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Florida TaxWatch Answers Your Property Tax QuestionsFlorida TaxWatch is taking the lead with its effective and respected research in resolving the various inequities and unfairness in our property tax system in Florida. Florida’s property tax system is in crisis, with skyrocketing levies accompanied by explosive local government spending that is exceeding the taxpayers’ ability to pay. Our research quantifies the growing tax burden and tax shift onto certain classes of property owners that has created two separate, but unequal tax systems in Florida. On October 29, 2007, the legislature concluded Special Session D to deal with property tax reform and presented its plan, which includes:
The plan is explained in detail here; now it’s up to Florida voters to decide. Florida TaxWatch finds that that the plan really amounts to tax cuts – not true tax reform. Savings are targeted almost exclusively to homestead property owners, leaving non-homesteaders and businesses with little protection from property taxes that have spiraled out of control. Another issue is that providing more benefits to homesteaders and attempting to fix problems Save Our Homes created for them makes it much more difficult to create a future constitutional amendment to help non-homestead property that would garner enough voter support to pass. Still another problem is that heaping savings on homesteaders may naturally disincentive them from participating to try to keep local government spending under control. Read more about the Florida TaxWatch analysis here. Through the summer of property tax reform talk that began with mid-June’s Special Session and continues with the conclusion of Special Session D, Florida TaxWatch has provided in-depth analysis of the proposed plans’ impact on Florida taxpayers. To recap: The Florida Legislature, meeting in a mid-June Special Session slated for nine days, passed a property tax relief plan in three days. It required local governments to cut property taxes immediately, caps future increases, and creates a now-defunct, constitutional “Super Homestead Exemption” that Florida voters were to approve in a January 29, 2008 election. Read more details of the Legislature’s plan here. At the time, Florida TaxWatch found that the action was a step in the right direction. Read more about the Florida TaxWatch analysis here. Barring overrides by individual local governments, every property taxpayer in the state would have seen a cut in this fall’s property tax bill of about 7 percent. Average savings would have ranged from $174 for homesteads, $199 for non-homesteads and $941 for commercial properties. Collectively, all property owners were estimated to save approximately $15.6 billion over the next five years. More than a third of Florida’s local governments overrode that mandate, and the property tax cuts some homeowners saw on their TRIM notices this fall were underwhelming. While they’d been promised “property taxes that would fall like a rock,” some were quoted in Florida newspapers characterizing the drop as more like that of a “pebble.” Meanwhile, a Florida judge threw out the proposed Super Homestead exemption on the grounds that the ballot summary language was misleading. Florida TaxWatch also released the following research reports on property taxes prior to and during the 2007 regular session of the Florida Legislature:
What Florida TaxWatch is Doing Now to Help The Florida TaxWatch research team is reviewing and analyzing data to formulate the likely impacts of both the statutory and proposed constitutional reforms on local governments and taxpayers. This will include consideration of the key factors of just value growth and personal income, the effects of local government overrides of property tax caps, the on-going shift of tax burden from homestead to non-homestead property owners, non-ad valorem tax revenue changes, and the effects of any future increases in the portion of school property taxes mandated by the Legislature. Florida TaxWatch is also moving ahead to the next step in the process, by advising local governments with a summary “How To Trim” guide to local budgeting and cost savings that provides useful ideas on cutting costs without affecting core services. Also, through its Center for Local Government Studies, Florida TaxWatch is offering specialized local budget profiles and cost savings analysis to local taxpayer, business, and civic groups, to help in the fight to reduce property taxes and local spending while providing helpful assistance to local officials in implementing those rollbacks and cuts mandated by the Legislature. Read more about Florida TaxWatch local government projects here. With the 2007 Legislature having provided modest relief, now the constitutionally created Taxation and Budget Reform Commission can perform a more thorough, thoughtful and deliberative study of Florida’s property tax and local government spending crisis. With more time and a focused mission dedicated to studying the tax and budget systems of Florida, the Taxation and Budget Reform Commission can work toward recommending true, meaningful and long-lasting reforms that will not have the unintended consequences that the Save Our Homes amendment has had on Florida taxpayers. The Taxation and Budget Reform Commission is positioned to fully evaluate all of the property tax reform options and offers voters in Florida a package that is fair to all taxpayers, helps keep future tax increases in check and creates a system that is good for Florida’s competitiveness and economic vitality. Florida TaxWatch has taken the lead in helping to set the agenda, coupled with ongoing research and assistance to the Commission and its staff to quantify the problems and develop constructive remedies for consideration: Florida TaxWatch Primer on the Taxation and Budget Reform Commission In a research report released in December 2006, Controlling Escalating Property Taxation and Local Government Spending and Revenue, Florida TaxWatch recommends repealing the Save Our Homes amendment, a popular three-percent cap on homesteaded property owners’ annual tax bills. Other recommendations include:
Click here to read a copy of the Florida TaxWatch report, Controlling Escalating Property Taxation and Local Government Spending and Revenue. What is the Save Our Homes Amendment? Your Property Tax Bill – Guidance From Florida TaxWatch has been opposed to the Save Our Homes Amendment since it was first introduced in 1992. As our research pointed out to voters then, and as reality confirms today, Save Our Homes is not a tax limit, but a tax shift. Since it does not control total taxation or government spending, the effect has been a shifting of the tax burden to businesses, renters, and second homeowners. However, it is still popular with many Florida voters and the only way to eliminate these unintended consequences is to change the state constitution (which requires a vote of the electorate). Save Our Homes, with its 3% (or the increase in inflation, whichever is less) annual cap on homesteaded property value assessments, disproportionately helps higher priced homes, treats similarly situated homeowners and property taxpayers differently, and has tended to trap residents in their homes longer, because they wouldn’t be able to afford the tax increase on the next home they would otherwise purchase. The 2006 & 2007 Legislatures considered many proposals to address some of these problems. Some of the proposals considered would have created a more inequitable system for non-homestead property owners. Save Our Homes has removed $350 billion in taxable value from the rolls in Florida in FY 2006. That is worth approximately $6.8 billion in taxes (based on the average statewide millage rate of 19.54). RISING LOCAL GOVERNMENT TAX INCREASES AND SPENDINGCoupled with the impact of Save Our Homes is another dilemma facing Florida taxpayers. Due to rising property values, many local governments in Florida are poised to enact significant tax increases if they don′t roll back millage rates. That′s a big concern of Florida TaxWatch, which repeatedly advises cities, counties, and school districts to share record-setting property tax revenue ″windfalls″ with taxpayers by lowering millage rates. The remarkable growth fueled by a housing boom has allowed local governments to often lower millage rates while still increasing taxes, as outlined in the following TaxWatch research report: Property Tax ″Windfall″ Really Just a Tax Increase, September, 2005 Unintended Consequences, September 2006 When property values rise like this, some local governments either keep the same millage rate, which amounts to a major property tax hike, or lower the rate only slightly and call it a property tax rate cut, when, in fact, it′s still a tax increase. These are misstatements that aren’t in keeping with the spirit of the Truth in Millage (TRIM) law. Florida′s TRIM law recognizes that property values are a powerful revenue-producing tool for local governments and rapidly escalating values result in rapidly escalating tax burdens if the tax rate is not reduced. TRIM requires that taxing authorities calculate a ″rolled back millage rate″, which is the millage rate that, when applied to the current year's assessed value, would raise the same amount of revenue as last year. According to TRIM, any millage rate in excess of the rolled-back rate is considered to be a tax increase and is to be advertised as such by local governments. New construction, additions to existing structures, major rehabilitations and annexations are excluded from the rolled-back rate calculation to allow for some growth revenue. Therefore, even if a taxing authority keeps the same millage rate, if the total assessed value of the property on last year′s tax roll is up, then it′s considered a tax increase. TRIM notices were mailed to property owners in the month of August and many taxpayers are seeing significant increases in the taxes proposed by their local governments. This link will help you understand how TRIM notices are put together: The state has forecasted that the total taxable property value in Florida grew by $331 billion in 2006, bringing the statewide tax roll to $1.648 trillion. This remarkable 25.1% growth marks the fifth year in a row that total taxable value has had double-digit annual growth. Some counties have seen their property tax rolls grow by more than 40% this year, and a couple have exceeded 50%. Florida TaxWatch commends the Hillsborough County Commission for taking the first steps at true budget reform, by its action on February 7, 2007 to limit the increase in the county’s annual spending to the rate of inflation plus the county's population growth. This has been a recommendation by Florida TaxWatch to local governments across Florida and in keeping with the cost cutting and tax saving proposals outlined in the Florida TaxWatch budget study on Hillsborough County government from 1999. Read more about the Commission′s action WHAT YOU CAN DOAs a Florida taxpayer, you play an important role in this process, with rights and responsibilities to ensure that we have a fair and equitable tax system in our state. Make your voice heard by contacting your local and state elected officials with your concerns, and by participating in local government budget hearings during the month of September, as final millage rates and budgets are set. Join Florida TaxWatch and contribute to our efforts to protect Florida′s taxpayers and improve the fiscal health and economic prosperity of our state. How to join Florida TaxWatch Past Florida TaxWatch Research and Other Links of Interest:Amendment 10: More Harmful Than Helpful, October 1992 Amendment 10 Homestead Valuation Limitation: Yes or No?, October 1992, by Ken Wilkinson and Michael Sittig The Save Our Homes Amendment Could Cause Some Problems, October 1994, by Dean H. Gatzlaff Amendment 10: Not A Tax Limit But A Multi-Million Dollar Tax Shift, September 1995 Historical and Forecasted Levels of Save Our Homes Differentials (see Tables 13a, b, and c): http://edr.state.fl.us/conferences/advalorem/adval0306.pdf Graphic showing growth of differential: http://www.myflorida.com/dor/property/FLcapgap.html The Wall Street Journal captured the essence of the problem in this recent report: http://www.floridataxwatch.org/resources/pdf/FloridaSnowbirdsChallengeFairnessOfTwoTierTax.pdf |