The homestead property tax "trap" is the phenomenon which gave rise to no less than three proposals in the 2005 legislative session for "portability" in whole or in part of accumulated Save Ours Homes "cap" benefits accrued on property.
The consequences of the Amendment 10 "cap" are so extreme as a result of 12 years of application since inception that some properties, especially in South Florida, have an assessed or taxable value of less than 1/3 of the fair market value. This means that two identical homes adjacent to each other can--and sometimes do--have tax bills with a 200% variation even though their values and tax (i.e. millage) rates are identical!
Cases in point include the following.
Eileen Rennick, a widow, moved to Century Village in Deerfield Beach in 1999. She became accustomed to paying $104 a year in taxes on a one-bedroom condominium unit. But two years ago, when she moved across the street into a two-bedroom condo unit, her taxes increased by 900%, to $1,040 a year. "It's outrageous," Rennick said, adding that she would not have moved if she had been aware of the dramatic impact of the change in property taxes.
Randy Aube of Boca Raton would like to move to Broward County, but he's afraid he can't afford the taxes. He pays $4,300 a year in property tax on the house he has lived in for six years. If he moves and buys a place of similar value, his property taxes will triple to $14,000.
Aube wrote in a recent letter to State Representative Adam Hasner (R., Delray Beach), "My next-door neighbor, who bought his house a few years after I did, is paying about twice as much [in property taxes]. That just doesn't make any sense. I know this is a huge complicated problem, but if it doesn't get fixed, it's only going to get worse."
Upset about the homestead exemption property tax "trap," South Florida homeowners can address their concerns directly to state legislators of both parties at town hall-type meetings across the state in the ensuing months. Eight town hall-style hearings are scheduled. See this blog for dates and times of hearings in Fort Lauderdale and Miami during the second week of February.
The hearings will provided grist for the legislative mill in the upcoming session, which will start in March.
Newly-elected Governor Charlie Crist and many legislators want to reduce taxes people pay on their homes. They are discussing a constitutional amendment that legislators would propose and voters approve or disapprove in statewide elections to be held as early as this summer. The proposal, among other things, would double the current $25,000 homestead exemption, which lowers the assessed and taxable value of a home. Under the existing exemption, the owner of a $200,000 house pays property tax on $175,000 of that value. If such a proposal passes, the taxable value would be reduced to $150,000.
The Republican governor also wants to let homeowners take some or all of their so-called "Save Our Homes" tax savings if they move. A 13-year-old constitutional provision caps tax increases at 3 percent a year (or the cost-of-living increase, whichever is less) no matter how much the value of a home increases. But those savings are lost when a homeowner moves, and the cap doesn't apply to businesses, rental properties or vacation homes.
This month, Crist and legislators concurred on changes to cut property insurance rates. Property tax issues promise to be hinkier and more controversial.
Local government officials say tax cuts of any significance will reduce public funds avalable for local parks, salaries of police officers and firefighters and other essential public services.
Lauderdale Lakes Finance Director Larry Tibbs is among those who are worried. He says if homestead exemptions are doubled, his city alone would lose more than $1 million annually. Mr. Tibbs said, "To make up that difference, Lauderdale Lakes would have to raise the millage rate."
Consequences would be even worse for Miami-Dade County municipalities which have a stable and predominant tax base of homes owned by permanent residents. North Miami and South Miami quickly come to mind.
Governor Crist cogently suggests that local governments, which have expanded their budgets during the past several years due to swollen tax bases resulting from a booming real estate market, should pull in their belts and spend less.
"They are going to have to have a little more discipline at the local level to help the people," said Governor Crist.
Some Republican legislators joined the chorus of those calling for spending cuts by cities, counties and other taxing authorities. They say total property taxes levied at the local level ascended from $16.6 billion in 2001 to $30.4 billion in 2006, an 83.1% increase that nearly septupled the 12% population growth during the same period.
"Florida doesn't have a revenue problem. We have a spending problem,"
said Senator Mike Haridopolous (R., Indialantic), chairman of the Senate Finance and Tax Committee.
Palm Beach County resident Larry Zalkin, who serves on a county advisory board, agrees that it's time for Florida to reduce property taxes, even if it means slashing city and county budgets. "This is the ideal time to fix the situation" by sharing budget surpluses with the public which funded them, opined Mr. Zalkin.
The property tax debate is gaining momentum after fizzling during the 2005 legislative session. State legislative leadership says everything is on the table, even though House Speaker Marco Rubio insists any tax cuts be across the board and be combined with stringent spending caps for cities, counties and school districts.
"[Property tax cuts] have to help the owner of the apartment building, so that hopefully they'll pass it through to their tenant. It also has to help the owner of the laundromat or the dry-cleaning store at the corner," said Rubio (R., West Miami).
For better or worse, watch for the 2006 legislative session to study all, and implement some, of the proposals advanced by the Property Tax Reform Committee appointed last year by outgoing Governor Jeb Bush. The Committee was created by executive fiat after the 2005 session of the Legislature did little to address the property tax inequities engendered by the Save Our Homes constitutional amendment approved by Florida voters in 1994.
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Daniel A. Weiss is a former Attorney Special Master for the Miami-Dade County Value Adjustment Board with over 25 years property tax experience. Mr. Weiss represented the Miami-Dade County taxing authorities in litigation and appeals between 1981 and 1995 and has since represented taxpayers in property tax matters. Mr. Weiss was named one of the top lawyers in real estate, zoning and land use by South Florida Legal Guide 2007. In Florida Super Lawyers 2006, Weiss was named one of the top 6 local government lawyers in South Florida.
In Florida Trend magazine™'s Legal Elite's issue, July 2004, Mr. Weiss was selected by his peers as one of the top 30 government lawyers in the State of Florida.
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