Property taxes: Unfair system's a little more so now
By Alex Leary, Times Staff Writer
Published March 2, 2008
TALLAHASSEE - Jan. 29 will be remembered as an extreme triumph for Gov. Charlie Crist, the day he beat the critics and proved how hungry people are for property tax relief.
But to record history accurately, Jan. 29 should also go down as the moment Florida's unfair tax system became more so.
The plan Crist carried to victory with a steady regimen of sound bites and TV commercials only made Save Our Homes stronger by allowing longtime homeowners to take tax benefits with them when they move.
This "portability" exacerbated the inequities in Florida's property tax system, giving even more benefit to homestead property owners and not much to everyone else.
Amendment 1 - and the $9.3-billion in tax revenue it cut over the next five years - also left less room for lawmakers to right the system this coming legislative session and beyond.
Exhausted after a yearlong battle on taxes, there is little room for compromise on a new deal. Local government coffers are suffering under existing cuts, which approach $25-billion with a rollback and cap on property tax revenue already in effect.
More significantly, no Republican leader is willing to tackle the cause of the problem - Save Our Homes, which has suppressed property taxes for longtime homeowners, shifting the tax burden to everyone else.
Save Our Homes, approved by voters in 1992 and put into effect in 1995, limits annual assessment increases for homestead property owners to no more than 3 percent per year.
"People want it. It's popular. It's certainty," said House Speaker Marco Rubio.
Rubio, determined to maintain the spotlight on taxes, is eyeing two ambitious property tax plans despite the odds:
One would cap taxes on all property at 1.35 percent of taxable value. It's similar to what California did three decades ago with Proposition 13. The other is an overall cap on local and state government revenue and spending.
Either will have a tough time of passing. Another avenue is the Taxation and Budget Reform Commission, a blue ribbon panel with the power to bypass the Legislature and put items on the November ballot.
But none of the measures currently under debate will correct the underlying problem of Save Our Homes, even as some people still hunger for a fair property tax plan.
They include homesteaded homeowners who bought during the real estate run-up and will not benefit from Amendment 1's portability for tax benefits; business owners who will see little, if any, tax break; and second homeowners who were largely left out of the Amendment 1 benefits.
People like George Cannan, 63, of Citrus County. He retired there in 2006 after living in the same home in Collier County for 23 years. Portability means nothing to him.
"This isn't a tax cut. It's the biggest screw job Florida has ever seen," said Cannan, who voted against Amendment 1. "People will wake up eventually and see this is bad for the state."
Cannan wants to join a class-action lawsuit filed by a Tallahassee lawyer challenging the constitutionality of Save Our Homes. Portability only sharpens those inequities, the suit asserts.
Crist, who was warned against a lawsuit, says he is not worried.
His restaurant will not catch a tax break
Harry Wright voted for Amendment 1. "If they are only going to give me a few bucks, I might as well take it," he said.
Those savings will be on his residential property tax bill. But thanks to Save Our Homes, that has never been a concern.
What really worries Wright are the taxes on his barbecue restaurant in Land O'Lakes. Amendment 1 does virtually nothing to cut his bill, which has doubled to $8,000 in four years.
Under the tax plan, Wright will get a small break on business equipment and a 10 percent cap on annual assessments. The cap, however, is not expected to have any measurable effect now that the real estate market has dried up.
"They left us out in the cold. It's too little, too late," said Wright, who has been in business for 24 years and just expanded intoHillsborough County.
Wright, 58, says he is using any profit from a catering business to cover the taxes. But even that venture is feeling the pain. Sales last year were down $1-million because home builders are not holding open house events anymore.
"It hurts when every aspect of the business is up also," said Wright. "Our food costs are up. Our insurance is up. Our gasoline expense is up."
So unhappy they have sued
Stan Chamberlin was at home in Brooklyn in 2001 when the bill arrived from the Palm Beach County tax collector. The taxes on his second home had jumped to $13,000.
Shocked, he called his neighbor. "What happened, did City Hall burn down? Was there a natural disaster?" he recalls asking.
"You're not homesteaded," the neighbor replied.
That was Chamberlin's introduction to Florida's property tax system. Out-of-state homeowners like himself were among the hardest hit as property values shot up in the past six years.
His neighbor, who is homesteaded, saw his taxes go up only 3 percent a year under Save Our Homes. In 2007, Chamblerlin paid $22,830 in property taxes; his neighbor paid $9,313.
Last year, Chamberlin, 71, became a full-time Florida resident. And he filed a lawsuit against the state, arguing that Save Our Homes creates widely different classes of taxpayers. Amendment 1 only made Save Our Homes stronger by allowing people to carry accrued savings when they move - a concept known as portability.
"If the inequality wasn't obvious before, now it's really obvious," said Chamberlin, contending the lawsuit is even stronger now.
A buyer's break he can't get
Robert Emerick is fuming at the idea. Under Amendment 1's "portability" provision, he said, someone could move into his new house near Brooksville and enjoy a lower property tax bill.
"You're telling me someone else can live in my house cheaper than I can. I swear this is unconstitutional."
A person who has built up significant tax equity under Save Our Homes could transfer that to Emerick's house and make out with a better deal.
Emerick, who has lived in Florida most of his life, paid $164,000 to have the home built in 2005. By the time it was finished - a year later - it was valued at more than $200,000.
But because he moved before portability existed, Emerick had nothing to transfer from his old house in Pasco County. (Had portability been in effect, he could have transferred about $70,000 in tax equity.)
His latest property tax bill was just over $2,800. Contrast that with the tax bill his brother pays - $800 a year - on a home worth $80,000 more.
"It's infuriating because I've owned a home in Florida since 1994," Emerick said. "I've helped pave the roads and pay for the firefighters and the teachers. But I've got nothing to show for it."
No tax help for first home
The irony does not escape Gion Louis. All day she works to place lower-income families in their first homes as part of a community development program in Tallahassee.
Louis herself, however, does not qualify for assistance. She and her husband, a professional basketball player in Europe, earn too much. And yet they live with their four children in a home they do not own.
"If I were to buy this house right now, it would cost at least $500 more a month than what we're paying for rent," said Louis, 37. "It's just too expensive."
Amendment 1 does nothing for people trying to get into a home. In fact, it most favors people who have been in their homes the longest.
The Legislature tried. Under a previous proposal, which died amid bickering between the House and Senate, first-time home buyers would have received a 25 percent reduction on their assessments. That could have made the difference for Louis, who has been searching for a home in the $200,000 to $250,000 range.
"Everybody wants a comfort zone," Louis said. "I want something that's mine."
For a better Florida
[Issues facing the 2008 Legislature]
For a Better Florida is the St. Petersburg Times' preview of the annual legislative session that begins Tuesday. Published every year since 1951, it presents news articles and opinions intended to stimulate debate over some of the most important issues facing our state. This is the final installment of a four-part series, which began Feb. 10 (growth and energy), continued Feb. 17 with stories on education and Feb. 24 with budget and gambling stories. See previous installments at tampabay.com.