Thursday, May 01, 2008

Disappointment with the Commission for Taxation Reform work

The Taxation and Budget Reform Commission (TBRC) was established by constitutional amendment in 1988 and met for the first time in 1990. Changes adopted by voters in 1998 called for the TBRC to begin deliberations in 2007 and established future meetings to occur every 20 years thereafter.

The Commission examines the state budgetary process, revenue needs and expenditure processes of the state. Its members analyze Florida tax structure as well as governmental productivity and efficiency. They review policy as it relates to the ability of state and local governments to tax and adequately fund governmental operations.

On appointing 11 members of the commission in February 2007, Governor Charles Christ said: This commission is an important element of my goal to increase transparency and accountability in government, ' I am eager to review the findings which will undoubtedly provide a deeper understanding of our budget constraints and unveil opportunities to lower taxes for the people of our state.'

The commission consists of 29 members, 11 appointed by the Governor, seven appointed by the President of the Senate, seven appointed by the Speaker of the House and four non-voting ex officio members, all of whom are members of the Legislature. Members will begin meeting in early 2007 and must submit any proposed constitutional amendments by May 4, 2008.

Well, we finally know the result of their hard work. Thanks to them, voters will have to deal with seven ballot questions in November elections. Will this bring a solution to the tax and budget mayhem that is presently ruling our state's economy?

I doubt it.

Dominated by a majority unwilling to carry forward any significant reform, the commission drafted some new tax breaks to favor owners of marinas and conservation lands, as well as some tax incentives for energy efficiency and windstorm protection expenses.

But their most important decision was to propose a reduction of property taxes by about 25%. It would apply not only to homeowners but also to businesses, second homes and commercial buildings. It would also establish a 5 percent cap on yearly assessment increase for non-homestead properties – businesses, investment, and second homes. In January 2008, voters have already approved a 10% percent cap.

This reduction is accomplished by basically eliminating the schools part of property tax revenue. This is the good part. The bad part is that the lost revenue will have to be replaced by new taxes and/or increases of existing taxes to be decided by our state legislators. Most possibly, an additional 1% on sales tax, and new sales taxes on now exempt services. We are talking about a 9.5 billion dollars gap. The legislature must find a way to replace the schools revenue and cover the gap.

Our school system, perhaps the poorest and least efficient in the whole US is once again the weak link in the chain. It will be the legislators' task to compensate the schools' lost revenue with an increase in the sales tax, new sales taxes on services, or cutting on the government budget additionally to the cuts already made this year.

Of course, these 'budget cuts' invariably lead to reduction in social and educational programs.

Frankly, that is not that we expected from a commission that is supposed to bring together some of the best brains in Florida. Instead of spending their time on more creative solutions to rein in the local government excessive spending and implement a sensible and intelligent property tax reform, the commission spent much of their time deciding on matters that have nothing to do with tax reform.

They revived the school vouchers for students at failing public schools and approved a proposal to allow state and local governments to contribute public funds to churches and religious organizations. Does this have anything to do with budget reform and taxation?

By the way, both proposals have already been overturned in the past by the Florida Supreme Court, after being approved by the legislature.

Florida voters will have to untangle all these failing proposals on the November ballot. They will not bring relief to our suffering middle and lower classes.

The property tax reduction might encourage investment and second home purchases. However, it will be at the expense of Florida residents, and it has all the looks and sounds of another hot air balloon to convince us all Florida residents that our government has solved the crisis, lowered taxes, solved all our problems, while it looks more and more like the famous home insurance reduction promised by our governments, which ended up actually increasing many homeowners bills.

Changing money from one pocket to another have never solved financial problems. In this case, swapping property taxes to sales taxes will only load an additional burden on people who don't even own a home. The elusive American dream will just be a bit harder to achieve in Florida.

I had hoped at some point that, after the failure of our legislators to implement a solid and sensible reform, the Taxation and Budget Reform Commission was our last hope to get a reasonable proposal presented to voters in November 2008. It ended up in politics as usual.

Henry B. Nathan is a Florida Realtor at United Realty Group Inc.
Visit my website: http://www.condo-southflorida.com
where you can search for Aventura Condos, Florida Condos, Sunny Isles Condos.


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