Pasco County and Safety Harbor
5 percent rollback: Hillsborough County, Indian Rocks Beach, Seminole, Plant City, Tampa, Pinellas Park, St. Petersburg, Tarpon Springs and Belleair
7 percent rollback: Pinellas County, South Pasadena, Kenneth City Dunedin, Port Richey, Clearwater and Oldsmar
9 percent rollback: Hernando County, Belleair Bluffs, San Antonio, Gulfport, St. Pete Beach, North Redington Beach, Belleair Beach, Largo, Madeira Beach, Treasure Island, Redington Beach, Redington Shores, Indian Shores and Weeki Wachee
[Last modified June 8, 2007, 23:45:57]
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