Potential cuts average $1,300 as lawmakers OK historic property tax reform
TALLAHASSEE -- The average Florida homeowner could see a $1,300 drop in annual property taxes by the fall of 2008 under a historic tax-cut package state legislators approved Thursday in answer to cries for relief from across the state.
Legislators also hope to revive Florida's sluggish real estate market and boost the state's faltering economy by easing the fiscal burden on home and business owners and making it easier for first-time homebuyers to enter the state's high-priced housing market.
"We've stopped the hemorrhaging, the bludgeoning that taxpayers have been taking," said Senate President Ken Pruitt, R-Port St. Lucie.
Legislators wrapped up their special session on tax reform after three days filled with fierce and sometimes bitter debate.
The tax package they adopted mandates a rollback in local government tax rates and gives voters the chance in an election next January to decide whether they want deeper cuts through an expanded homestead exemption.
"The thing that gives me the greatest comfort is that we did half of it now, and the people get to finish the job on Jan. 29," said Gov. Charlie Crist, who campaigned on cutting property taxes. "It is power to the people to bring about the biggest tax cut in Florida history."
The two-pronged plan will force cities and counties to freeze property taxes at 2006 levels, then trim them by up to 9 percent, depending on how much residents' taxes have risen in the past five years.
Tax bills this November should reflect an aggregate savings of $15.6 billion to property owners of all types, including homesteaders, snowbirds, landlords and business owners. The average homeowner's tax bill is expected to drop by $174.
"This is about savings to people, not about cuts to government," said House Speaker Marco Rubio, R-West Miami. "The voices of the people of Florida said, `Don't come back and don't stop trying until you get this done.'"
The Senate passed the tax rollback 37-0. The House approved it 117-1, with the lone "no" vote cast by Rep. Jim Waldman, D-Coconut Creek.
"I support tax cuts. They're a great way to stimulate the economy. I don't support this bill," Waldman said. "I am not in favor of anything that is going to take one ... police officer off of the road, one ... firefighter off the road. That's not responsible."
Crist is expected to sign the bill into law.
Voters must approve the second component of the tax plan, a proposed change in the state constitution establishing what many legislators termed a "super-sized" homestead exemption for permanent residents.
The fate of the proposed amendment, which passed the Senate on a 25-12 vote and the House, 74-43, will be decided by voters Jan. 29, the day of Florida's presidential primary.
"What does it mean? When you talk about $1,200 to $1,300 in savings, it means that if you have a child in first grade and you want to buy a pre-paid scholarship so he can go off to college, you can now pay for it with this tax relief," said Senate Finance and Tax Chairman Mike Haridopolos, R-Melbourne. "This is real. That's what $100 a month means to a family."
The benefit of the entire tax-cut package was initially estimated to exceed $31 billion over the next five years. But a late change pushed by Senate Republican leaders blunted the overall financial impact, to an estimated $24 billion.
Democrats opposed the change in the homestead exemption, arguing that it will force budget cuts at the city and county level that could decimate vital services such as police and fire rescue.
"I don't want the people in Century Village who get sick to have to wait for an ambulance to get there because there are fewer firefighters," said Senate Democratic Leader Steve Geller of Cooper City.
It was also estimated that Florida's public schools could lose more than $7 billion in revenue over five years if the amendment is approved.
"The real tragedy of this proposal is that it's the single largest cut to education spending ever in the United States, and the people who will pay the price for this fix are the kids in school," said Rep. Shelley Vana, D-Lantana, a former president of the Palm Beach County Classroom Teachers Association.
Many Democrats decried the lack of financial aid for businesses, owners of rental properties and snowbirds who have borne the brunt of tax increases in recent years because they don't have Save Our Homes protection.
"We were sent up here to offer reform of a system that has really hammered non-homestead property owners," said Sen. Ted Deutch, D-Boca Raton. "We didn't take those steps."
Hoping to allay fears of longtime homeowners worried about how the new homestead exemption could affect their tax bills, lawmakers decided to give taxpayers a choice.
Originally, homeowners would have been forced to drop their Save Our Homes protection, which limits increases in their home assessments for tax purposes to 3 percent a year, and switch to the new homestead exemption if it saved them even $1 a year in taxes.
But no one could tell homeowners whether they would still be better off under the new plan a few years down the road.
The rewritten amendment, as approved Thursday, would allow homeowners to keep Save Our Homes if they chose to do so. They would have the option of switching to the new homestead exemption at any time, but once they did, they couldn't backtrack.
"We now have another element of choice and control for homesteaders," said Rep. Dean Cannon, R-Winter Park, who helped write the tax-cut plan.