Below is some additional detail on what is included in the final deal. They will continue to work on reforms that we consider the top priorities such as "highest and best use."
The agreement consists of a two-tiered approach to achieve immediate relief and long-term reform. The combined elements of the plan offer $31.6 billion in tax relief over the next five years. This is touted by House and Senate leaders as by far the largest tax cut in the history of Florida.
1. The Statutory Component - Immediate Tax Relief
Cities and counties must lower their tax rates a certain percentage based on their past taxing conduct. This component of the plan offers $15.6 billion of tax relief over five years, with savings beginning this year. The statutory component affects all properties in a positive way (homestead, non homestead, commercial).
· First, all cities and counties must adopt the rolled-back rate for the coming fiscal year. In other words, tax levies for FY 2007-08 must be equal to tax levies for FY 2006-07, excluding taxes levied from new construction.
· After adopting the rolled-back rate, the bill requires each city and county to further reduce taxes based on their recent taxing history (from 2001 to 2006, the period in which property values rapidly increased). To delve into this further, there will be five tiers. Between 2001 and 2006, if a County had an average annual tax levy increase of a certain percentage then they'd have to roll back a certain percentage more. So, if their tax increase was below 5% the cut is 0; over 5 to 7% tax increase the cut is additional 3%; over 7 to 9% tax increase the cut is 5%; over 9% to 11% the cut is 7%; and over 11% tax increase the cut is an additional 9%. The City cuts are similar. The bottom line is that those counties and cities that increased taxes at a faster rate than the statewide average must offer larger tax cuts. Those that modestly increased tax levies will in turn sustain smaller tax cuts.
· Beginning in 2008-2009 and every year thereafter, the bill requires all local ad valorem taxing authorities except school districts to set millage rates in accordance with the rolled-back rate, adjusted by the annual growth of Florida personal income. A local governing authority may override this cap requirement by guidelines setforth in statute.
2. The Constitutional Component - Long-term Reform
The constitutional amendment cures the inequities in the property tax system by transforming Save Our Homes through a new "super" homestead exemption. The new exemption covers 75% of the first $200,000 of homestead value and 15% of the next $300,000, with all homesteads receiving at least a $50,000 exemption. Current homestead owners will be given a choice as to whether to keep their benefits and assessment cap under Save Our Homes or to use the new super exemption. The bill also authorizes a $25,000 Tangible Personal Property exemption and allows targeted relief for affordable housing, low-income seniors, and working waterfronts. This component offers $16 billion of tax relief.
3. The Special Election
This bill authorizes a special election for #2 above. Voters will have the opportunity to adopt the proposed constitutional amendment during the presidential preference primary on January 29, 2008. If voters approve the amendment, it will lower property tax bills in 2008. If the vote on the constitutional amendment is delayed until the general election in 2008, the reforms will not take effect until tax bills are calculated in 2009.