Making sense of property tax issues

Confusion abounds on what will happen next. Here is where things stand now.

By ALEX LEARY
Published July 14, 2007

If you're confused about the dramatic changes to the state's property tax structure, the next six months should be plenty of time to figure it out.

Or, it may just get more confusing.

Already, cities and counties are dealing with a state-ordered property tax cut by laying off workers, cutting programs and raising fees.

Voters, meanwhile, are trying to understand a proposed constitutional amendment that would give many of them a choice: keep their Save Our Homes protection against rising property assessments or take advantage of a new "super" homestead exemption.

Voters won't decide the fate of this amendment until Jan. 29. But already some knowledgeable observers -- including a bunch of county property appraisers who met this week in Kissimmee -- think it will be defeated.

And that's assuming there even is a vote. On Monday, the mayor of Weston, a small city in Broward County, petitioned the Florida Supreme Court to throw out the amendment, saying the wording is imprecise and misleading.

"We need a backup plan, something viable for the public to turn to," said Lee County Property Appraiser Ken Wilkinson.

Of backup plans, it would seem, there will be no shortage.

Wilkinson himself is pushing one that addresses the "portability" issue that vexes so many longtime homeowners.

There are other proposals as well, the most extreme of which would get rid of property taxes entirely on primary homes.

The problem

The super homestead exemption amendment is supposed to be the solution to a problem.

Ironically, the problem it's meant to fix was at one time a solution.

Back in 1992, voters approved the Save Our Homes amendment. It capped annual increases in assessments on homesteaded property at 3 percent. It was meant to solve the problem of people being taxed out of their homes.

And it did just that -- for some.

But then came the housing boom, when property taxes rose at double the rate of personal income.

Save Our Homes continued to shield existing homeowners. But new buyers faced high prices with no extra tax benefit. This created inequities.

- People in identical homes in the same neighborhood paid vastly different taxes.

- The tax burden was shifted to those unprotected by Save Our Homes (businesses, out-of-state and second-home owners, for instance).

- And there was a downside even for Save Our Homes beneficiaries: They felt trapped in their homes because they would lose the tax benefit if they moved and might pay higher taxes on a less expensive house.

Solutions

Wilkinson, who spearheaded the 1992 citizen petition drive for Save Our Homes, wants to change that by allowing people to carry their accrued tax savings with them.

He is organizing a citizen petition drive for a statewide referendum on a plan to allow people to take up to $400,000 in Save Our Homes benefit with them if moving to a more expensive home. Those going to a smaller home would take up to 50 percent of the market value of the new property.

Getting the measure on the ballot will be difficult. Wilkinson needs 611,000 signatures; so far, he has 13,101. Getting the rest will require legions of volunteers and lots of money, perhaps $1-million.

The earliest the question could be put before voters is November 2008, and the signatures are good until 2010.

But even Wilkinson's backup plan has a backup -- one with fewer hurdles. Wilkinson is a member of the state Taxation and Budget Reform Commission, a panel of political appointees that convenes every 20 years for a thorough review of Florida's taxing and spending systems.

The 25-member commission has the same power as the Legislature to put proposed constitutional amendments before voters.

Over the coming months, Wilkinson will try to persuade fellow members of the commission to adopt his ideas on Save Our Homes portability.

Allan Bense, the former speaker of the Florida House who chairs the commission, said last week that the idea is worth investigating. But he cautioned that he would want to determine the cost to local governments.

The 'tax swap'

Remember current House Speaker Marco Rubio's controversial plan to do away with property taxes on primary homes in exchange for a 2.5 percent sales tax increase?

It died after staunch opposition from Democrats. They called his plan a regressive tax on the poor. Opposition also came from fellow Republicans in the Senate, who loathed the idea of raising a tax even if it cut another one.

Despite expressing support for the super homestead amendment, Rubio has not abandoned the idea. And he has a key ally on the Taxation and Budget Reform Commission.

"It's a very serious and attractive proposal," said former state Rep. Carlos Lacasa, who was put on the commission by Rubio.

30-40-50 plan

Fed up with what he saw as weak tax relief efforts by the Legislature, Miami businessman Bernie Navarro developed his own idea and formed a group called Citizens for Property Tax Reform.

The plan, a proposed constitutional amendment, would give different percentage cuts to property owners.

Seniors would pay taxes on only 30 percent of their home value while all other homestead owners would pay on 40 percent. Second-home owners and commercial property owners would pay taxes on 50 percent of their value.

Navarro's plan faces the same hurdles as Wilkinson's - raising enough money and awareness to garner the signatures to get the proposal on the ballot.

The unknown

Eric M. Hersh, mayor of Weston, filed a petition Monday with the Florida Supreme Court asking that the proposed constitutional amendment, set for a vote on Jan. 29, be thrown out.

The suit, which was transferred Thursday to circuit court, argues that the amendment language is misleading because it does not clearly state that a favorable vote will lead to the phasing out of Save Our Homes.

The suit also points to a clause in the amendment. It would "require the Legislature to limit the authority of counties, municipalities and special districts to increase ad valorem taxes." But the suit notes that the Legislature has already ordered a tax rollback and cap - before the voters have had a chance to pass judgment on the amendment.

If the courts agree with Hersh, it is unclear what would happen to the tax cuts now being enacted by local governments.

The Weston mayor's lawsuit is not the only one challenging the state's property tax structure. Earlier this year, three Alabama residents who own second homes in the Florida Panhandle filed a lawsuit against Save Our Homes, because it has shifted more of the tax burden to non-homestead property owners.

If the amendment on the super homestead exemption fails or is thrown out, Bense says, the Taxation and Budget Reform Commission will be ready with a backup plan.

And don't forget the Legislature. Failure at the polls of the super exemption amendment would come as the Legislature gears up for the 2008 session. That would give Rubio and other legislative leaders another chance to remold Florida's property tax system.

Just as they tried to do this year.

Fast Facts:

Proposed changes

Florida voters on Jan. 29 will decide the fate of a proposed constitutional amendment that would increase the current $25,000 homestead exemption to up to $195,000 on $500,000 of home value. If it is approved, homeowners would have a one-time choice of going with the new exemption or sticking with the 3 percent cap on annual assessments known as Save Our Homes. New homeowners could no longer enroll in Save Our Homes, and current homeowners who move would lose that protection as well but get the new "super" exemption.

[Last modified July 14, 2007, 01:00:37]