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Property Taxes

Panel considers property tax plans

TALLAHASSEE, Fla. – March 17, 2008 – Florida’s best chance of voting on another property-tax revision this year happens Monday, when the state tax panel that has the ability to put constitutional amendments directly on the November ballot votes on three proposals.

If the 25-member Taxation and Budget Reform Commission approves any of the three ideas and voters agree, it would become the largest tax change in Florida history since legislators passed the failed services tax 20 years ago.

Each of the plans would reduce property taxes by at least a third for all property owners, and save taxpayers statewide between $7 billion to $8 billion a year. The lost revenue would be replaced with either a half-cent or one-cent increase in the sales tax and a requirement that the Legislature make major budget cuts to accommodate the tax relief or find new taxes to make up the difference.

For House Speaker Marco Rubio, this is “as close as any entity in Florida has ever gotten to meaningful, comprehensive tax reform. . . . It’s a golden opportunity in Florida’s history and I hope they don’t let it pass them by.”

Rubio, who appointed seven of the members of the panel — which meets every 20 years to consider changes to tax and budget laws — has become the biggest cheerleader for the proposed plans. He spent last year pushing failed attempts at offering voters deep property tax relief and has made no secret of his dissatisfaction with the property-tax amendment voters approved Jan. 29.

Rubio is moving the commission meeting to the Capitol complex Monday in order to give it a higher profile. And he has lobbied members to merge two of the three ideas and get behind it.

Rubio wants the commission to approve a plan that would eliminate, by 2010, the $7.9 billion portion of property taxes that pays for schools. The schools tax, which makes up about a third of the average property tax bill, would be replaced by a one-cent increase in the sales tax.

But because the sales tax increase makes up only about $3.3 billion lost, the Legislature would have to come up with the rest from a list of options that includes repealing sales tax exemptions on everything but services, raising additional sales taxes, relying on growth or cutting spending.

Rubio is urging that the idea proposed by Patricia Levesque, his appointee to the commission and a former aide to Jeb Bush, be tacked on to another similar proposal by former Senate president and commission member John McKay.

For years, McKay has sought a complete review of all the sales-tax exemptions the state gives out to both industries and services and has advocated elimination of some of them to broaden the sales-tax base, which he argues has become stagnant in today’s economy.

But the commission rejected McKay’s plan to open up the debate to a tax on services and left the proposal nearly identical to Levesque’s.


The third property tax cut proposal, pushed by commission member and former state Rep. Carlos Lacasa, would produce the most fundamental change to the property tax system. It is patterned after a bipartisan proposal to create a super-exemption, which emerged from the House last fall but was rejected by the Senate.

The plan would replace the additional $25,000 homestead exemption approved in January by voters with a super-exemption equal to 12.5 percent of a home’s taxable value in 2009 and 25 percent of the taxable value in 2010 and thereafter.

Save Our Homes — which caps the yearly rise in assessed value of primary homes — and portability would remain in place, but every year, homeowners would receive the super-exemption or their Save Our Homes savings, whichever is greater. The goal is to gradually wean the state off the Save Our Homes concept and reduce the tax shift that now forces a heavier tax burden onto new homebuyers, second homeowners and businesses, which are not covered by Save Our Homes.

The proposal, however, carries a big price tag: $25 billion in the first year of the super-exemptions. Some of the money would be replaced by a half-cent sales tax imposed for three years, but the Legislature would have to come up with the rest.

Rubio thinks the McKay/Levesque plan will win the necessary 17 votes to make it on the November ballot — a sign that the idea he couldn’t sell to the Legislature may be triumphant at last.

“We’re a single vote away from having a [tax] swap on the ballot,” he said. He is also lobbying for a plan before the commission to impose a revenue cap on state and local governments.

Group’s warning

But fierce opposition is mounting against the idea of replacing property taxes with a sales-tax hike. TaxWatch, the independent tax watchdog group financed by some of the state’s largest businesses, is urging the panel to reject it.

“Florida’s economic foundation and its economy for the foreseeable future is facing its strongest challenge in over 50 years,” TaxWatch warned in an analysis released late Friday. Instead, TaxWatch said the panel should encourage the gradual phase-out of school property taxes because doing it all at once — with no guarantee that the Legislature would come up with replacement money — could threaten the state economy and put school funding at risk. TaxWatch called the idea “a dangerous proposition.”

However, TaxWatch has endorsed Lacasa’s plan because it thinks the measure “will decrease the inequities between similarly situated properties and reduce taxes for new homeowners” as well as providing a more constitutional approach to portability than Amendment 1.

The Lacasa plan also includes a 5 percent assessment cap for non-homestead properties, which would work the same way as Save Our Homes.

Gov. Charlie Crist promised homeowners that if they voted for Amendment 1 in January, more tax cuts would follow, but the Legislature has all but rejected any more discussion of tax cuts.

So now the governor, who appointed 11 of the tax panel commissioners, said last week that he likes all the tax cut ideas and expects one of them to pass.

“Cutting taxes would be nice to give citizens,” he said.