Are you tired of getting your assets taxed off?
That’s the tagline being pushed this year by supporters of a constitutional amendment that would reduce property taxes for some Florida homeowners.
But the idea is freaking out local governments, which have been making budget cuts and laying off staff for half a decade now, and would see more cuts if the measure passes.
Let’s take a look back at our current economic situation in the Sunshine State, shall we?
First there was the subprime mortgage crisis that hit in 2007. The next year brought the full-on recession that officially “ended” in 2009, but recovery from it has been lackluster at best. The result: Five straight years of stunted growth, with reduced property values leading to lower revenues for local governments, straining services.
In the case of St. Petersburg, a $9 million budget shortfall this year will result in the city’s first tax increase in 22 years.
And if Amendment 4 does pass this November, critics contend even more pressure will be put on local governments in the Bay area to raise taxes, make deeper budget cuts, or cut deeper into reserves, even if the economy begins to improve.
But supporters of the property tax-cutting measure say that in fact it will boost the economy enough to overcome diminishing ad valorem taxes.
It’s being touted as a win for Florida homeowners, as well as a gift to the virtually moribund construction industry. But opponents say that it’s unfair to year-round Floridians, not to mention its potentially deleterious effect on local services.
So what’s in this package?
First off, it would reduce the 10 percent cap on increases in property values of non-homesteaded properties to 5 percent.
The second provision is for first-time homebuyers, defined as those who have not owned a home in Florida in the past three years. They would receive an additional homestead exemption on half the appraised value of their home (up to $150,000), phased out over five years.
And lastly, the measure would rescind the “recapture rule,” a relatively little-known provision that has been the law since 1995 and has allowed property taxes to rise on some people’s homes even though their assessed value has decreased from the previous year. It’s the only part of the multi-pronged amendment that would cut into education funding.
Critics allege that the tax breaks are a boon to those wealthy enough to own a second home.
“We think when you give a tax break to snowbirds and investment property owners, that’s going to shift the tax burden to our full-time residents, and we just don’t think that’s how our property tax system should be structured,” says Cragin Mosteller with the Florida Association of Counties.
Her group is one of the biggest opponents of the measure, since it would have a potentially crushing impact on local governments who rely on property taxes, taking out $1.6 billion from counties over the next four years if the measure passes. Over the past five years, counties have already cut over $3 billion.
The income loss for cities over the next four years would amount to $447 million, according to John Thomas with the Florida League of Cities.
Since 2008, revenues have dropped more than $35 million in St. Petersburg, prompting Mayor Bill Foster to remark to Michael Van Sickler in the Tampa Bay Times that he was past cutting through the bone and was now in the “cremation phase,” leading to the tax hike.
To balance the two budgets he’s had to assemble since becoming Mayor of Tampa, Bob Buckhorn had to dig into the city’s previously robust pot of reserves to the tune of over $14 million.
Mark Anderson, a member of Tampa City Council’s Citizens Budget Advisory Committee, says this should be a concern for city officials going forward. He says the committee doesn’t see property taxes going up anytime within the next three years — regardless of whether Amendment 4 passes this year.
Hillsborough County faced a $14.5 million deficit this year, but Administrator Mike Merrill was able to balance the budget without having to lay anyone off or make any major disruptions to service. However, the county did lay off more than 160 employees over the previous two years.
Hillsborough County Commissioner Mark Sharpe says he’s sympathetic to the goal of enabling homeowners to stay in their homes and pay reduced taxes. But he’d really like to know the Legislature’s ideas on how to manage the basic needs of local government, such as funding parks, roads and schools. “I get it when I walk into the grocery store,” he says, “but they’ll begin to hear the same voices.” They also might begin to get it when they try to recruit a company to relocate here, he adds, “and the company laughs and says ‘Well, where are the services?’”