Property owners vote, and most homeowners will vote for a tax cut.
That is the conclusion of a carefully crafted constitutional amendment before the Florida Legislature that will put an additional $25,000 homestead exemption for properties valued at more than $100,000 on the 2018 ballot.
The measure appears headed for approval Monday by the Florida Senate, and later in the week by the House. If 60 percent of voters support it, it would be the broadest middle-class tax cut since 2008, when Florida voters approved a series of property tax breaks that capped increases in non-homestead property tax assessments at 10 percent a year and expanded the homestead exemptions from $25,000 to $50,000.
It is also carefully timed.
The proposal, which would become law in 2019, will be on a mid-term November 2018 ballot when turnout is traditionally lower than in a presidential year.
Also on the ballot with be an open race for governor and all three Cabinet positions, all 27 congressional races, half the Florida Senate, all 120 seats in the Florida House and a series of amendments proposed by the Constitutional Revision Commission. House Speaker Richard Corcoran and Senate President Joe Negron are counting on their appointees to the commission to advocate for ballot amendments to authorize private school vouchers and restore Legislative control over redistricting.
“This is all about politics,’’ said Senate Democratic Leader Oscar Braynon, D-Miami Gardens, who opposes the measure. “It’s not about lowering taxes — we have such low taxes already — it’s about starving government.”
The homestead amendment has been a priority for Corcoran, who sees it as an opportunity to force local governments to scale back in the face of rising revenues from a rebounding economy. It was put on the fast track last week in the Senate after Corcoran agreed to concessions during budget negotiations in exchange for Senate President Joe Negron’s push for the homestead exemption in the Senate.
But whether the measure is motivated by ideology or politics, it could have a lasting impact on local government revenues and governance for decades to come.
Special taxing districts for fire and rescue operations say they will be forced to make cuts to services. County and city commissioners warn that they will be forced to raise millage rates on all property, increasing the burden on non-homestead and commercial property, or scale back services.
And, while Realtors support the measure, believing fewer taxes will stimulate sales, affordable housing advocates warn this will widen an already growing gap between the working class with homes and those with jobs who cannot afford home ownership.
“The result of this increase in millage would be to shift the property tax burden from owner-occupied homes to other properties, including rental properties,” said Joe Pennisi, executive director of the non-partisan Florida Policy Institute. “To the extent that many struggling with the housing gap are renters, it would be reasonable to assume that the building owners would increase rents to offset higher property taxes.”
Lee Feldman, city manager for Fort Lauderdale, warns that the popular tax break will put local governments in a box.
“All things being equal and demand for services increases, expenses keep rising, and services are not cut, there’s a revenue shift,’’ he said. “Just because you have less revenue, doesn’t mean your expenses go down.” Cities will be forced to shift the tax burden to non-homestead properties, he said.
For supporters of expanding the homestead exemption, it’s about forcing local governments to reevaluate as Florida real estate values have recovered since the Great Recession, raising property tax revenues, too.
The median property tax in Florida is $1,773 per year for a home worth the median value of $182,400, according to Tax-Rates.org, which crunches data from the Florida Department of Revenue. Florida ranks 18th of the 50 states for property taxes as a percentage of median income; Florida’s median annual household income is $53,595.
“Property taxes have continued to rise and, because of the way it’s handled, local governments have not had to face their constituents and tell them they’re raising their taxes,” said Sen. Tom Lee, R-Thonotosassa, sponsor of the Senate version of the bill.
It is unclear what the total tax savings might be for average homeowners, but preliminary estimates indicate that the drop in revenue for all counties and cities in the state will be about $644 million. For Miami-Dade County, that could amount to an annual cut of about $50 million and for the city of Miami, $17 million.
In Hillsborough County, where commissioners have taken pride in holding the line on tax rates for 24 straight years, the total cut is $30.4 million, and Tampa would see a drop in revenues of $4.1 million.
“We will be hit extremely hard,” said Hillsborough County Commissioner Les Miller. “It sounds good. It’s a political soundbite. But what you’re causing local governments to do is you’re going to make us vote for a property tax hike. It sounds good until we can’t get a fire truck to your home because we can’t afford the services.”
According to data compiled by the Department of Revenue, only three large counties — Miami-Dade, Palm Beach and Orange — and three mid-sized counties — Sumter, Escambia, and Alachua — have seen revenues from property taxes return to the level they were before 2008.
Several smaller counties — Liberty, Union, Lafayette, Calhoun, Holmes, Hamilton, Bradford, Jackson — are considered fiscally constrained because of their low property values, saw their property revenues rise marginally since 2008.
But for many others, the state’s uneven recovery has led to slow rebound in local government revenue. Another hit to their bottom line will force them to cut services or raise taxes.
Todd Bonlarron, assistant county administrator for Palm Beach County, called it a “middle class tax shift” that allows someone with a home valued at $125,000 to pay less while the neighboring home valued at $185,000 pays more.
“There’s going to be a continued inequity between those homes, even if the value rises at 1 percent a year,” he told the Senate Rules Committee last week. “That person with the $185,000 home is going to be paying for the services of the person next door and will for quite some time.”
The benefits of the expanded homestead exemption will be greatest for the state’s most populous county: Miami-Dade.
A real estate boom has pushed the value of properties higher than anywhere else in Florida in the last decade, allowing the county to not only recover from the Great Recession but exceed the property tax revenue it was receiving before the market fell in 2008, according to data from the Department of Revenue.
Miami-Dade’s homeowners already benefit more those in any other county from the current property tax breaks. The 2008 proposal to put a 10 percent cap on tax increases in annual assessed value saved non-homestead property owners $26 billion in 2016, according to the Department of Revenue.
The county with the next highest savings is Broward, with $8 billion. Hillsborough and Pinellas are eighth and ninth in the state with $2.7 billion and $2.1 billion respectively.
But unlike those tax breaks, which reflect taxes never collected, the proposal for the 2018 ballot would be to let homeowners keep money that they are paying now.
This would be the third property tax exemption for most homeowners. Every owner is given a tax exemption on the first $25,000 of their residential property’s assessed value. They receive a second exemption on the property valued at between $50,000 and $75,000 and, if this becomes law, it would provide a third exemption, for values between $100,000 to $125,000.
The statewide median sales price for single-family homes in March was $231,900, up 10.4 percent from the previous year, according to Florida Realtors research. The statewide median price for townhouse and condo properties in March was $171,000, up 9.4 percent over the year-ago figure.
“If it goes to the voters to vote, I think we’re all in agreement that it’s going to pass,” said Sen Joe Abruzzo, D-West Palm Beach. “But if counties are going to have to cover the tax break for by raising taxes on others, I won’t get a benefit but Century Village, the Glades and others communities where the assessed value is below $100,000 will get a tax break. If that’s the case, I’m all in.”
Steve Schale, a Democratic political consultant, is among the experts who doubt the issue will do much to drive voter traffic in 2018. People predicted that a minimum wage amendment on the ballot in 2004 would help Democrats, that the gay marriage amendment would help Republicans in 2008 and that the marijuana initiative would help Democrats in 2014, he said, and in each case they were wrong.
“There is a sense that these thing drive top-of-the-ticket politics and, at least in the history of Florida, there is no evidence that it does,” he said.
Steve Contorno of the Tampa Bay Times contributed to this report.
2008: $237 billion
2016: $250 billion
2008: $165 billion
2016: $162 billion
2008: $26 billion
2016: $23 billion
Florida Dept. of Revenue