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Democrats' proposal would sharply raise homestead exemption

Author johnbsims3
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#1 | Posted: 15 Mar 2007 06:40 
Democrats' proposal would sharply raise homestead exemption


The battle of the property-tax cut proposals intensified Wednesday, with Democrats in the state House rolling out a plan for a steep hike in the homestead exemption and their GOP counterparts backpedaling from a controversial measure to sharply roll back -- and eventually kill -- local property taxes.
As Democrats described their idea as a ''surgical'' cut that spares cities and counties from the deep budget cuts proposed by House Republicans, Speaker Marco Rubio backed off a key piece of his proposal.

At a meeting with city and county officials from Miami-Dade County, Rubio announced he still wants to eliminate property taxes on all primary homes and replace it with a 2.5 cent increase in the sales tax. But rather than use the 2000-01 budget as the base for budget cuts, he now prefers to use the 2003-04 budget as the base and avoid budget cuts altogether, if possible, by changing the way counties assess property.

''I prefer to do this because the hit is less and it does away with the inequities,'' Rubio told members of the West Miami and Hialeah city councils and Miami-Dade Commissioners Rebeca Sosa, Bruno Barreiro, Carlos Gimenez, Sally Heyman and Katy Sorenson.

Because the GOP House plan does away with property taxes on homesteaded property, it eliminates inequities caused by the Save Our Homes Act, which charges neighbors with similar homes vastly different tax rates.

Meanwhile, House Democrats voted unanimously to endorse a solution that leaves much of the current property tax system in place -- including the Save Our Homes cap on tax assessments -- but gives homeowners heftier exemptions. The tax cuts would help middle- and working-class homeowners, renters and small businesses, proponents said.

Under the Democrats' plan, the state would base tax exemptions on the median assessed value for single-family homes in each county. Owners of primary homes would get a homestead exemption equal to half that amount, plus the existing $25,000 exemption.

For example, in Miami-Dade County, the median assessed value of a single-family home is $226,580, so homeowners would, at a minimum, receive an exemption of $113,290 plus $25,000, for a total of $138,290. In Broward County, the median assessed value is $230,730, so homeowners could get a minimum exemption of $140,365.

Homeowners whose property taxes under the current Save Our Homes system are lower than under the new proposal would get to keep the lower tax.

Commercial property owners would get a tax break, equal to 25 percent of the median assessed value of similar property in the county. The tax would apply to the first $1 million of value, and the tax break would be capped at $250,000. Owners of rental property would be required to pass along the savings to renters, at a rate to be determined by each county.

''This brings portability and tax relief -- that's why this thing's so fair,'' said Rep. Jack Seiler, a Wilton Manors Democrat and an author of the Democratic plan.

After being briefed by Seiler and House Democratic Leader Dan Gelber, Broward County Commissioner Sue Gunzberger said the idea is ``much better than what we've been looking at.''

Seiler said the plan also offers one big advantage over the Republican proposal: It doesn't treat rich and poor alike. Under the Republican plan, for example, radio talk-show host Rush Limbaugh would get a $424,423 tax break on his Palm Beach mansion. Under the Democratic plan, Limbaugh's tax break would be closer to $130,000.

The competing tax ideas emerged a week after Rubio declared local government spending was out of control and needed to be tamed with severe budget cuts.

Since then, many local governments warned that the cuts would sever critical local services, and some House Republicans retreated.

Rubio said he will not abandon his original plan altogether, saying he believes there is still support for rolling back local budgets by $5.8 billion statewide.

Rubio urged the local officials to help push for his new version, which would allow the state to swap property taxes for a 2.5 cent hike in the state sales tax.

Among the other changes in his the new version: Renters would get property tax relief and taxes on commercial and nonhomesteaded property would be reduced to 2003-04 levels and capped into the future under a formula that takes into account inflation and population growth. Businesses also would get a $25,000 exemption on tangible personal property, and the poorest counties would be exempt from any budget cuts.

Hialeah Mayor Julio Robaina said Rubio's alternative plan might work. Barreiro said there should be ''zero rollback.'' But all agreed that tax changes are needed.

Robaina said he and members of the Florida Association of Counties and the Florida League of Cities have been trying to craft a fair formula to divide up tax revenue from the 2.5-cent sales-tax increase and send it back to counties.

That formula, Rubio said, will be the key to passing the House Republican plan.

''If you can't design it, it can't be done,'' he said.

In the News Florida Homestead Services - Florida Homestead Exemption Act Forum / In the News /
Democrats' proposal would sharply raise homestead exemption
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