There is no question whatsoever that the hottest topic in the state legislature right now is property tax "reform". What I want to know is who up there is taking a serious look at how these so called reforms are going to affect the quality of life here in Florida? What do I mean by this? Come along and we'll take a quick tour of the issues.
Nobody disputes that there are serious inequities in our current property tax system. However, nothing in the House bill actually addresses those inequities, and precious little in the Senate bill. Here are the subgroups of people who have been most seriously disadvantaged by our current property tax system:
1) Rental property owners and by extension renters.
2) Business property owners
3) Non homestead residential property owners
4) Homesteaders trapped in their homes by Save Our Homes
Rental property owners, particularly those who rent affordable units, have been brutally hit by the current property tax system. But the people they have been hit by are the property appraisers. The appraisers see that property as a potential high price condo and tax it accordingly. That's akin to an income tax that taxes you on what you might have earned rather than what you actually earned. What a brilliant idea that is.
Business property owners have the same problem. Their properties are being taxed as if they were in a new multi use property or a new office tower, as opposed to the mom and pop shop they actually run. More taxes on potential.
Non homestead residential property owners, or second home owners if you will are also getting hammered by the run up in real estate values. But legislators, here's a clue. These people are either not citizens of Florida, or they are fortunate enough to own a second home in this state. The first group are not voters here. The second group, to the extent they can afford to have a second home in this state also ought to be able to afford the taxes on it.
Finally we have the homesteaders who are trapped in their current homes by the Save Our Homes amendment and its unintended consequences. The Save Our Homes amendment is working exactly as it was meant to. People are not being taxed out of their homesteads in Florida. But they are being held hostage in their current homes due to the tax consequences of moving into a new home.
So what do the House and Senate "reform" plans do for these classes of tax payers? The house bill does virtually nothing for anyone except homestead property owners, the exact class that needs tax relief the least. I was fortunate enough to buy a property in downtown St. Petersburg 10 years ago. Thanks to Save Our Homes and Homestead Exemption, the taxable value of my home is still below my 10 year old purchase price. Meanwhile the actual market value of my home has quadrupled. Do I need tax relief? Actually my city taxes in St. Petersburg declined slightly last year. The only tax reform I need is Save Our Homes portability.
The Senate bill attempts a form of temporary portability. Their excuse is that there are constitutional issues (US Constitution) against just making Save Our Homes fully portable. The issue is that making Save Our Homes portable would unconstitutionally create different classes of taxpayers in Florida. This argument is spurious at best. We have had Homestead Exemption for as long as I can remember. We have additional homestead exemptions available for the elderly, disabled veterans, widows and probably some other groups. None of these has ever been successfully challenged on constitutional grounds. There is no real reason to suspect that Save Our Homes portability would not pass the same test.
How about rental property owners and the renters themselves? Well, if your rental property is qualified as "affordable" and you agree to maintain that use of the property for 20 years, you can get your appraised value figured on actual cash flow on the property. There is no reason that actual cash flow could not be used as a valuation method on all rental properties.
The same thing applies to other business property owners. They need to get off "highest and best use" appraisals and get onto some variation of current use valuation. Nothing substantial is being proposed for these property owners.
Now, what has all this to do with quality of life. The reforms that I am in favor of above are already going to cost local governments tax revenue. The bigger gun to the head of local governments is actually the various proposals to "roll back" local governments property tax revenue to some prior year. That is what is going to hit us all squarely in our quality of life.
My own local governments, St. Petersburg and Pinellas County have not been profligate squanderers of tax money, but they are being dumped into the same boat with other local governments that might have been. Both governments have been looking at the likely consequences of the property tax proposals in Tallahassee. Both local governments have insisted that the police and sheriff's departments would not have services curtailed due to property tax revenue reductions. So where does that leave them?
St. Petersburg has mentioned that some fire stations might be closed. That can not have a good effect on overall fire department response times.
St. Petersburg and Pinellas County are faced with a homelessness crisis, as evidenced by the tent cities that have sprung up in St. Petersburg. Residents and business owners want government to step in and fix the problem. The temporary solution is more emergency shelter beds. The longer term solution is affordable housing. Both of these "solutions" cost money. However these are precisely the spending areas that are likely to fare poorly when the budget axe falls. We will then have to deal with the current homeless situation without major relief for some time to come.
Pinellas County is starting to have second thoughts about the feasibility of Tax Increment Financing (TIF). This is the program that allows all property tax revenues from a specific area (city and county) to be reinvested in those specific areas. TIF has had spectacular results in downtown St. petersburg and in Ybor City. If county governments decide they can no longer afford TIFs, the economic effects in construction spending slowdowns will be felt for years to come.
St. Petersburg has already prepared a letter to all social service agencies and charities that have received financial support from the City. These folks have been told to plan their budgets on the basis that they would receive no funds from the City of St. Petersburg this year. These items include support for alcohol treatment centers and an inebriate receiving center.
Other quality of life areas sure to receive budget hits are the Pier Aquarium, the Florida Orchestra, the MLK Festival Band Event and various other City Co-sponsored events. Some of us are surely going to miss these things when they are gone.
There are other areas that are sure to take some hits as well. Library branches might close, or have their hours of operation sharply reduced. Parks will not have their grass cut or their other maintenance needs tended to as we would like to see them.
If our legislators rush into this so called "property tax reform" without careful consideration, we are going to be feeling the unintended consequences in our quality of life for years to come.
Who will the legislators blame then?