Tax reform failure
A Times EditorialPublished October 31, 2007
A panicked, desperate Florida Legislature squandered a golden opportunity to lead the way toward meaningful tax reform and significant relief for taxpayers who need it most. The constitutional amendment it placed on the January ballot costs too much for too little gain and creates more inequities in a property tax system that already is grossly unfair. It lacks vision and focus, and Floridians deserve better.
Opinion polls, not sound public policy, are behind this amendment. But those poll-tested concepts will begin to show their warts as voters consider the practical impact over the next three months. It will become clearer that legislators from both political parties failed to meet the challenge -- and that something is not always better than nothing.
The only cry to increase the $25,000 homestead exemption came from Gov. Charlie Crist, who campaigned on it. But increasing the homestead exemption only provides modest relief for those who need it least and whose taxes already are artificially low because of Save Our Homes. And don't swallow the line from the governor or state lawmakers that the amendment doubles the homestead exemption. School taxes will be exempt, and they account for about 40 percent of the typical property tax bill. So that additional $25,000 exemption would really be worth all of $15,000.
Legislators also couldn't resist allowing homesteaded property owners to take a Save Our Homes tax break with them when they move. Perhaps the silver lining is that it would be limited to $500,000 in protected value, and it could help revive a depressed real estate market facing bigger problems than property taxes. But this also primarily benefits long-time homeowners who need the least help, and it makes the system more unfair by ensuring that similar homes always will be taxed differently. Lawmakers recklessly ignored the advice of their own lawyer who concluded that making this change would increase the vulnerability of Save Our Homes to a constitutional challenge. And when their own analysts estimated it could cost public schools more than $2-billion over five years, they summarily dismissed it with empty rhetoric about economic stimulation.
For businesses, owners of investment properties and second-home owners who have been unprotected by Save Our Homes, this amendment would provide very little relief. A new 10 percent cap on assessment increases for nonhomesteaded property is too high to provide much protection. And unlike Save Our Homes, school property taxes would not be covered. These are taxpayers who are most desperate for relief, and they would get the least.
This is an amendment that takes what's wrong with the current property tax system and amplifies it. The unfair advantage long-time homeowners have over more recent home buyers would be extended. The shifting of the tax burden from homesteaded property to nonhomesteaded property would be exacerbated. And the cost for making matters worse would be indefensible.
Is this worth cutting nearly $69-million from Pinellas schools over the next five years? Or more than $177-million from Hillsborough schools? Or more than $67-million from Pasco schools and more than $21-million from Hernando schools?
These are the sorts of unpalatable trade-offs that will be debated in the weeks before the Jan. 29 vote. This amendment does not have to be the final word on tax reform or tax relief. The Taxation and Budget Reform Commission can place amendments directly on the November 2008 ballot. The Legislature -- God, forbid -- can always take another crack at it in the spring.
Unveiling a new constitutional amendment on Sunday afternoon and forcing an all-or-nothing vote before dark on Monday is no way to provide voters an opportunity to create a fairer, more reasonable property tax system.
Floridians deserve better.