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The Details of the Tax cut and how it impacts your bill

Friday, June 15, 2007

by Roman Pavlik

The Florida Association of Realtors(R) just reported that the Legislature has adjourned Sine Die at 6:28 pm today bringing the 2007 Special Session on Property Tax Reform to a close. Both the House and Senate passed all three bills making up the property tax reform package. The package includes a statutory rollback and cap of property tax rates, a proposed constitutional amendment creating a "super homestead exemption" and a bill designating the upcoming January 29, 2008 presidential preference primary as the date for Floridians to vote on the "super homestead exemption" amendment.

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.

PROPERTY TAX CUTS ARE HERE!! WITH HOPEFULLY MORE TO COME

Friday, June 15, 2007

by Roman Pavlik

Here is the article from the Miami Herald directly:

Legislature passes property tax cut proposal

BY MARC CAPUTO mcaputo@MiamiHerald.com

TALLAHASSEE -- The state Legislature just passed the biggest property-tax cut in state history, immediately rolling back and capping local-government spending and asking voters to supersize homeowner tax exemptions.

Eight days ahead of schedule, lawmakers ended the special session at 6:26 p.m. shortly after the House, by a party-line 74-43 vote, passed the proposed constitutional amendment for the tax exemptions.

The outcome of the two-step plan was largely a foregone conclusion Thursday morning, with only one real question remaining: Would Senate Democrats agree to put amendment on the Jan. 29 ballot?

They did, despite the urging of Senate Democratic Leader Steve Geller. He wanted the proposed constitutional amendment on the November 2008 general election ballot, figuring more independent voters and Democrats are likely to show then and vote against it.

To make the amendment more palatable to voters, Republicans changed it so it wouldn't force homeowners into the new tax system and lose their Save Our Homes tax cap.

That would reduce the five-year anticipated tax savings to about $9 billion, down from $16 billion.

Regardless, Republicans said the point was made, and the cuts are real.

''We're putting up a stop sign for local government,'' said Rep. Frank Attkisson, a Kissimmee Republican.

Democrats in both chambers bashed the constitutional amendment, saying it primarily helps homeowners -- rather than owners of other types of real estate -- and cuts too much from schools: $7.2 billion over four years.

Nevertheless, House Democrats joined the vote for the Jan. 29 election date, cast a party-line vote for the amendment itself and a near-unanimous vote for the rollback-and-cap plan. Rep. Jim Waldman, a Coconut Creek Democrat, cast the lone dissent in the 117-1 vote.

Voting no is ''the right thing to do. What they're proposing is to devastate local government,'' the freshman lawmaker said, calling the Legislature ''hypocritical'' for raising school property-taxes in next year's budget while cutting those taxes for local government.

Said Senate President Ken Pruitt: ``If [local governments] allowed it to get to that point, that a $15 billion hit -- or even a $30 billion hit -- is going to bankrupt your community and projects are going to stop and this is the end of the good life as we know it, then you've got some real explaining to do to your local constituents.''

Sen. Mike Haridopolos, a Melbourne Republican, acknowledged the proposal isn't ``perfect. You'll never get one of those out of Tallahassee.''

But he pointed out the plan gives deep tax relief, helps solve the portability issue and ultimately leaves voters in charge of approving the constitutional amendment.

Republicans also changed the plan to allow people to keep their existing protection under the Save Our Homes provision.

Originally, the proposed constitutional amendment sought to phase out Save Our Homes and force homeowners from enjoying its protections if they benefited from the new system. The new system would supersize homestead exemptions, giving homeowners a 75 percent write-off on their first $200,000 in market-based ''just value'' and an additional 15 percent write-off on the next $300,000.

Earlier in this week's special session on property taxes, Democrats made much of the fact that Save Our Homes would disappear for some, but that their tax-assessment increases could be greater in future years.

But Democrats opposed the fix when it was brought up Thursday morning.

Sen. Ted Deutch, a Boca Raton Democrat, said the new proposal exemplified all that was wrong with the tax bill's secretive, last-minute changes sprung on the public. Deutch pointed out that no one knew what the cost of the fix would be.

But Republican Sen. Don Gaetz of Fort Walton Beach marveled at the ''role reversal,'' with Democrats fighting something they once appeared to support. Earlier in the day, he said Democrats just opposed tax reform regardless of what was proposed.

With the exception of Waldman, Gaetz was wrong. Democrats voted for the $15.6 billion in tax cuts from the rollbacks.