Florida Coalition For Property Rights
Florida Tax Watch Opposes Amendment One
Florida Tax Watch: Amendment 1 is the wrong way to go
South Florida Sun-Sentinel
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SOUTH FLORIDA SUN-SENTINEL OP-ED ONLINE
by Dominic Calabro
There is no doubt that Florida’s property tax system needs to be reformed. This current inequitable system, coupled with rapidly increasing local government spending, has produced tremendous tax increases for many taxpayers. Unfortunately, these are not the taxpayers that Amendment 1 would help. The Legislature’s need to pass something “people will vote for,” coupled with a sincere desire to help Floridians who cannot afford to move because of higher taxes, resulted in a proposal that is not only unsatisfactory but also likely to be detrimental. Not to mention that one of the provisions may be unconstitutional.
Amendment 1 is bad policy for a number of reasons.
Amendment 1 does not provide the kind of tax relief that Florida needs. It gives most of the relief to those who need it the least (long-term Save Our Homes property), while giving very little to those that have seen their taxes rise the most (non-homestead property). Homeowners who have been in their homes since Save Our Homes was enacted have lower tax bills today than they did in 1994, in inflation-adjusted dollars. Everyone else has paid for the doubling of total Florida property taxes in the last six years. It is new homebuyers and non-homesteaders–landlords and renters, businesses, second and vacation homeowners, snowbirds and even homesteaders who also own non-homestead property–who has shouldered the burden of increasing property taxes. However, the amendment bestows 80% of its savings to homestead properties, leaving far too little the non-homestead property owners currently suffering the most.
Amendment 1 is not just a tax cut; it is a tax shift. It will perpetuate the current system and exacerbate the shift of tax burden from homestead to non-homestead property. It will also continue to shift tax burden to new homeowners.
Simply put, the 10% cap for non-homestead property is so high as to be of little value to most properties. The average annual growth in the total value of non-homestead properties is less than 5%. And since school taxes are not covered under the cap, it only applies to approximately 60% of the average tax bill. It could help some properties with extraordinary spikes in value, but even that help could be short-lived. If a covered property’s just value does not rise as much as the cap, the assessment can still increase 10%, as long as it does not exceed just value. Therefore, it will be very hard for the vast majority of non-homestead properties to accumulate any savings. The cap will also be repealed in ten years, unless voters re-approve it.
The lack of Save Our Homes “portability” is a real problem that needs to be addressed, but the way Amendment 1 provides it creates some serious constitutional concerns. A legal expert hired by the Legislature warns of “100% certainty” of a constitutional challenge to the amendment on the grounds that portability violates the U.S. Commerce Clause. Besides the legal concerns, another economic report commissioned by the Legislature for $500,000 states “Portability increasingly shifts the tax burden from longer-term residents to newer, less affluent, homeowners and to non-homestead properties.” The legislature has largely ignored these experts – the voters should not.
The proposal does not restrict local governments’ ability to increase millage rates to recoup revenue losses, thereby lessening the savings for some and shifting more tax burden to others. While there will be significant political pressure to keep millage rates down, some governments will surely adjust rates to recoup at least some of the taxpayer savings. Not to mention increasing non-ad valorem assessments and other fees.
Perhaps most importantly: If voters approve this new amendment, future attempts to reform non-homestead property taxes will be extremely difficult. By providing more benefits to homesteaders and attempting to fix problems Save Our Homes created for them, this would make it much more difficult to create a future constitutional amendment to help non-homestead property that would garner the 60% voter support needed to pass. Proponents, most of which acknowledge some of the amendment’s shortcomings, like to say this is a “first step.” Instead, it could well be the death of hope for comprehensive property tax reform.
Although many Floridians of all types are struggling with property taxes, property tax reform must include real relief for renters, new homebuyers, second homeowners, and businesses. These groups drive the Florida economy and yet are saddled with the largest portion of the tax burden. This system is unfair and unsustainable. If something is not done, these groups (largely unrepresented at the polls) will “vote with their feet.”
Voters must acknowledge there is no such thing as a free ride. Unfair taxes on one group of taxpayers have ramifications for all taxpayers. Businesses, whenever possible, will pass along the higher property taxes they pay through increased prices of their goods and services purchased by all Floridians. Those businesses that cannot, and those renters and part-time residents that cannot, will be priced out of doing business or living in Florida. If that happens, all Floridians will suffer.
Florida can, and must, do better. Sound advice for amending the constitution is “when in doubt, leave it out.” But we are convinced there is more than just doubt, there is plenty of evidence that this is not the right thing for Florida’s taxpayers and economy. Some people say, “well at least its something.” Instead, we caution this is a step backwards.
When amending the constitution, you must get it right. Amendment 1 does not get it right.
Dominic Calabro is executive director of Florida TaxWatch. For more information on property taxes and Florida TaxWatch’s recommendations for reform see www.floridatwatch.org.
To see the CPR analysis of Amendment One, please visit: http://www.proprights.com and click on the lower left hand corner.