February 17, 2009
Lawmaker: Property Taxes Shouldn't Rise When Home Values Fall
Sen. Mike Fasano wants to eliminate a quirk in the popular Save Our Homes program that causes home assessments to rise even as their market values drop.
Save Our Homes offers tax protection for homestead property owners by limiting the rise in their annual tax assessments to three percent a year. But as many residents were surprised to learn last year, Save Our Homes also guarantees a rise in assessments â?? either by 3 percent or the percentage change in the Consumer Price Index, whichever is lower.
This rule, known as "recapture," translated into a 3 percent increase in 2008, and is projected to mean a .1 percent increase in 2009 â?? even as market values are projected to drop more than 10 percent on average.
"We started getting phone calls from people who were surprised that their taxes had stayed the same or actually went up," despite the Amendment property-tax cuts that passed in January 2008, said Fasano, R-New Port Richey. "For all of us who have enjoyed the Save Our Homes cap for many years, all of a sudden it's come back to bite us a bit because of the recapture rule."
Local schools districts, counties and cities have relied on the recapture rule to ensure some stability in the property tax collections on which they rely to fund much of their budgets. But Fasano said enough is enough.
His proposal would put the question to voters as a proposed Constitutional amendment. If approved by 60 percent of voters, it would ensure that the assessed value of a Save Our Homes homesteaded property would not increase if the market value of that property decreased.
Fasano's bill will have to pass by supermajority in the House and Senate in order to reach the 2010 ballot. It would take effect in 2011.
The proposal has solid backing from Gov. Charlie Crist. The governor is preparing to unveil a series of property tax cut proposals for the spring legislative session -- despite a projected $1-billion fall in property tax collections, which provide the lion's share of funding for K-12 public schools.
Some lawmakers, including Senate budget chief JD Alexander, R-Lake Wales have raised the specter of property tax increases to plug the hole in the schools budget.
But Crist said he hopes the stimulus dollars that Florida is poised to receive from the federal government can fill in some or all of the property tax gap. By the governor's calculations, Florida stands to receive as much as $12 billion over the next three years, though much of the money comes with strings attached that will dictate how the money must be spent.
Fasano confirmed Monday that Crist's staff is discussing proposals with lawmakers that include curbs on government spending, to be achieved by capping how much cities and counties can collect in taxes. A proposal to increase the homestead property tax exemption is also expected.
Amendment One limited the growth in assessed value of non-homesteaded properties to 10 percent annually. Crist now wants to lower the cap to 5 percent.
"That's a great idea," said Fasano, who filed a similar proposal several years ago. "Businesses need to know what their maximum tax is going to be â?? especially when the economy starts to grow again."
Democratic Rep. Marty Kiar, D-Davie, said that he would support cutting property taxes, too â?? provided that schools don't suffer as a consequence. Kiar the ranking minority member of the House schools budget committee, said the state needs to be looking at new revenue sources to support education, such as a hike in the cigarette tax.
"No matter what, we have to hold schools harmless," Kiar said.
But the anticipated tax cuts drew outcry from worried local counties, who lambasted the notion.
"It is our counties, not big government, which should be choosing the look and feel of our communities from critical services to quality of life," Association of Counties President Rodney J. Long said in a written statement. "Over the last three years local governments have reduced revenues on average by 9.3 percent. These reductions have resulted in cuts in services, construction, and employees in almost every county.
"With Amendment 1 and more dramatically the crash of Florida's economy, everyone is cutting costs and making dramatic reductions. Counties are no exception. While some reductions have increased efficiencies, an artificial, one-size-fit all gimmick will prohibit counties from being able to provide critical services that are in higher demand due to Florida's struggling economy."
Crist responded Monday by saying that he hears from residents every day about their frustrations over property taxes.
"I mean, there have been some reductions, but I think as we all know and recognize, the people are hurting out there. All of us are," he said. "And they deserve to have more of their hard-earned money in their pocket. And I'm more sympathetic to them than anyone else."