Make No One Happy

How did the Legislature manage to screw up property tax reform so thoroughly?

click to enlarge PROPERTY AND TAXES: Florida's homeowners are demanding property tax reform. So far, they're not getting any. - Jeremy Sterk/istockphoto
Jeremy Sterk/istockphoto
PROPERTY AND TAXES: Florida's homeowners are demanding property tax reform. So far, they're not getting any.

Last week Tampa Mayor Pam Iorio stood in front of a bank of news cameras and microphones and — with no small measure of pride — detailed how she's going to lay off another 100 city employees, only months after she gave 123 other municipal employees the boot.

She will bid out janitorial services and security. She'll consolidate payroll and human relations functions among the city's departments. Surplus city property will be sold online, cheaper than the current system of hiring a local live auctioneer.

"This organization has to change," Iorio said. "It has to fundamentally change."

The reason: the statewide groundswell for property tax reform, which is forcing municipalities all over the state to make cutbacks. The Legislature's first effort to change state budgets was short-circuited by the courts as being unconstitutional, but a second, watered-down attempt was approved last month and is headed for the Jan. 29 ballot.

The changes Iorio announced last week would save more than $3 million a year. But the Democratic mayor's solution looks suspiciously Jeb-like: outsourcing and privatizing, consolidating departmental functions and using more technology. (Iorio vowed her efforts won't end up the same way Jeb's did, with tens of millions of dollars lost in poorly supervised private contracts.)

The thought of Florida's large Democratic cities having to adopt very Republican solutions no doubt brings glee to conservative state legislators. This was exactly the outcome some of them had in mind when they began shifting state services (such as juvenile justice) to the local level during the Jeb Bush administration: force the locals to go on an economic diet. That shift also freed legislators from having to fund the rising costs themselves, allowing Republicans to campaign on a "no new taxes" platform while handing out tax cuts for businesses and wealthier Floridians.

And yet, there are surprisingly few people celebrating the Jan. 29 vote. A recent St. Petersburg Times poll put public support for the vote at just 53 percent, below the 60 percent needed for passage. In Tampa Bay, support is only at the 49 percent mark.

"I'm going to vote for it, but it's nowhere near enough relief," said St. Petersburg neurosurgeon and anti-tax crusader David McKalip, the founder of Cut Property Taxes Now, which wants to let voters decide on a 1.25-1.5 percent annual cap on government growth. (See related story in "Political Whore," p. 8.)

Citizen tax groups such as McKalip's (and their numbers are growing) don't like the proposal because it doesn't go far enough, and several have their own petition drives under way to put reform measures on the Nov. 2008 ballot. City and county leaders are against the measure because it will cut their budgets even further — $75 million in Hillsborough and as much as $12 million in Tampa. Education groups and teachers are opposed because it would slice an estimated $1.8 billion to $3 billion out of Florida education budgets. Small-business owners are unhappy because they get only a small fraction of the tax decreases.

The problem is that the proposed cuts are terribly complicated to understand. An additional exemption of property value applied only to non-school taxes; the "portability" of the Save Our Homes tax cap that would take an accountant to explain. It's all gobbledygook to most voters' ears. The cuts offer merely a small portion of relief, critics insist, while failing to address the need for reform. Even county property appraisers are having trouble grasping the full impact of the possible cuts.

"People are weary," said Warren J. Weathers, chief deputy to Hillsborough Property Appraiser Rob Turner. "They've got tax reform fatigue."

The Legislature's plan doesn't address the inequities in sales taxes from county to county or the fact that many services are exempt from paying sales taxes. It doesn't address Florida's seeming disinterest in collecting hundreds of millions of dollars in sales taxes on merchandise purchased online. And it neglects a fundamental problem with property taxes: Save Our Homes didn't cut taxes but merely shifted the burden onto first-time homebuyers, small businesses and people who own a second or vacation home in Tampa Bay.

"We did nothing to address that," said House Democratic Minority Leader Dan Gelber, a lawyer from Miami Beach. "All we did was exacerbate it. It is an awful plan."

The current crisis is the result of soaring property values, years of fat budgets and a civic disincentive for many homeowners to raise hell about it. As long as stable, permanent residents (read, frequent voters) paid artificially low taxes because of the Save Our Homes tax cap, they weren't likely to march on City Hall at budget time.

Gelber voted against the tax reform legislation and is speaking out against the referendum. "We've given the most relief to the people who need it the least," Gelber recently told a meeting of the Hillsborough Democratic Professional Council.

He believes that if the referendum passes, real tax reform will be rendered impossible. And he called the Legislature a "dysfunctional" body that is incapable of finding comprehensive solutions to large, complex problems.

The last, best hope for meaningful, equitable change, Gelber insists, is the Florida Commission on Taxation and Budget Reform, a group that meets every 20 years and can put constitutional changes directly onto the ballot.

That's where former Florida Senate President John McKay of Bradenton comes in. For years, McKay has tried to remove most of the exemptions to the state's sales taxes, many of which were given for political reasons to industries that had close ties to elected leaders. McKay is a member of the tax commission and he has put his own referendum effort on hold while he tries to get his colleagues to approve a bold plan: End most sales tax exemptions and use that money to eliminate local school property taxes, which account for about one-third of a typical property tax bill.

"The state dictates probably 99 percent of education policy," McKay said, "and so the state ought to pay for education."

Just one more idea in a sea of tax reform as Florida homeowners cling to a lifesaver of hope.

» The Jan. 29 Tax Reform Package

» Political Whore: The taxpayers revolt

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