Counties protest House's tax cut concept
By MARY ELLEN KLAS
On Thursday, the counties struck back.
Alarmed by the speed with which House leaders are moving on a plan to cut local property taxes, a group representing Florida's 67 counties sent an economist to the state capital to deliver this message:
Yes, county budgets have ballooned since the real-estate boom, but the money has gone into police, security and the rising costs of insurance, fuel, land and healthcare.
''There's no evidence of extravagant spending,'' said Hank Fishkind, an Orlando economist who presented his analysis to a Senate committee.
While counties agree with legislators that Florida's property-tax system needs ''dramatic repair,'' they oppose ''hastily crafted, one-size-fits-all solutions that could severely handicap our citizens,'' said Susan Latvala, president of the Florida Association of Counties.
In the post-election war against rising property taxes, counties and cities have been portrayed as the villains.
Gov. Charlie Crist and legislative leaders, who say local governments have allowed their budgets to expand as tax money from rising real-estate values rolled in, are targeting local coffers to give tax relief to homeowners and businesses.
GOP DISAGREES
House Republicans, who refused a request from Democrats to allow Fishkind to present his report to members, immediately found fault with his conclusions, saying they failed to explain how much of the money was spent. The Senate, by contrast, listened to Fishkind's report and offered its critique:
''They had the money and they spent it, as opposed to rolling back taxes,'' Sen. Mike Haridopolous, a Melbourne Republican and chairman of the House Finance and Tax Committee, said after Fishkind presented his report. ``That's why we're all in agreement we're going to change the tax system. The question is how.''
The House has proposed a controversial plan to roll back local tax levels to where they were in 2000-01, plus an additional amount to account for population growth and inflation. That would give most Florida residents sizable breaks on their property taxes.
The Senate has not released its plan, but Haridopolous said Thursday he will unveil the first piece of it next week.
One part that would lower taxes: forcing counties to value property on its current use, rather than its highest potential use.
The Senate is also considering rolling back property taxes, he said, but not by as much as in the House plan, whose 2000-01 yardstick would strip $5.8 billion from local government budgets statewide. The Senate may bring local spending back to the levels they were in 2004 or 2005, he said.
`NOT SUSTAINABLE'
But Haridopolous warned that counties should prepare to take a hit.
''People will have to realize the services they've had in the last few years are going away,'' he said. ``You cannot sustain spending at this rate and keep a vibrant economy.''
Fishkind agreed that the rate of growth of property taxes ''is not sustainable'' because it is discouraging business investment in Florida and chilling economic growth. But he warned that if lawmakers force deep cuts in local government services, it could lead to unintended consequences that will cost more to fix later.
He said that while property-tax revenues increased by $11.3 billion throughout Florida since 2001, much of it went to schools -- $4.2 billion -- while $3.9 billion went to counties and $1.7 billion went to cities.
The schools portion spiked because legislators engineered it that way. The state cut the amount of money it sent schools and allowed them to make up the difference from soaring property-tax revenues, he said.
From 1999 to 2005, Fishkind said, Florida's consumer price index rose 17 percent, and its population increased 17 percent, while county budgets rose 68 percent. But, he added, the combination of price increases and population led to higher county expenses -- up 58 percent for the period.
Most of the money went to police, jails and security, he said. Triple-digit percentage increases went to health and property insurance, and to community redevelopment, he added.
Fishkind disagreed with House and Senate Republicans who say government budgets should grow no more than the growth in household income.
''Counties aren't households,'' he said. ``They buy pensions and healthcare, where costs have risen very rapidly in the last five years.''
In Miami-Dade County, for example, Medicaid costs have risen 50 percent since 1999-2000, while Broward County's costs have grown 16 percent since 2000-01, according to Fishkind's report.
Pensions in Miami-Dade have risen 40 percent between 1999 and 2006, while Broward's pension costs have increased 30 percent between 2002 and 2006.
`CHAMPAGNE TASTE'
While Fishkind's report attempted to dispel the notion that counties were spending money on frills in addition to services, some lawmakers were not satisfied.
''Your report would indicate there's no frivolity in local government,'' said Sen. Ronda Storms, a Brandon Republican and former Hillsborough County commissioner. She said the extra money encouraged local officials to go ''from having a beer budget to champagne taste'' when they made spending decisions.
Fishkind disagreed. Services ''have gone up much more dramatically than could be explained by frills,'' he said.
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