Wednesday, August 06, 2008

On Florida Property Tax-Swap Amendment

By Henry B. Nathan August 6th, 2008

It looks like the proposal going on the November ballot has a chance to pass, now that Gov. Charlie Crist has said he will strongly endorse it.

I have already written about this subject. Let’s recap.

Basically, it will eliminate the schools part in property taxes. That would reduce everybody’s tax bill by more than 25% including snowbirds, businesses, real estate investors. How would the schools funding come from? Partially by adding 1% on Florida Sales tax.

That would leave a 8 billion gap which will have to be covered by additional sales tax on some services, budget reduction, and a few more things to be figured out by our legislators.

Against the plan are teachers, bus drivers, and other education-related workers, and many business groups, as well as legislators from both parties.

The fact is the magic of tax swaps have proved illusory and a cover-up of the lack of vision in addressing problems with common sense and realism.

I see with apprehension a centralizing of schools funding that will leave them under the complete economic control of state’s authorities, instead of their traditional funding through real estate taxes.

On the other hand, the money has to come from somewhere. In the end, the tax payer will be stuck with the bill, up to the last penny. That’s the essence of “Tax Swapping”. Will it hit harder certain sectors of our population? Possibly. Perhaps those who don’t own a home and would just suffer increased sales taxes and nothing in compensation.

That brings me back to my eternal predicament. Why can’t we just cut the fat? Bureaucracy, mismanagement, and waste are eating up a large part of our cities and counties’ budgets.

Luxurious city halls, generous pension plans, unnecessary duplication of services, you name it. Did you ever ask yourself why, in South Florida, we have dozens of police departments, fire departments, code compliance departments, water departments, administrators, sub-administrators, commissioners, city managers, and so forth, ad-nauseam?

And that brings me again to something that’s going on in our cities now. Forced to reduce a minimal percentage of their budgets by voters’ mandate, they have chosen to start charging for services that were always free. An ingenious alternative to “tax-swapping”, mind you.

The last one I heard about is some city starting to charge a hefty fee to drivers for any accident occurring on its territory, and many other municipalities quickly jumping on the bandwagon. Many other charges and fees are subtly sneaked in to replace the lost revenue. Increasing millage (percentage applied on assessed values to calculate taxes) is also been used by some cities to compensate for reduced assessed values. With some exceptions, they have mostly chosen the easy way out.

I am 100% for property tax reduction. It is a screaming necessity. It must be done now, because it’s hurting the ability of all layers of our society to buy and keep a home. It is a strong deterrent to out-of-state buyers of vacation homes and investors. Home building is a major job-creating industry in Florida, and many builders are all but bankrupt. So, there is no doubt that it is a priority.

On the other hand, I also think that the only way to accomplish this tax reduction is to live within our means. I do not believe in economic “stimulus” packages and other gimmicks and tax-swapping solutions.

That brings the question: OK, my friend, what would you do if you were in the Governor’s shoes?
I am not an economist. But I have a grain of common sense. The same sense that allows me to survive when my personal income is down.
The only answer that comes to my mind is: I’d just reduce the local governments’ income through reduced property taxes and let them deal with it. They will find the answer.
They were living with much less just a few years ago. If they can’t deliver, perhaps we will have to find somebody else to do the job. That’s what elections are for.

In the meantime, people are losing jobs in Florida while outsourcing is ever flourishing. Salaries are shrinking, middle class is receding, and population growth is negative.
I don’t think that the present recession will just end by itself some time in 2009 or 2010, as they want to make me believe. However, I am confident that, at some point, common sense will prevail and we will avoid falling into a major depression. Helping the development of our real economy and putting people to work should be the preferential vision of our elected authorities.
Meanwhile, our local governments are selfishly trying to maintain privileges and avoiding bold decisions.

Henry B. Nathan is a Florida Realtor at United Realty Group Inc. and a Florida Licensed Mortgage Broker.
Visit my website:
where you can search for Hallandale Beach Condos, Sunny Isles Condo
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