TALLAHASSEE -- Florida voters will have a chance to reduce property taxes for first-time home buyers, commercial property owners and snowbirds under a constitutional amendment the Florida Senate voted Wednesday to put on the November 2012 ballot.
The proposal, hailed by the real estate industry and shunned by cities and counties, was approved, 25-12, despite warnings that it worsens the inequities in Florida’s property tax system. The House passed the measure last week, 105-11.
“This bill, although it’s headed in the right direction, doesn’t solve the problem,” said Sen. David Simmons, R-Altamonte Springs. He said that, if approved, the measure will increase the number of homes and businesses located on the same street but with different tax rates.
“We are compounding the inequity that exists in our tax laws,’’ he said.
Under Florida’s Save Our Homes law, taxes on the assessed value of residential property are capped at a 3 percent a year.
Voters in 2010 added a cap on commercial property tax assessments at 10 percent. The 2012 amendment would lower that threshold to 5 percent, affecting businesses, commercial property and second homeowners, beginning with the 2013 tax bills.
The proposal also gives first-time homeowners a super exemption, which would phase out over five years. The exemption discounts the home’s assessed value by 50 percent in the first year, not to exceed 50 percent of the median home price in that county. The concept is patterned after a similar proposed amendment that legislators placed on the 2010 ballot that was rejected by the Florida Supreme Court because of its confusing language.
Sen. Mike Fasano, R-New Port Richey, the sponsor of the bill, said that the adjustment is needed to spur Florida’s anemic real estate market.
“We have literally tens of thousands of unoccupied homes in the state,’’ he said. “We’ve got to create some incentives.”
Realtors believe the measure will help market Florida residential and commercial property to out-of-state investors, finding buyers for the inventory of residential and commercial property that has stagnated on the market since the Wall Street collapse.
“This is huge,’’ said John Sebree, president of the Florida Association of Realtors, which has been one of the top contributors to the Republican Party and Florida legislators over the last two years as they have pursued this issue.
But cities and counties, which believe the measure could reduce Florida’s $26 billion property tax base by more than $500 million a year, fear the concept will strip them of the money needed to finance their already struggling budgets to provide services.
“We all want to pay less taxes, but we all enjoy those things that contribute to civilization -- to roads that work, to parks that work, to police and to fire,’’ said Sen. Chris Smith, D-Fort Lauderdale, who voted against the bill.
Unlike Save Our Homes, which continues indefinitely, Fasano’s amendment takes effect in 2013 and would sunset in 2023. It also exempts the portion of all tax bills that apply to schools, thereby avoiding any reductions to school budgets.
Wary of impact
Several senators voted against the bill because of the impact the lowered tax assessments will have on small and rural counties.
Sen. Charlie Dean, R-Inverness, said he doesn’t want to go home and tell his constituents that he voted against a tax, but “for at least nine or 10 of my counties, this is a killer,’’ he said.
Sen. Steve Oelrich, R-Alachua, warned that if voters approve the amendment, “it could be disastrous for these counties.”
But Fasano said the measure allows legislators to provide some relief to those counties by providing subsidies to offset the lower tax base.
Sen. Jim Norman, R-Tampa, said that the measure was needed to avoid having banks take over foreclosed homes in Florida.
“This is a good bill that protects homeowners,” he said.
Simmons said he will be back next year and offer an alternative – to give a 30 percent exemption for the just value of residential property from $75,000 from $200,000 and a 15 percent exemption from $200,000 to $400,000 of just value. Such a change would reduce the property tax base in the state by $423 million a year, he said, but has the support of cities and counties because it helps end the inequities.
He would also change the cap on non-homestead property to 7 percent, not 5 percent, because he believes that existing companies will now find new ways to avoid paying their property taxes.
“There is a great mischief that can be done with an artificially low cap,’’ Simmons said. “There is a much, much better solution than this bill.”