The battle over Florida’s property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. referendum is heating up given the news that the state is also facing an estimated $1 billion deficit. The news now is that one of the early supporters of the measure is backpedaling. From State Tax Notes:
Florida Republicans who voted to put what they called the largest taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. cut in history on the January 29 ballot are changing their minds about the proposal.
The biggest shift came in late August, when Sen. Lisa Carlton (R), chair of the Fiscal Policy and Calendar Committee, said she would not support the measure because of its likely impact on school funding when the state is already grappling with a $1 billion deficit. Carlton is among the most powerful and respected leaders in the Legislature, and according to a Sarasota Herald-Tribune story, four of the six lawmakers who appeared with her at a luncheon said they would also vote no on January 29.
The amendment would phase out the current property tax exemptionA tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the Internal Revenue Service (IRS), preventing them from having to pay income tax. s and caps for residents and replace them with a “super exemption” worth $195,000 on a $500,000 home.
The amendment, backed by business groups and opposed by government worker unions and educators, is already facing a tough fight. It needs 60 percent approval in January, and the battle to convince voters they should give up the $25,000 homestead exemption and the 3 percent Save Our Homes cap on assessment increases is a tough one.
Losing Carlton’s support is a blow for business groups trying to win over voters.
“She is certainly going to raise some concern with her coming out” against it, said Doug Wheeler of the Florida Chamber of Commerce, “particularly when she did vote for it in the session.”
If the measure passes, it will obviously reduce revenues. Almost any tax cut does that. But are lower revenues (and taxes) always bad? If the voters cannot trust their elected officials to restrain spending, then a starve-the-beast technique may be necessary. However, a mere property tax reduction would likely not do that in the long-run as the state could just raise other taxes to make up for the lost revenue. Furthermore, a cut in property taxes alone–essentially the sole source of local government revenue outside of aid from other levels of government–should not necessarily be seen as great news by political conservatives who tend to be behind this property tax relief push because it will undoubtedly reduce tax competition between jurisdictions and also reduce local control over government services, including schools. In other words, the folks in Tallahassee will be making more of the decisions instead of the locally elected officials.
For more on Florida property taxes, check out our previous blog posts here, here, here, here, here and here.
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