Property Tax
Q&A on the Property Tax Reform Issue
Floridians are demanding property tax relief. What position on this does the Florida Association of Counties take?
The Florida Association of Counties (FAC) supports carefully weighed, responsible solutions that insure equity and fairness among taxpayers. Citizens need property tax relief, but not by creating a second crisis through forcing cuts in essential county programs and services they depend on.
What is the FAC stance on the Speaker Rubio's proposal to cap local governments' revenues?
While we are still evaluating the full ramifications of Speaker Rubio's plan, the Florida Association of Counties strongly opposes any move by the Legislature to statutorily cap the revenues that local governments can raise to pay for crucial programs and services for our citizens. Such a cap would force counties to make deep cuts to programs and services that our citizens want and expect, and could harm quality of life in our communities.
What about reducing millage rates?
Florida's counties recognize that citizens need property tax relief - in 2006, two-thirds of the state's 67 county governments voluntarily reduced millage rates, resulting in more than $500 million in savings to taxpayers statewide. And in 2005, nearly half of the counties reduced millage rates, resulting in savings of $185 million for taxpayers. But in attempting to craft relief, the Legislature must avoid creating a second crisis by forcing cuts in essential county programs and services that our citizens depend on.
What has caused this crisis?
Although this is a complex issue, two issues come into play here to create the "perfect storm."
The growth in property values has had a great impact. While good for the homeowner, it has adverse affects on taxpayers. The well-intentioned 1992 Save Our Homes Amendment has had severe consequences over time: it has shifted a disproportionate share of the tax burden to businesses and renters, "locked" people into their current homes, and created vast discrepancies in the tax bills of similarly-valued homes.
Compounding the issue has been the action of state leaders who have added to counties' fiscal burdens by mandating they help pay for programs, or fund them outright. For example, counties have paid for an increasing share of Medicaid costs, for state juvenile justice programs and for coverage for the uninsured. Likewise, the federal government also imposes mandates on county government ranging from environmental, landfill, and voter regulations to welfare disabilities and labor requirements.
Other proposals call for increasing the homestead exemption or expanding Save Our Homes. Are these viable options?
Doubling the homestead exemption to $50,000 would eliminate more than $600 million from county budgets statewide. This would especially hurt Florida's 32 rural counties - some already at the 10 mill cap - in their efforts to provide essential services.
The proposal to make Save Our Homes portable is likely unconstitutional, according to legal scholars. Existing law says newcomers who become permanent Florida residents must be treated the same as other residents of the state.
Why has government become so expensive?
Counties provide crucial everyday support for Florida's citizens and are spending property tax dollars responsibly, despite the pressures of growth, citizen expectations and mandates. County governments play an increasingly important role in the lives of citizens as our population grows, citizens seek a higher quality of life, and federal and state governments push more responsibility for paying for programs onto counties.
As political subdivisions of the state, counties are required by the state to provide certain basic services, such as: public safety (including sheriffs, fire and rescue, and building inspection); public welfare (including medical help for the needy, affordable housing and environmental protection); and transportation (including road construction and maintenance, right-of-way acquisitions, and drainage systems.)
What is the effect of unfunded mandates?
In recent years, state leaders have added to counties' fiscal burden by mandating they help pay for programs, or fund them outright. For example, counties have paid for an increasing share of Medicaid costs, for state juvenile justice programs and for coverage for the uninsured. Likewise, the federal government also imposes mandates on county government ranging from environmental, landfill, and voter regulations to welfare disabilities and labor requirements.
What has happened to all this money coming in?
Between 2001 and 2006, Florida's counties saw a 68 percent growth statewide in property tax revenues. What happened to this money? About 34 percent of county spending was directly attributable to population growth and inflation (both rose 17 percent), and included required infrastructure improvements. The rest of the spending was concentrated in five large budget categories: law enforcement, corrections, general government, parks, and health and human services.
Beyond basic services and mandates, citizens also look to counties to provide a range of other services that add to quality of life in Florida's communities. For example, counties provide their citizens with basic utilities, public transportation, libraries, and other infrastructure.
What does FAC recommend?
Limits On Assessment Increases- We support reasonable limits on property tax assessment increases, but oppose any state-mandated caps on county revenue or spending. Florida's citizens want tax and spending decisions made locally - they don't want a "one size fits all" solution on property taxes handed down from Tallahassee that will make things worse.
Tangible Tax Exemption- We support relief for businesses by providing a $25,000 exemption per business taxpayer on Tangible Personal Property Taxes.
Annual Assessment Level- We support an annual assessment limit of 10 percent on all non-homestead properties with revaluation upon change of ownership or use of the property. A 10 percent cap will even-out assessments and taxes over time. A lower cap would be inequitable to newcomers to Florida, including new businesses.
Responsible Local Government- We also support and encourage decisions made by individual County Commissions-such as the recent actions in Hillsborough, Sarasota, Broward and Miami-Dade Counties-to debate and implement self-imposed revenue or spending caps. This is the essence of "home rule" -local government, not Tallahassee, knows best what local citizens want and is in the best position to make such decisions.
Use The Existing System For Change- While recognizing our citizens need property tax relief, we believe any major statewide changes to the property tax system should be considered by the Taxation and Budget Reform Commission-not rushed to voters as a special election ballot. The Tax and Budget Reform Commission was approved by Florida voters and created in the state constitution to do a comprehensive review of our state's tax and budget policies. A special election would preempt the work of this commission.