SENATE DEMOCRATS UNVEIL SWEEPING PROPERTY TAX REFORM PLAN

Florida Senate
Steve Geller, District 31

Press Release
FOR IMMEDIATE RELEASE
March 27, 2007 CONTACT: MICHELLE DEMARCO
850-487-5833

SENATE DEMOCRATS UNVEIL SWEEPING PROPERTY TAX REFORM PLAN
Reform package promises frustrated Floridians equitable, fair and immediate tax relief

TALLAHASSEE - From the elderly property owner wishing to downsize to the first time homebuyer, and from part-time residents to small business owners, Floridians struggling with rising property taxes can expect immediate relief under a dramatic tax reform plan unveiled Tuesday by Senate Democrats.

"The property tax system we currently have in Florida has not only been unfair, it's become an albatross on our economy," said Senate Democratic Leader Steven A. Geller (D-Hallandale Beach). "The tax reform plan we are offering today means mobility for homebuyers and a kick start to the housing market. It also means an equitable rollback in property tax rates to property owners across the board without sacrificing local government services, especially police and fire protection. Finally, it means that a Widow Jones will be on par with a Rush Limbaugh when it comes to their proportionate property tax contributions."

Senator Ted Deutch (D-Boca Raton), who helped draft the plan, agreed. "Under this proposal, everybody gets some relief. We balanced the effort as much as we could, with across the board tax cuts along with targeted tax cuts, particularly to affordable housing and working waterfront and first time homebuyers."

The key elements of the package include the following:

Portability: Folks wishing to downsize will be able to take their Save Our Homes tax savings with them. For people seeking more expensive homes, Save Our Homes will extend to an amount not to exceed $250,000.

Assessment Protection: Increases the Save Our Homes assessment limitation to 3% plus the change in the CPI, not to exceed 6 percent. This will protect homestead property owners from large increases in their property taxes from year to year.

Non-Homestead Protections: Limit assessment increases for non-homestead real property to 10 percent. This will protect non-homestead property owners from large increases in their property taxes from year to year, but will keep assessments in line with just value over time based on anticipated real property growth rates. It will reduce the uncertainty facing investors, and help preserve community character in times of rapidly appreciating property values.

Business Tax Relief: Provide a $25,000 exemption for tangible personal property. This provides tax relief for businesses that own tangible personal property and eliminates the administrative burden small businesses face in filing returns on equipment worth less than $25,000.

Property Tax Rollback: Impose a statutory three-year property tax limitation on property tax increases for all cities and counties. Property tax revenues could grow by the amount of new construction plus the percentage change in the CPI plus 3%. To provide immediate relief, property taxes will be rolled back to FY 2005-2006 levels.

Local Government Revenue: Require partial year assessments so that revenue lost through tax cuts is replenished by the timely addition of properties to the tax rolls. This not only ensures that new residents pay for those services they are receiving, but for those property owners who buy in mid-year, it also avoids sticker shock those owners traditionally faced when their escrow accounts were billed for taxes accrued during that period.

Affordable Housing: Tax affordable housing properties by basing their assessment on the properties' rental income. A change in the use of the property will subject it to a four year recapture of the tax savings.

Waterfront Property: Waterfront property used for water-dependent recreational and commercial purposes will be assessed on the basis of its income. Hotels will not qualify for the treatment. A change in the use of the property will subject it to a four year recapture of the tax savings.

First Time Homebuyers Tax Breaks: First-time homebuyers will be eligible for a tax exemption provided that the home is below the median just value of homestead property in the county of residence.

"This plan isn't a shell game shifting the burden from one group to another. This plan is real reform, representing the broadest, the fairest, and the most dramatic rate reductions for every property owner in Florida," said Senate Democratic Leader Pro Tempore Frederica Wilson (D-Miami). "In this lifeboat, everyone gets the same paddle."

http://www.floridahomesteadservices.com

Senate Democratic Caucus Property Tax Reform Proposal


• Allow portability of Save Our Homes differential. If the just value of the new homestead is greater than that of the old homestead, allow the dollar value of the differential to be transferred up to a maximum amount of $250,000; if it is less, the differential on the new homestead will be the amount that maintains the assessed value so that taxes on the lower valued home are no more than what the owner paid previously.

• Increase the Save Our Homes assessment limitation to 3% plus the change in the CPI, not to exceed 6 percent. This will protect homestead property owners from large increases in their property taxes from year to year, but accumulation of extreme SOH assessment differentials would be much less likely to arise in the future. The large divergence in recent years between the Save Our Homes limit and the appreciation rate of homestead property has created the current system that is widely perceived as inequitable, has discouraged homestead property owners from moving, and has shifted the property tax burden onto non-homestead and newly-homesteaded property. It has also made homestead property owners insensitive to increased property taxes because their tax burdens largely unaffected.

• Limit assessment increases for non-homestead real property to 10 percent. This will protect non-homestead property owners from large increases in their property taxes from year to year, but will keep assessments in line with just value over time based on anticipated real property growth rates. It will reduce the uncertainty facing investors, and help preserve community character in times of rapidly appreciating property values.

• Provide a $25,000 exemption for tangible personal property. This provides tax relief for businesses that own tangible personal property and eliminates the administrative burden small businesses face in filing returns on equipment worth less than $25,000.

• Impose a statutory three-year property tax limitation on property tax increases for all cities and counties. Property tax revenues could grow by the amount of new construction plus the percentage change in the CPI plus 3%. The limit would apply to FY 07-08, FY 08-09, and FY 09-10, after which the changes above would be in place and the tax cap would not be needed. In order to achieve immediate tax relief, the FY 07-08 limit will be based on FY 05-06 revenues.

• Place real property improvements on the tax roll as soon as they are completed. The tax for the partial year would be added to the tax bill for the first full year the property is on the tax roll. This will ensure that all new property bears its share of the burden of paying for local services.

• Tax affordable housing properties by basing their assessment at on the properties' rental income. A change in the use of the property will subject it to a four year recapture of the tax savings.

• Waterfront property used for water-dependent recreational and commercial purposes will be assessed on the basis of its' income. Hotels will not qualify for the treatment. A change in the use of the property will subject it to a four year recapture of the tax savings.

• First-time homebuyers will be eligible for a tax exemption provided that the home is below the median just value of homestead property in the county of residence. Homebuyers, including those moving into this state, must sign a sworn affidavit attesting to the fact that they are a first time homebuyer.

• Study feasibility of consolidating some special districts with counties or Water Management Districts.

http://www.floridahomesteadservices.com