Budget Woes May Trump Property Tax Reforms

by Michael Peltier
The News Service of Florida

Despite campaign promises and facing a $4-billion budget gap, state lawmakers are unlikely to make significant changes to the state's property tax structure when they return in March.

With cities and counties already strapped for cash after previous cuts, and property values reaching dramatic lows, lawmakers who want to reduce proprety taxes more would face a tough fight.

{sidebar id=1}Still, a handful of bills have been introduced that could benefit commercial and residential homeowners. Further, lawmakers are required to hammer out the details of constitutional amendments passed by voters in January 2008 dealing with such issues as working waterfront property.

Among the issues that are floating around are:

HJR 97 and SJR 532, which would ask voters to amend the constitution to provide additional tax benefits for first-time homebuyers by boosting the exemption during the first years of ownership. In addition to the $50,000 homestead exemption, the measures would allow first-time owners to exempt an additional 50 percent of their home’s just value during the first year of ownership. The additional exemption would be phased out at a rate of 20 percent a year.

SB 304, SB 464, and HB 105, which would require appraisers to reduce the tax assessment value of homesteaded property by an equal percentage if the market value of the property falls.

HJR 385 and SJR 738 would ask voters to approve a constitutional amendment to cap local property taxes at 1.35 percent of a parcel’s taxable assessed value.

HB101 would allow Save our Homes benefits to continue when a homeowner transfers title of the residence to a trustee while still residing in the home. The bill is an attempt to put state law in line with federal tax code as it relates to an estate planning device known as Qualified Personal Residence Trust.

Of particular interest are measures that would prevent local governments from raising tax assessments if market values fall. Save our Homes, a constitutional amendment passed in 1992, limits to 3 percent the rate in which local governments can raise a homesteaded property's asessment, regardless of how the market performs.

{sidebar id=1}Another aspect of Save Our Homes says that if the value of the property goes up less than the Consumer Price Index – or if the value of the property falls – the assessment increases to match the Consumer Price Index. That has inadvertently forced property appraisers to raise most tax assessments even though market values have declined.

That doesn't sit well with at least one lawmaker.

“If the value of your home goes down, there is no way your property tax should go up,” said Sen. Mike Haridopolos, R-Indialantic.

That “recapture” problem is addressed in the three bills that would require appraisers to reduce the assessment value of homesteaded property if the market value of the property falls.

Beyond that, systemic change may not be in the cards as state and local government officials deal with an anticipated state budget shortfall of $4 billion for the budget year beginning in June.

“Other than the recapture issue, I don’t see a lot coming down the pipe this year,” said Sen. Mike Bennett, R-Bradenton, and sponsor of a SB 304.

Local governments say they are already dealing with recent changes and reduced education enrollment that have meant less money available for local operations and schools. Further reducing property tax revenue would add to the burden.

One proposal of particular concern would ask voters to approve a flat assessment cap of 1.35 percent on all taxable property. Though a legislative long shot, the concept is being watched closely by local government groups that oppose it, said Cragin Mosteller, spokeswoman for the Florida Association of Counties.

“We are vigilant as we watch for proposals that would cause permanent damage to the critical services local governments provide,” Mosteller said.

This article originally published on February 9, 2009.

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