Politics

Plan's survival turns on Save Our Homes

Out of legislative necessity, the session's sacred cow becomes a voters' matter of choice.

By ALEX LEARY
Published June 17, 2007

TALLAHASSEE - In the midst of last week's property tax debate, Sen. Daniel Webster said what few others dared to say.

Save Our Homes, the wildly popular law that keeps tax assessments on homes from rising too fast, "is a failed experiment, " he proclaimed. "It has hurt our economy and it's going to hurt our future."

But a few hours later, in a chilly budget office on the second floor of the state Capitol, Webster set out to save Save Our Homes.

Promising to give Save Our Homes a future was the only way to get approval for the homestead exemption program Webster and others in the GOP hope will replace it.

Lawmakers rewrote Florida's homestead exemption law Thursday, but because of that final compromise, nobody in Florida has to use it. Anyone who wants to keep Save Our Homes will be free to do so, even if their tax bills would be lower with the new plan.

In the end, Save Our Homes proved more powerful than the Florida Legislature.

"They tried to make Save Our Homes a whipping boy and they got whipped," said Lee County Property Appraiser Ken Wilkinson, who championed the program in the early 1990s. "I couldn't be prouder."

Webster, one of the longest serving lawmakers in Tallahassee and one of the most respected, made a practical political calculation.

Forcing 70 percent of current homeowners to give up Save Our Homes, which becomes more valuable to homeowners with each passing year, jeopardized passage of the replacement plan.

Giving residents the option cleared the way for final passage of this constitutional amendment, which will go before voters on Jan. 29.

"I was torn about it until that issue was resolved," said Sen. Burt Saunders of Naples, one of several Republican lawmakers whose uneasiness threatened to derail last week's special session.

If voters approve the deal -- and there are signs they won't -- Save Our Homes would still face extinction. Although residents would be allowed to keep Save Our Homes, new homeowners couldn't enter the program and would instead have to take the standard exemption worth up to $195, 000. Anyone who moves loses the old benefit.

Ultimately, Save Our Homes, and its unintended consequence of protecting longtime homeowners so well that everybody else pays extra, would die out.

"Eventually it still works," said Webster, R-Winter Garden, "but it's going to take longer."

How much longer depends on how many people elect to stay with the assessment cap. Although legislative budget experts determined that 73 percent, or 3.2-million homeowners, would save more under the exemptions right away, the long-term tax advantage is less clear.

Local government tax collections would be capped, providing some relief but nothing as generous as the 3 percent assessment cap that has inoculated beneficiaries from the huge tax spikes seen by other property owners in recent years.

"It has worked much better than we thought it would -- fantastically," Wilkinson said. "Can you imagine someone wanting to get rid of it?"

- - -

Save Our Homes was sold in 1992 as a way to protect the elderly from being forced from their homes. But the benefit -- which got 53.6 percent approval during a statewide referendum -- applied to everyone.

In 2006, the program excluded $404-billion from the tax rolls. The average savings per property was about $1,700.

That disparity has jumped sharply in recent years as property values have soared. The result is that more and more of the tax burden has shifted to businesses and owners of second homes. Each pays about 25 percent more in property taxes than if there were no Save Our Homes.

And there's more.

People who accrue savings over the years face huge tax increases when they move because the cap resets with each home purchase. Older residents complain it has kept them from going to smaller houses, and growing families face challenges moving into larger homes.

"This has been a ticking time bomb ever since it was passed," said Mark Soskin, a University of Central Florida economist who has studied Save Our Homes.

Soskin said he, too, makes out like a "bandit." He bought his Ormond Beach home in 1990 for $160,000 and it is now worth $360,000. In 2006, his taxable value was $150,989.

- - -

In the months leading up to the special session on property tax, scores of plans were offered to tackle the problem. House Speaker Marco Rubio wanted to eliminate property taxes altogether on primary homes. But that idea had no political legs because it meant raising the sales tax to recover some of the lost revenue.

The idea of replacing Save Our Homes remained a goal of tax reformers, but everyone understood the special political value of the program -- precisely why few politicians were as blunt as Webster about its flaws.

When lawmakers unveiled their tax cut plan just before the special session began, it carried the superhomestead exemption that would lower most tax bills by double-digit percentages. But it would allow anyone whose tax bill would be even $1 lower under Save Our Homes -- about 1.2-million people -- to keep it.

Grandfathering in people who have benefited the most under Save Our Homes sweetened the deal, but not enough.

Many lawmakers saw it as too rigid. Officials would calculate your tax bill using the old and the new system and they would decide which tax exemption worked best for you.

Criticism grew rapidly during the first two days of the session, along with Democrats' outcry that the plan took more than $7-billion from school budgets with no guarantee from the state to make up the difference.

Every vote was critical in the Senate, where a handful of teetering Republicans who were concerned about alienating fans of Save Our Homes needed something more.

Wednesday night, unbeknownst to everyone outside a tight circle of lawmakers, Webster and Rep. Dean Cannon, the lead House negotiator, met with about five staff members in a cold conference room. Laptop computers, coffee cups and a bowl of mints sat on the table.

Over the course of four hours, the politicians and weary staffers worked out details and finalized the agreement to allow everyone to keep Save Our Homes if they wanted it.

The following morning, the amendment was revealed. Democrats howled about another secret deal. But shortly after, the Senate voted 25-12 in favor of the deal -- one more than needed for the constitutional amendment that will be put before voters.

Hours later, the House approved the plan and the session came to an end.

- - -

Now it is up to Florida voters to determine whether it was a worthy effort. Sixty percent of voters must approve the constitutional amendment. (Save Our Homes passed by 54 percent in 1992, when the threshold was lower.)

Webster, sounding exhausted Friday after returning home, conceded that Save Our Homes is here to stay for years to come.

"But in the long run," he said, the new homestead plan "is going to be a much better policy for the state."

Times Tallahassee bureau chief Steve Bousquet contributed to this report.

Fast Facts:

Save Our Homes

1992 Year enacted, by 53.6 percent of voters. It was implemented in 1995.

4.4-million Homes protected.

$404-BILLION Amount excluded from tax rolls in 2006.

[Last modified June 17, 2007, 08:05:58]