Saturday, December 15, 2007

Untangling Florida Property Tax Riddle:

A) First we had the Florida Legislature rolling back property taxes (to their 2006 level!). However it left the door open for cities to override the rollback by a two third majority vote, which was actually done by a few of them.

Then they put on the January 2008 ballot a package of tax relief which included raising the homestead exemption to 75% of the first $ 200,000 of property value, then 15% on the next$ 300,000. Beneficiaries of "save our homes" would lose that benefit if they opted for the homestead exemption increase. We called that "the poison pill".

B) On October 29, after a judge had thrown out the ballot package, due to its confusing language, and weeks of indecision, the Legislature finally approved a new ballot proposal which consists of:

- Increasing the homestead exemption by $ 25,000, not applicable to school taxes, which would reduce it to a total of $ 40,000 approximately, instead of the present $25,000 exemption? The savings would amount to an average of $ 220 per year said the legislature.

- Establishing the 'portability' of the 'save our homes' protection, up to $ 500,000

- Putting a cap of 10% on yearly increases of assessed value of non homestead and commercial properties.

We called this proposal: the 'drop like a pebble'.

C) At the end of November 2007, a coalition of different group was starting to collect the 611,000 signatures needed to put a new tax reform project on November 2008 ballot.

The new proposal consists mainly of imposing a property tax limit of 1.35% per year on the taxable value of on all properties, including non-homestead and commercial real estate.

It would keep the 'save our home' protection. The sponsors claimed that it would reduce the average tax bill by 26%.

In this proposal, there is no mention of 'portability' of the 'save our homes', no protection against violent raises of property value like those that hit us between 2000 and 2005.

The sponsors called it: 'cut property taxes now' and any owner can add his signature on their website.

D) A new initiative is pending review from the Taxation and Budget Reform Commission.

It would eliminate all Florida school taxes and replace them by expanding the Florida sales taxes to include services.

The background of all these proposals is the general opposition of public employees, and local governments to anything that would have any meaningful impact on their spending.

They are actively campaigning with their eternal threats of crippling education and schools, cutting back on police department, ambulances, and fire departments.

I am not impressed. And I will not buy into their menaces. Florida budget has bubbled to levels we wouldn't have dreamed about a few years ago. At the same time property tax collections have doubled during the last five years, from about 16 billion to more than 30 billion. So what are these complaints all about when we try to roll back a couple of billions for the sake of our state and our people's economy?

It's about the ever-increasing public sector, with its dozens of cities, bureaucracies, police and fire departments, mayors and commissioners, which is a luxury that we can't afford when our education is at the bottom level in the US, our public health problems have not been seriously addressed, and so many people are in the danger of loosing their homes on the wake of sky-high taxes, insurance premiums and mortgages.

One of the main issues that worry them are the retirement pensions of this new-formed social class. These pensions are steadily guzzling their budgets and there are starting to feel the fear of loosing these benefits that are negated to many Floridians.

I will always affirm workers' right to secure their retirement. I will never negate the importance of good police and fire departments. But everything must be done within the reasonable and the possible.

That is the reason why we should address the problem in its deep root. Uncontrolled spending must be stopped and rolled back. Efficiency must be the rule and not the exception. And our local government, as well as our State government must abide by the same belt-tightening measures that they have forced onto a majority of our population.

One of the first steps, in my modest opinion, is the regrouping of city services, and the undoing of this hundred-head bureaucracy that we don't need.

The exercise of swapping and juggling with tax revenues is proving to be a vain purpose. We have to modify our Tax Property system to make it more equitable; encouraging first time buyers, investors and out-of-state buyers, instead of chasing them away. This won't be accomplished without reducing our government expenses to acceptable levels.

We definitely need a reform. We do not need a temporary patch. A big part of Florida's future depends on what is done now. All parties should agree on this basic fact and work to reach a real solution.

Please visit my website:

One more Florida Property Tax reform proposal!

December 15, 2007

The last addition is pending review from the Taxation and Budget Reform Commission. It would repeal most of school property taxes, replacing them with the inclusion in the state sales tax of SERVICES that are mostly exempt at the present time.

In 1987, the taxation of services lasted for only a few months and was repealed by the Florida legislature under strong opposition by business interests.

The proposal was sponsored by Commissioner John McKay, a former Florida Senator. It came immediately under attack by business interests who claim that it would mainly affect small business and cause the losses of thousands of jobs. They claim that very few states levy taxes on services; service business could be easily transferred to neighboring states. The Coalition for to Protect Florida's Economy (which is said to represent more than 200,000 employers) is strongly opposing the proposition.

The proposal would allegedly cut total property taxes by about 40% and has received some approval by different groups who claim that it would be of great relief for businesses who now pay a disproportionate share of property taxes.

It would apparently target areas that are now exempt, such as legal fees, accounting, printing, transportation, automobile repairs, while retaining the non-taxation of food, medicine, electricity and some essential services.

This new proposal is aimed at correcting the shortcomings of the now legislature- approved tax reform that will go on the ballot on January 2008, which do not provide major relief to owners of non-homestead properties, as well as business and investment properties owners.

My opinion: Reduce taxes, reduce taxes, reduce taxes. Not by swapping creativity, not by increasing one tax to reduce the next one, not by ignoring the main issue. Which is: Reduce expenses, reduce expenses, reduce expenses.

Our bubbling bureaucracy, our absurd multiplication of services, our unreachable goals of pensions and benefits for the ever-increasing class of public employees is the real issue and the real problem to be solved.

Our teachers are the lowest paid in the US, but the most of the proposals to reduce property taxes will further compromise schools budget.

However, we still have a ridiculous amount of small cities with their own water departments, fire departments, mayors, commissioners, parties, cultural departments, and so forth. And the prospect of pension plans for this whole new class is an ominous threat on our future.

Is this an economical way to spend our money? Citizens' consensus is NO.

Magic cannot be performed without real reforms. Our public service expenses have not created a better school system (Florida has one of the worst in the whole country), has not improved citizens' quality of life. It has just gobbled the billions of dollars of property over-taxing and will not give up a penny without a bitter fight.

Is anybody going to put together a proposal that addresses the real causes of the problem, not its consequences?