Legislators, go home

By A TIMES EDITORIAL
Published October 28, 2007

The divided Florida Legislature already has done more than enough to frustrate and confuse residents about property taxes by raising false expectations and promoting changes without fully considering the long-term consequences. Barring a sudden outbreak of visionary brilliance, legislators on Monday should adjourn the special session, go home and let the depressed real estate market continue to work itself out.

This is the time to pause and take the long view, not to panic and pander. It will not be the end of the world if there is no constitutional amendment about property taxes on the January ballot, despite the political heat lawmakers are feeling. The property tax rollback and revenue caps approved by the Legislature in the spring already have saved taxpayers more than $2-billion and will have a significant impact in coming years. The Legislature will be in regular session again in about five months and can vote then to put amendments on the ballot in November 2008, when there will be a higher voter turnout. The Taxation and Budget Reform Commission is methodically holding hearings and reviewing the state's tax policy, and it has the authority to put constitutional amendments on the November 2008 ballot as well.

There is a property tax crisis, and the system badly needs an overhaul. It is particularly unfair to businesses, the owners of second homes or investment properties, and newer homeowners who bought at the peak of a hot real estate market. But it took years to reach this point, and it would take divine intervention for legislators to agree on an appropriate response before the special session ends Monday night.

Desperate legislators might agree on a streamlined amendment to double the homestead exemption and allow homeowners to take a large Save Our Homes tax break with them when they move. The concepts are easy to understand, and they happen to be Gov. Charlie Crist's campaign promises. But those changes won't solve the problems, and they aren't likely to placate most frustrated Floridians. Doubling the $25,000 homestead would not mean doubling the tax break, because school property taxes would be excluded and they account for 40 percent of the typical bill. Allowing homeowners to take up to $1-million in untaxed value with them when they move only exacerbates the unfairness created by Save Our Homes and guarantees similar homes on the same street will be taxed differently forever.

The House headed in the right direction last week by approving a cap on the assessed values of nonhomesteaded property. But its 5 percent cap is too low and would cost schools alone nearly $2-billion over five years. The House plan to limit the assessed value of homesteaded property to 40 percent of a county's median value or its Save Our Homes value also is intriguing, because it is aimed at helping the most recent homebuyers. But both proposals were recklessly approved without nearly enough vetting or understanding of the potential consequences. They would require more massaging and study before they are ready for voters to consider.

We have recommended several ways to provide reasonable, fair property tax relief. They include lowering school property taxes for everyone and replacing the money by closing sales tax exemptions; setting a reasonable limit on assessed values for nonhomesteaded property; and changing the way nonhomesteaded property is appraised from highest and best use to current use. We also dream that a judge one day will find Save Our Homes unconstitutional, and Florida can start over and create a property tax system that is both fair and reasonable for all taxpayers.

The reality is that the Legislature cannot solve the property tax crisis on Monday, and it has the potential to do more harm. The real estate market's problems run far deeper than property taxes, and it will take more time for Floridians to recover from the home mortgage mess and adjust to home prices that are falling back to Earth. The deadlock in Tallahassee has only added to the uncertainty, and it is time for lawmakers to go home.

[Last modified October 27, 2007, 20:13:40]