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Local tax cap effect unclear
Area officials still aren't sure exactly how taxes will be calculated.
By WILL VAN SANT and JENNIFER LIBERTO
Published June 16, 2007
The wealth of local governments and property tax bills in Florida has until now been tied to the ups and downs of the real estate market.
But after Thursday's vote by the Florida Legislature, that market will play a less decisive role.
A provision of the massive property tax overhaul caps the annual growth of local government property tax collections. The limit will take full effect in 2009.
The cap could prove to be the most significant part of the Legislature's overhaul, particularly if voters reject a new homestead plan on the ballot in January. The cap will limit local governments' taxing authority indefinitely.
But its development behind closed doors and its rapid passage in this week's three-day special session has left little room for public scrutiny.
On Friday, local government leaders who will have to deal with its effects were left struggling to understand the measure.
"That's the one we still have a lot of questions ourselves on, " said Pinellas County budget manager Jerry Herron. "We are a little bit up in the air about how this is being calculated."
With other effects of the legislative package imminent - including mandatory tax cuts in November - some local officials said they had not yet had the time to turn their attention to the cap.
"The immediate impact, " said Tampa finance director Bonnie Wise, "that's my main priority at this time."
Hillsborough County officials don't think the new provision will mean much for them because they've already capped themselves. At the urging of County Commission Chairman Jim Norman, Hillsborough leaders voted earlier this year to tie their annual spending increases to population growth and inflation.
Bob McKee, the state Revenue Department's chief economist, offered an explanation of the cap and its impact on Florida communities, but he cautioned that the bill was not yet available in final form to review.
At its core, the cap builds on a community's property tax rollback rate, which is the millage rate needed to collect the same amount of taxes year to year despite property value increases.
Under the Legislature's plan, the cap would equal that rollback rate applied to the tax roll, including construction, plus an adjustment for annual personal income growth statewide, McKee said.
If personal income growth was 3 percent, for example, the amount a community could collect would increase 3 percent.
McKee said the cap was designed to allow areas with lots of development the necessary tax income to deal with infrastructure and service demands.
Senate Majority Leader Dan Webster said the cap would especially benefit commercial business owners and others who weren't given as much attention as homeowners in the overhaul package.
"The cap gives predictability, " Webster said. "Even though we didn't give a huge cut to commercial property, we gave them predictability. There will be a reduction."
While Webster sees virtue in predictability, local government leaders oppose the cap concept, seeing it as a bar to taking on long-term financial obligations.
"If opportunities come along to make a large investment in land for a new hospital or a new park or a new jail space, local government's hands are tied by this cap, " said Cragin Mosteller, spokeswoman for the Florida Association of Counties.
Times staff writers Mike Brassfield, Bill Varian and Janet Zink contributed to this report. Will Van Sant can be reached at email@example.com or 727 445-4166.