Monday, August 30, 2010

Florida Property Taxes - Millage Vs. The People

 I just received my 2010 proposed property taxes notice.  
I have lived in the same house for about 24 years. I am thus protected by the Homestead exemption which should not allow my taxes to be raised more than 3% per year.
The value of my home has been steadily decreasing during the last 3 or 4 years. 
However, my 2010 taxes will go up about 9.4 % in the best case and 14.4% in the worse.
How does this happen? 
a) My "assessed" home value goes up 3% to catch up on past years when I was protected.  When prices went artificially up 20% or 30% some years, they couldn't raise my taxes more than 3% per year, because I was a beneficiary of the homestead regulations. But now, even though prices have been going down every year, they still apply the 3% tax increase every time. Difficult to explain? I confess it is. 
b) The millage. Say your home is worth $100,000 and your taxes are $2,000 per year. Your millage is 2%. Figured it out? The millage is the percentage applied on your home value to calculate your tax. Of course it is on the net assessed value. The assessment is what the County Appraiser establishes as your home value. 
We have certain tax exemptions generally called Homestead which benefit residents' first home, and plus some minor additional benefits for some senior and low income or disadvantaged residents. The Homestead exemption reduces your assessed value by $50,000 for some tax components,  except for the school taxes which have a lesser exemption.
Let's analyze my specific property taxes, as an example.
Reading my 2010 proposed tax bill, (if the budget changes are approved)  I notice:
a) County taxes amount to 22.96% of the dollars total of the tax bill. 
Millage Last Year: 4.8889 - Millage  this year: 5.2256%  - 6.88% Millage  increase 
b) Public School taxes total a 33.61% of the dollars amount of my tax bill. 
Millage Last Year: 7.363% - This Year: 7.631% - 3.64% Millage  increase
c) South Florida Water management taxes amount to 2.16% of the tax bill. 
No changes in Millage rate  -  0.5346 % .
d) Everglades Construction Project taxes amount to 0.362% of the total tax bill. 
No changes in millage rate- 0.0894%
e) Florida Inland navigation taxes amount to 0.1396% of the total tax bill.
No changes in millage rate - 0.0345%
f) Children's Services Council amounts to 1.90% of the total tax bill.
Millage Last Year 0.4243% - Millage this Year 0.4696% - 10.68% Millage increase
g) Municipal (City Taxes) which amount for  31.15% of my total tax bill:
Millage Last Year 6.9934% - Millage This Year - 7.7% - 10.10% Millage increase!
h) South Florida Hospital District, which amounts to 5.90% of my total bill.
Millage Last Year - 1.2732% - Millage This Year 1.4572% - 14.45% Millage increase
i) Non ad-valorem assessments: 1.80% of the total dollars amount of the tax bill.
No change in millage rate.

I repeat:  Altogether, my 2010 taxes will go up between 9.4 % in the best case and 14.4% in the worse, depending on the budget discussions.


Is this fair? When property values have been plummeting  for four years now?

When inflation is close to zero? 

Can people hardly hit by this unending recession afford these increases?

Here is my analysis and my conclusions

The largest impact on my tax bill is by far the MUNICIPAL TAXES  item, followed by BROWARD COUNTY TAXES. Millage rates have increased a lot in one year on both counts.
Public School Taxes had a more moderate increase in the millage rate.
Hospital District Taxes had the highest millage rate increase (14.45% more). However it is only a 5.90% of my tax bill; so the impact is not so bad, and I can understand that in these recession times, hospital could be extending their services to more under-privileged citizens. 
What I can't easily swallow is the County and City tax increases. 
In spite of the present property values drops, the overall tax base (total of assessments for all properties) of my city has substantially increased since 2000. This increase is much higher than the rate of inflation in the same period.  How can be explained?  A couple of words may suffice: waste and mismanagement. 
Do I have actual proof of that? I do not follow these budgets and city commissioners'  decisions and meetings so closely.
On the other hand, services have not improved, and I have seen higher bills for my  sewer, water, trash services; In some cases, these services have been actually reduced.
But like any private corporation, what count for a shareholder at the end of the Business Year are the dividends of his investment.  And a conscious shareholder will compare them against previous years' returns and results, as well as similar corporations' results. According to this judgment, the CEO and Board of Directors will be confirmed or voted out.

Our taxes are a main consideration when assessing our governors' work. It's not quite the same as a corporation, but very similar. We can and should exercise our judgment and make our voices heard. 
It is done once every few years when voting for our commissioners.  

As a realtor, I am severely affected by the impact of property taxes (as well as insurance, maintenance expenses), on people's ability to sustain their home-ownership.  Foreign buyers often balk when confronted with the cost of maintaining a property in Florida. 

No doubt that, unleashed as it seems to be, this is a leading factor in the real estate recession.
This is the bottom line. 


I have read in The Palm Beach Post – August 27, 2010,  an article on the same subject.  That confirms it. I am not alone. This is what it says:

Home values way down but taxes often up; homeowners ask how it's possible
Many Palm Beach County homeowners may feel like they've been drop-kicked in the gut after opening their preliminary property tax notices this week.
Property values across the county have plummeted, leaving many owners owing more than they paid for their homes.
Even those who aren't under water felt the jolt. In many cases, not only did their property values fall, but they will pay more in property taxes next year.
"I thought to myself, 'How does that happen?' " said Bob Deacy, who is slated to pay about $100 more in property taxes next year for his home in West Palm Beach's historic Flamingo Park neighborhood. "I read it over three times."
The increase came despite a 22 percent drop in his home's market value.
Deacy bought his home $79,000 in 1997 and saw its value rise year after year. But to see it plunge this year from $189,143 to $147,296, is more upsetting than the proposed tax increase, he said.
"I am a realist, and I know that if you want improvements in your community you are going to have to pay," he said. " I didn't think in a neighborhood that is sought-after it would go down as much as it did."
By contrast, suburban Lake Worth resident Erna Altenor also watched her home's value plummet but has seen her tax bill fall. Altenor bought her home for $260,000 in 2007. Its market value is now $73,581, according to her preliminary tax notice.
"I couldn't take it no more," said Altenor, who stopped reading the notice after seeing the new value.
State law prevents homeowners from being taxed on more than their home is worth. As a result, Altenor's taxes have also plummeted to $1,055, down from $2,133 last year.
"That is good news," she said.
For those unhappy with the numbers in their preliminary notices, there is time to challenge them.
The county's value adjustment board can lower a property's assessed value after a hearing before a special magistrate. Petitions can be filed with the Palm Beach County Clerk and Comptroller's office.
And the county, cities, and other agencies won't finalize tax rates until next month. Before they do, they must hold public hearings on their budgets. Those who want to sound off about tax increases can speak out at those hearings.
The dates and locations are included on property owners' preliminary tax notices.
Property taxes rising
Many longtime homeowners will see their property taxes go up this year, even though the values of their homes have fallen. Here's one example:
West Palm Beach Year purchased: 1997
2009 market value $189,134
2010 market value $147,296
2009 property taxes $1,310
2010 proposed property taxes $1,413
Property taxes falling
Homeowners who bought during the boom will likely see property taxes fall this year, along with the values of their homes. Here's one example:
Suburban Lake WorthYear;  purchased: 2007
2009 market value $133,740
2010 market value $73,581
2009 property taxes $2,133

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