Current Sarasota Real Estate News

Florida Legislature Leaders Issue a Framework for Property Tax Reductions

Posted June 13, 2007

    Florida House and Senate leaders are still ironing out details but they expect to reach an agreement to force local governments to roll back property taxes to offset the large revenue increases most of them have approved in the past few years by taking advantage of increasing appraised values. House Speaker Marco Rubio and Senate President Ken Pruitt on Friday issued a 3-page letter outlining a framework for providing both immediate and longer-term tax relief.

    The Republican leaders said there has been "excellent progress" on how to make the cuts, to be based on a formula tied to the amount by which properety taxes have increased in each city and county over the last 5 years, along with a cap on future taxing income for those entities tied to growth in personal income.

    The House and Senate framework allows local governments to avoid the property tax caps if a "supermajority" of elected officials votes to do so, but the lawmakers have not yet determined the size of the supermajority that would be required to avoid the revenue and spending caps. It is also anticipated that the cap could be suspended by a voter referendum.

Cities and counties where taxes have grown the most on a per capita basis "will be required to reduce them the most," under the proposed framework while jurisdictions that have increased tax revenues by less will have to "reduce taxes by less" according to House Speaker Rubio and Senate President Pruitt.

    For longer-term tax relief, the leaders said the state's existing Save Our Homes tax cap, which limits increases in property value assessments to 3 percent a year would be replaced by a new homestead exemption based on a tiered percentage approach. The new exemption would have to be approved by voters in a statewide referendum. The new exemption, they wrote, would be applied to homestead properties, non-homestead residential properties, commercial and industrial properties. The Constitutional changes reducing property taxes would not take effect until 2009 tax bills to give local governments time to plan for their reduced tax revenues.

    Howver, the two leaders left open a major question that state lawmakers will have to settle before or during an upcoming special session on property tax cuts set to begin June 12. They didn't say what percentages would be allowed under the new homestead exemption, which determines how extensive the savings will be to homeowners and how sharply local government budgets will be impacted.

    The leaders acknowledged much hard work remains for lawmakers and said a "thorough fiscal analysis" of the impacts to cities, counties and family's budgets still needs to be prepared. Democratic legislators complained that the Republicans have offered only a broad framework for cutting taxes with no specifics of who will benefit and by how much. Republican lawmakers need the support of some Democratic legislators to achieve the the three-fifths vote needed for the constitutional change. Democratic leaders said they first need to see the numbers.

    Whatever is finally agreed upon in the upcoming special session on tax reform is planned at this point to be presented to Florida Voters on Jan. 29, 2008, on Presidential Primary Day avoiding the cost of conducting a special election to deal with this issue.

   View a copy of the Leaders' Letter.