Florida Democrats to unveil property-tax plan that helps renters, middle class
By Mark Hollis
March 5, 2007
TALLAHASSEE -- Challenging Republicans on a politically sensitive issue, Florida House Democrats are seriously exploring property tax-cut options that would slash costs for a broad swath of Floridians, including renters, without savaging budgets of local governments or giving the most relief to the wealthy.
A prime tax-cut option House Democrats are studying would increase the current $25,000 homestead exemption but base additional exemptions on a percentage of median property values within a county. Residents in South Florida, where property values are among the highest in the state, would likely enjoy the greatest savings by dollar amount.
Another option House Democratic leaders expect to officially unveil Wednesday is a new "renters' homestead" that would give income-based rebates to people who don't own their homes. The goal is to ensure that property tax cuts enjoyed by landlords are shared with tenants.
The ideas are outlined in a four-page memo prepared by legislative aides at the request of House Democrat leaders.
The South Florida Sun-Sentinel obtained a draft version of the document and conducted interviews with House Democrats on Sunday. They said this is the likely framework for their tax-cut package.
Democrats hold only slightly more than a third of the seats in the 120-member House. But they have enough sway to influence the outcome of the property tax debate that will be the dominant issue of the 60-day legislative session that convenes Tuesday.
The memo asserts, and legislators reiterated, that their goal would be to direct property tax relief to middle-class homeowners, renters and small businesses while also minimizing some obstacles to first-time home ownership.
Some property tax-cut options Democrats are considering could be long shots to pass because they call for raising other taxes to make up for the lost revenues to state and local governments.
A House Republican plan swaps property tax relief for an increase in the sales tax. House Democrats said they prefer paying for tax cuts with a variety of revenue sources and are intent on protecting local governments from steep cuts due to property tax decreases.
The House Democrats have been having informal talks among themselves on tax-cut options for several months. But they are not yet set on a dollar amount for cuts or a replacement source of funds.
Democratic leaders noted a 1-cent sales tax increase raises $3.6 billion a year. By reinstating a portion of the tax on intangible wealth, such as retirement savings, they said, the state could generate $2 billion for property tax cutting purposes.
The Democrats, according to their tax-cut memo, also might fund property tax relief by attempting to eliminate about $1.9 billion a year worth of "corporate tax loopholes" and reinstating a state portion of a federal estate tax that could raise another $750 million a year.
House Democratic Leader Dan Gelber, D-Miami Beach, said his caucus' proposals would not need voter approval or require a change in the state constitution.
"Floridians are paying too much in property tax," Gelber said Sunday. "We're trying to come up with a method that responsibly delivers relief, but especially for the people hurting most. We want everybody to receive a benefit, but primarily middle-class homeowners, primary residential renters and small businesses."
The major Democratic proposal would add to the current $25,000 homestead exemption an additional exemption worth half of the median home value within a county. In addition, the state's "Save Our Homes" protection would be maintained until a homeowner moved, but taxpayers would be able to get the greater of the Save Our Homes benefit or their homestead exemptions.
The Democrats' tax-cut memo proposes a scenario involving a family owning a home valued at $300,000 in a county with a median home value of $200,000. The family currently pays taxes on $180,000 of their home value because of savings they now enjoy under the Save Our Homes benefit. Under a proposal Democrats are likely to consider, the family would get a total exemption of $125,000 (the current $25,000 exemption plus half the county's median home value of $200,000). The Democrats' memo suggests a savings for that family of $2,000 a year.
Until now, House Democrats have been cordial in their reaction to Republican tax cut proposals, including House Speaker Marco Rubio's plan to cut taxes by almost $6 billion, to eliminate property taxes on homesteaded property and to replace some of the lost revenue with a 2.5 percentage point increase in the state sales tax. House Republicans have estimated their plan could save a homeowner, based on a statewide average, $2,283.
Several House Democrats, including Rep. Joyce Cusack, D-DeLand, have said they are wary of Rubio's proposal because they fear it might simply shift the tax burden from wealthy property owners to lower-income and middle-class residents.
"We can't just help one group at the expense of another," Cusack said. "Everybody is hurting."
Rubio and other Republicans have said they are open to a bipartisan dialogue on tax cutting. House Policy and Budget Council Chairman Ray Sansom, R-Destin, has said the House would take a cautious approach to overhauling the tax system. He said his council would hold a series of hearings on the constitutional amendment before voting on it sometime in late March.
But Sansom and other House leaders argue the state needs to be aggressive in cutting back property taxes in hopes of reviving the state's economy, which has been partially undermined by a sagging real estate market.