On Day 3, a tax deal

A rate rollback is certain and a vote on bigger homestead breaks will come in January.

Published June 15, 2007

TALLAHASSEE -- Reacting to public outrage over property taxes, the Legislature ordered cities and counties Thursday to roll back tax rates and offered voters a chance to award themselves a much larger homestead exemption.

The special session on property taxes ended quickly -- just three days after it opened -- and on the same harsh note of partisan dispute that characterized the policy discussion of recent weeks.

Republicans declared victory with "the largest tax cut in history" at $31.6-billion over five years, which Democrats decried as an attack on school budgets. The brevity of the debate did nothing to bring the two sides together.

Although Republicans and Democrats were unified on the rollback plan, they split sharply on the so-called superhomestead exemption, which would replace the Save Our Homes cap with a steep reduction in the taxable value on primary homes.

Not a single Democrat in the House or Senate voted for the new homestead exemption, but they joined Republicans in voting to put the plan on the ballot for voters to consider Jan. 29.

"Today millions of Floridians stand on the verge of knowing they will pay lower property taxes next year than they are paying right now," House Speaker Marco Rubio proclaimed.

Yet the normal, celebratory mood at the end of a session was conspicuously missing as lawmakers met outside both chambers. The few Democrats present lingered on the sidelines. Even victorious Republicans talked about what wasn't done.

"It's not what I want, as much as I want. I'm still hungry, and I believe many other taxpayers in the state of Florida are still hungry," said Sen. Ronda Storms, R-Brandon. "But I believe this is a good thing and it moves us forward."

It didn't come easily. Details of the tax proposal came out only last Friday, giving opponents of the spending cuts that would be demanded by the new tax structure ammunition to argue against the plan as a rush job. They roared into Tallahassee on Monday and controlled much of the public debate with protests, marches and rallies.

From the outset, the "superhomestead" exemption was in peril. Democrats locked onto a cut in school spending that the expanded exemption would bring, and some Republicans worried that the new deal wasn't good enough for homeowners who like the assessment cap of Save Our Homes.

A late-night compromise rescued the plan. The legislation that was approved gives homeowners the freedom to keep Save Our Homes, which caps annual assessments at 3 percent, rather than switch to the new superhomestead exemption.

The original version would have forced homeowners to surrender their Save Our Homes cap if the new tax structure gave them a lower tax bill.

"People were resisting because they wanted to hold on to Save Our Homes," said Senate Majority Leader Dan Webster, R-Winter Garden. "So we gave them that choice."

The new homestead exemption is now a proposed amendment to the state Constitution, which is subject to voter approval. If approved by a 60 percent majority, it would replace the current $25,000 exemption with a tiered percentage approach.

The first $200,000 of value would get a 75 percent exemption, then property values between $300,000 and $500,000 would get an additional 15 percent exemption. Homes valued at $500, 000 and up would get a maximum exemption of $195,000.

There also are benefits for low income seniors, affordable housing and waterfront property.

Legislative budget experts had projected the savings of the new homestead plan at $16-billion, but that amount could be smaller now that homeowners are free to keep the Save Our Homes plan. It's possible that some residents would choose to keep Save Our Homes even if their immediate tax bill is higher, on the belief that a 3 percent cap on assessments is a better long-term tax advantage.

That would ease the burden on cities, counties, schools and other taxing districts that face life with less revenue. But it did nothing to allay Democratic concerns that public school budgets will suffer from a $7.1-billion reduction in funding.

"It's not just a hole, it's a Grand Canyon," said Rep. Jack Seiler of Wilton Manors. "It's a $7.1-billion Grand Canyon that remains open."

Republicans vowed to adequately fund education.

* * *

Far less contentious, among lawmakers at least, was the rollback and cap of local government spending. The bill passed 117-1 in the House and unanimously in the Senate.

Cities, counties and special taxing districts will be required to freeze their tax base at the current fiscal year, with an allowance for growth, then cut an additional 3, 5, 7 or 9 percent based on previous tax increases.

The total cut will be $15.6-billion, though local governments could vote to break the cap. Savings will be reflected in November tax bills. The average homeowner will save $174 while businesses could get close to $1,000 off. The savings increase with time.

"Services are going to be dropping like a rock," said Pinellas County Commissioner Susan Latvala, who is outgoing president of the Florida Association of Counties, which had lobbied for smaller cuts.

With no way to stop the rollback and cap, local government officials and other interests will turn attention toward defeating the constitutional amendment on Jan. 29.

Local government leaders gathering now in Orlando for a Florida Association of Counties' conference say they plan a public campaign to get voters to kill the constitutional amendment.

"Our message will be about home rule," said Chris Holley, the association's executive director. "They are pre-empting local government authority. And that's a huge issue for us."

Business groups have been fairly quiet about the deal because it provides far more benefits to homeowners, an already protected class. While the Florida Chamber of Commerce and other groups said they were hoping for more relief, Republicans said the cap on local government tax collection provides significant relief.

* * *

The debate over taxes began even before the regular session opened in March. Rubio touted a plan to swap property taxes on primary homes for a 2.5 percent increase in the sales tax. Senators flatly opposed the tax swap and proposed modest cuts.

Negotiations halted just before the session ended in early May and talks were conducted in secret among a few top Republicans.

Crist, who joined in the post-session gathering, rebuffed criticism that the plan was rushed through, noting the public meetings held across the state.

"All of you, I'm very, very proud of you," he said. "I know there were trials and tribulations along the way ... but that's part of this process.

Turning to Rubio and Senate President Ken Pruitt, Crist said, "The thing that gives me the greatest comfort about this is that we've done half of it and the people get to finish the job Jan. 29."

Times staff writer Will Van Sant contributed to this report.