Odds are good Florida voters will approve another property-tax break for homesteaders in the Nov. 6 election, but local officials are warning they may need to hike tax rates and slash services to make up for the lost revenue.
Amendment 1 would create another $25,000 property-tax homestead exemption, this one for taxable value greater than $100,000. The Florida Association of Counties estimated the initiative would save the owner of the average Florida home about $243.
Many local-government officials say they are formulating their budget strategies with the belief voters will approve Amendment 1 and trigger the loss of an estimated $587 million in property-tax revenue statewide.
Amendment 1 opponents argue the additional homestead exemption would result in a cost shift to businesses, rental-unit owners and owners of lower-value homes, who would face higher taxes to make up for the savings realized by owners of homes with taxable values exceeding $100,000.
“Amendment 1 doesn’t make providing public safety, roads, parks or any other public service cheaper,” said Port St. Lucie Mayor Greg Oravec. “And the Florida Legislature didn’t provide offsetting revenue to local governments.
“The majority of property owners will see their proportionate share of taxes go up, not down,” Oravec predicted.
The additional homestead exemption, had it been in effect for the city’s current budget year, would have cost Port St. Lucie $3.6 million, said City Manager Russ Blackburn.
Tallahassee Mayor Andrew Gillum, a Democratic primary candidate for governor, said his city stands to lose about $2 million per year in property-tax revenue if Amendment 1 passes.
“It will pressure the city commissioners to make hard choices between raising the city (property-tax) rates or cutting services,” Gillum told the USA Today Florida Network. “There’s just no way around it.”
Homeowners who live in their houses are exempt from property taxes on the first $25,000 in taxable value. They also are exempt from property taxes, except for school taxes, on taxable value between $50,000 and $75,000.
The proposed Amendment 1 exemption on taxable value between $100,000 and $125,000 also would not apply to school taxes.
Property taxes are calculated by multiplying the tax rates set by taxing agencies – such as county commissions, school boards, city councils and special taxing districts – by a property’s taxable value, which is set by the county property appraiser.
House Speaker Richard Corcoran, R-Land O’Lakes, said his tax break initiative won overwhelming support in the Legislature and predicted it would pass in November with 80 percent of the vote.
“We’re seeing another bubble right now where property values are skyrocketing,” Corcoran told the USA Today Florida Network. “The local governments do not go to the rollback rate, which is the rate of revenue they took in the year before. Instead they take all the additional revenues. That money, instead of growing government, should go back into the pockets of the people.”
State Senate President Joe Negron, R-Stuart, said he, too, supports Amendment 1 and expects voters in his Treasure Coast district to approve it by a “large margin.”
Dozens of other government officials, business leaders and interest-group representatives also said they think Amendment 1 will pass. None said he or she believes it will fail.
Tax break opponents
The League of Women Voters of Florida and the Florida League of Cities are among groups opposing Amendment 1.
The League of Cities lobbied against even placing it on the ballot. It also created a web page offering city officials talking points, an action plan and sample resolutions, speeches, newspaper columns and news releases.
“It takes our very unfair and inequitable property-tax system and makes it much worse,” said Amber Hughes, a lobbyist for the League of Cities. “This tax shift is going to negatively impact almost every other property owner in the state.”
Cities, counties and taxing districts could just increase their property-tax rates to make up for the lost revenue, which would reduce the savings from the additional homestead exemption, Hughes said. Or they could cut services.
“You’ve got to look at it comprehensively,” Hughes said. “The vast majority of Floridians will not benefit from this, so I’m hoping they will vote it down.”
Other groups, such as the Florida Association of Counties and Florida TaxWatch, have not yet staked out an official position but still might.
“We’re still reviewing it, but we have serious concerns about it as we did in 2008 (when voters approved the second $25,000 homestead exemption),” said TaxWatch President and CEO Dominic Calabro. “It’s more of a tax shift than real tax reform.”
Lawmakers should consider adjusting the homestead exemption for inflation every 10 years, Calabro said.
The Florida Chamber of Commerce remains neutral, said Edie Ousley, its vice president of public affairs.
A statewide poll conducted by the chamber from May 25-June 4 showed 67 percent of voters favor the additional property-tax break. The initiative needs 60 percent of the vote to pass.
Business leaders concerned
If the measure passes, the state chamber opposes the idea of raising property-tax rates to make up for the lost revenues. That only would shift more of the burden to businesses, Ousley said.
“Saving money by paying less in taxes is a hard argument to beat,” Ousley said. “Some have suggested that communities might make up for those lost revenues on the backs of businesses. That would be unwise and bad for jobs and the economy.”
The Stuart/Martin County Chamber of Commerce also is remaining neutral, but the Cocoa Beach Regional Chamber of Commerce came out against it.
“It’s incredibly difficult, especially in Brevard County,” said Jennnifer Sugarman, president and CEO of the Cocoa Beach chamber. “Tax is very much a dirty word. I think it is in a lot of places, but for sure in this county it’s going to be a challenge.
“Yes, it looks like you’re saving hundreds of dollars now, but you won’t in the long run,” Sugarman said. “You’re going to have to pick it up somewhere.”
Naples Mayor Bob Barnett said he’s remaining neutral on the ballot question until its effects are analyzed by city officials, but he described the decision as a “no-brainer” for homeowners because they would save money.
Santa Rosa County Commission Chairman Bob Cole, who is seeking his fifth four-year term, said he supports the tax break, expects it to pass and will find a way to cope with the $3 million revenue loss.
“I’d be foolish to oppose it,” Cole said, “because the citizens feel like they should get a break on their taxes.”
If Amendment 1 passes, what would all taxing agencies stand to lose?
Brevard County: $17.1 million
Collier County: $9.4 million
Escambia County: $4.7 million
Lee County: $20.4 million
Leon County: $9.2 million
Martin County: $7.2 million
Indian River County: $4.2 million
St. Lucie County: $10.6 million
Santa Rosa County: $3.6 million
* School districts exempted
Average savings for homestead properties with values greater than $100,000
Brevard County: $240
Collier County: $139
Escambia County: $171
Indian River County: $193
Lee County: $220
Leon County: $262
Martin County: $244
St. Lucie County: $333
Santa Rosa County: $147
Source: Florida Association of Counties
© 2018 Journal Media Group, George Andreassi