What the property tax talk means to you
By Jason Garcia & John Kennedy
Orlando Sentinel
June 11, 2007, 4:05 PM EDT
TALLAHASSEE -- Florida lawmakers will open an 11-day special session Tuesday aimed at approving a package that will cut property taxes by nearly $31.6 billion during the next five years. Here's some answers for your questions.
Q: What are lawmakers going to do for me?
A: That depends who you are. All property owners -- business owners, primary homeowners, snowbirds and other second-home owners -- will benefit from the first step lawmakers intend to take: forcing cities and counties to immediately freeze their property-tax collections at current-year levels and then cut 3 percent to 9 percent more.
Whether a particular city or county has to cut an extra 3 percent, 5 percent, 7 percent or 9 percent will depend on how much it has raised property taxes during the past five years. Those that have increased the most will be forced to cut the most. Thirty poor and rural counties, including Sumter County, which the state identifies as "fiscally constrained," will have to cut only 3 percent.
Other local governments that charge property taxes, such as water-management districts, also will have to freeze tax collections and cut 3 percent. Only school districts will not have to cut.
Every property owner also will get the protection of a new cap that prevents local government property-tax collections from growing faster than the pace of personal income.
Governments could skirt this cap but only with at least a majority-plus-one vote of the county commission or city council. In some cases, governments could exceed the cap only with a unanimous vote.
Primary homeowners will get an even bigger benefit in coming years. Assuming voters approve in a statewide referendum, they will get a new, super-sized homestead exemption -- one that is many times bigger than the current $25,000 homestead exemption.
Q: What would the new homestead exemption be?
A: The new exemption would be based on the taxable value of your home, and it would include a sliding scale designed to ensure that the biggest savings are directed toward less-valuable homes.
Here's how it would work: the first $200,000 of your home's value would be 75 percent exempt from taxes, and the next $300,000 would be 15 percent exempt.
So if you own a $400,000 home, you would get a $150,000 exemption on the first $200,000 of value and a $30,000 exemption on the next $200,000 for a total exemption of $180,000. So you would pay taxes on your $400,000 home as if it were worth just $220,000.
Q: What would happen to the Save Our Homes tax cap?
A: It would be eliminated, replaced by the new super-exemption. But not right away.
That's because lawmakers want to avoid hurting longtime homeowners who have benefited from years of living in a single home with a property-tax assessment barred from growing more than 3 percent per year. The new system could cost them more, if Save Our Homes were eliminated.
Here's how that could happen: Say you bought a home in 1993 -- when Save Our Homes took effect -- for $100,000 that is now worth $400,000. But thanks to the Save Our Homes tax cap, you are only paying taxes on it as if it were worth $150,000.
Under the super-exemption, the same home would be taxed at a value of $220,000 -- $70,000 higher than what it is taxed at now.
To sidestep those situations, lawmakers say, they will grandfather in anyone who saves more under the Save Our Homes system. So you would continue to pay taxes on your home as it were worth $150,000, until you sell it.
State officials estimate that nearly three-quarters of all homeowners would save more under the super-exemption than under the current system.
Q: How much money would I save?
A: State officials predict the average savings for primary homeowners would be $1,300 come the 2008-09 budget year -- or 44 percent of their entire tax bill. Of course, the actual amount will vary depending on where you live, how much your home is worth and how much your city or county is forced to cut.
All told, the combined property-tax package would cut statewide property taxes by $31.6 billion during the next five years.
Q: What does all this mean for police, fire, parks and other services?
A: Most cities and county governments say they don't want to reduce law enforcement and fire protection. But with millions of dollars less in property-tax collections coming in, local governments are certain to face some reductions.
Many governments have already imposed hiring freezes. Most also have prepared competing budget plans looking ahead to next year -- with staff and services, for example, tied to an anticipated loss of property taxes.
Q: When will I see all these savings?
A: If lawmakers go ahead with ordering cities and counties to roll back property-tax collections, the first reductions in tax rates ought to be applied to this autumn's bills. So those savings will come quickly -- but they won't be enormous.
The largest potential cuts for homeowners won't be on the table until Jan. 29, if the constitutional amendment to dramatically increase the homestead exemption goes before voters.
If approved by Florida voters, those savings would be applied to tax bills in fall 2008.
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