Tax rate + higher values = tax increase

07/10/2014 7:09 PM

07/10/2014 7:11 PM

The whole truth is often complicated. A partial truth is much easier to grasp. Partial truths about property taxes, told repeatedly, have made rational discussion about county taxes extremely difficult. Politicians repeatedly claim they have voted to keep the tax rate flat, or they lowered the tax rate, even when property taxes have increased. By focusing exclusively on the rate of taxation, we deny ourselves an opportunity to honestly discuss the truth about property taxes.

In 1980, the Florida Legislature recognized that local officials were misleading their constituents about property taxes and passed the “Truth in Millage” law. Under the law, if local property taxes are being increased, the public must be notified. If a local government plans to increase property taxes, the county or city must advertise their intentions with an 18-point font headline declaring a “Notice of Proposed Tax Increase” in the newspaper of general circulation (Florida Statutes, 200.062).

The Truth in Millage law was introduced following a period of rapid increase in the value of properties. Back then, local politicians would boast of lowering the tax rate, or keeping the tax rate flat, but their local government would still be piling up more tax revenues in the coffers. Even though the law now requires the truth about property taxes be advertised, the repeated half-truths by some officials, often unchallenged by the media, leave many people confused about property taxes.

A tax increase occurs whenever the rate of taxation times the values of the properties equals more revenues, that is a tax increase. A flat tax rate with higher property values produces more funds. Mayor Carlos Gimenez is relying on this to balance the budget.

The proposed budget requires a “Notice of Proposed Tax Increase” advertisement in the Miami Herald. In fact, this will be the third year in a row that Mayor Gimenez has proposed a budget with a property-tax increase.

Following the tax break budget of 2011, the next year Miami-Dade County advertised a “Notice of Proposed Tax Increase” on Sept. 16, 2012. Then, the next year, on Sept. 15, 2013, another “Notice of Proposed Tax Increase” advertisement ran. Granted, even after the third year of property tax increases, the double-digit tax break Mayor Gimenez pushed through after being elected mayor is still providing over $100 million in tax relief.

Is that massive tax break sustainable? After reading the reports about the serious service cuts being proposed this year, I would venture to guess most residents would think not. It may be time to ask the foreign investors and owners of high value commercial, industrial and non-homestead residential properties, the people who pay 72 percent of the county property taxes, to enjoy a more modest tax break.

It is entirely possible to continue giving a $10 million-20 million tax break from the 2010 levels, and accomplish all of the following: set the Library District millage to save the system; maintain a Fire District millage that allows the public to have full confidence in the capabilities of our fire-rescue service; and set the Countywide and UMSA millage rates at levels that allow the Miami-Dade Police Department to maintain its ranks and its national reputation. It is also possible to avoid cuts to community-based organizations, and keep our Parks and Open Spaces properly maintained.

The truth about tax millage is complicated, but it may also light the way forward. The truth is, at the tail end of the recession, property owners were given a very big tax break. Each year since the big tax break, property taxes have been increasing slightly. This year, if the proposed tax increase is coupled with a significant reduction in the historic tax break, service cuts can be largely avoided. Mayor Gimenez would still be able to say, for four years in a row, he has kept property taxes lower than his predecessor. And, most important, the residents, the people who actually live here, would not have to endure draconian cuts to public services.

Terry Murphy, a government relations consultant, is an adjunct professor at Florida International University’s School of International and Public Affairs.

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