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Senate Unveils Tax-Cut Plan
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Published: October 29, 2007
TALLAHASSEE - A new property tax-cutting plan offered Sunday by Senate leaders is simpler, would provide less relief to some taxpayers and includes a scaled-down version of the House's assessment cap for businesses, snowbirds and landlords.
The proposed compromise also would limit the value of tax breaks homeowners could take with them when they move - known as 'portability' - to $500,000 instead of $1 million as both chambers had previously agreed.
The new Senate proposal would cut taxes by $8.74 billion in the first four years, or about $1 billion less than either chamber's present plan, according to Senate estimates.
The revision is an effort to break a stalemate with the House when lawmakers reconvene a special session today, just a day before the deadline for getting a new plan on the Jan. 29 presidential primary ballot.
'It represents our final offer,' said Kathy Mears, spokeswoman for Senate President Ken Pruitt.
House Speaker Marco Rubio's spokeswoman, Jill Chamberlin, said he couldn't immediately comment because he hadn't yet had a chance to give it a careful review.
Rubio, R-West Miami, and Pruitt, R-Port St. Lucie, called the special session after a judge removed from the ballot an earlier constitutional amendment. That plan's ballot summary was ruled misleading because it said the amendment would have protected existing homeowner tax breaks while phasing them out.
The Florida Constitution's Save Our Homes Amendment now caps annual assessment increases at 3 percent for primary homes, known as homesteads.
The House's plan also would give nonhomestead properties, including businesses, second homes and rentals, a 5 percent cap similar to Save Our Homes.
No such provision was in the original Senate plan, but the proposed compromise has a nonhomestead cap at 10 percent. Another difference is that the cap would not apply to school taxes property owners pay.
The Senate, though, is sticking with another key provision in its original plan that would double the existing $25,000 homestead exemption for homes valued at more than $50,000, except for school taxes. That's expected to save the average homeowner about $240 a year.
The House plan, instead, would offer an exemption equal to 40 percent of the median home value in each county - also except for school taxes - or accrued Save Our Homes benefits, whichever is more. Savings would range from less than $100 in low-value counties to four or five times that at the other end of the spectrum.
Portability is a key issue because homeowners now lose their Save Our Homes benefits - and face sharp tax increases - when they move. Many have put off moving for that reason, contributing to the state's depressed housing market.
The new Senate proposal also would retain a provision in both previous plans that would give businesses a $25,000 tax exemption on equipment and other personal property.
It does not, though, include additional relief in both prior plans for low-income seniors, affordable housing and working waterfronts including marinas. Also gone is a Senate provision that would give an extra exemption to first-time homebuyers.
One new element, however, would be state financial aid to small, rural counties, which are in a financial bind because of low property values, to make up for the tax cuts.
How the tax cuts would affect schools has worried many lawmakers, and the new Senate proposal may not put that issue to rest. The original Senate plan was estimated to cost schools $1.5 billion in funding, and the new Senate plan would hit schools even harder - $1.86 billion over four years. Those numbers are still significantly less than the removed ballot proposal, which weighed in at about $7 billion.
The Senate passed its original plan Oct. 17 and hasn't been back in Tallahassee since. The House adopted its version a week ago before leaving town.
The overall four-year cut in the original Senate replacement proposal would have been $9.76 billion compared with $9.84 billion for the House.
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