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Panel Crafts Tax Initiatives For November Ballot
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Published: February 26, 2008
Updated: 02/25/2008 11:47 pm
TALLAHASSEE - Proposals that would trim 25 percent from your property tax bill or give you a new homestead exemption moved a step closer on Monday toward the November ballot.
A panel of Taxation and Budget Reform Commission members approved a plan that would make the 25 percent portion of property taxes that pay for schools a thing of the past. Lawmakers would have to restore that $8 billion for schools by raising the sales tax by a penny and eliminating some of the state's 246 sales tax exemptions, cutting the state budget, substituting new revenue or some combination of those.
The same panel also approved a proposal to give all residential and commercial property owners a 25 percent tax exemption. In exchange, the state would boost the sales tax by a half penny for three years.
That plan heads to another committee, while the proposal to eliminate school taxes goes before the full Taxation and Budget Reform Commission. A powerful group that convenes once every 20 years, it has the power to place questions on the state ballot without approval from the legislative or judicial branches or need to collect petition signatures.
With lawmakers mired in cutting the budget this spring, the commission may be the likeliest source of substantial property tax reform this year. But commission proposals must clear a high bar to reach the ballot: 17 affirmative votes from the 25 members.
The plan to eliminate school taxes came from Commissioner and former Senate President John McKay, who long has argued that the state's sales exemptions are giveaways to special interests. But the version of his proposal that the committee adopted Monday lacked a core element: a tax on services, which McKay tried in vain to pass during his Senate tenure, from 1990 to 2002.
Tax-Free Haircuts, Accounting
Florida currently excludes purchased services from haircuts to accounting from taxation. McKay sought to prod lawmakers into broadening the sales tax base by taxing at least some services. The commission members voted 6-5, however, for an amendment from Commissioner Patricia Levesque to remove the services tax from the proposal and allow lawmakers instead to offset the tax loss with budget cutting or new revenue that results from the tax cut stimulating the economy.
The change was a blow for McKay, who argued Monday that, if given the option, the Legislature would rather carve into the Medicaid budget and "take wheelchairs away from people" than eliminate a single special-interest tax exemption.
Panel chairwoman Susan Story argued, however, that a services tax could decimate Florida's small businesses, which lack staff to perform in-house many of the services on which they rely.
"I think more small businesses will fail with the services tax," she said. "I absolutely do. And I think those people will be out of a job."
How the altered plan would affect Floridians remains unclear. None of the economists had analyzed the effects of substituting budget cuts for services tax, and no one can predict how lawmakers ultimately would combine their revenue options to make back the money for schools. Even the effects of the original proposal remained in question on Monday, as different economists debated whether the sales tax portion would cost the state thousands of jobs.
After voting against Levesque's changes, but in favor sending the proposal to the full commission, McKay said he had not ruled out trying to amend the plan again before the final vote.
Lower Tax Cap Proposed
The proposal would also lower the cap on annual rises in property taxes for nonhomestead properties from 10 percent to 5 percent, an element that likewise appears in another proposal the committee approved Monday.
That plan, from commissioner and former state House member Carlos Lacasa, would exempt 25 percent of all property value above $50,000 from taxation. To make back some of the lost revenue, the state would increase the sales tax by a half penny for three years, at which point the Legislature would decide whether to continue at that rate. The new exemption would replace the $25,000 exemption that voters adopted on Jan. 29.
Under Lacasa's plan, homesteaded property owners would decide each year whether to take the new exemption or to keep the 3 percent tax cap they receive from the Save Our Homes program. By offering a 25 percent exemption to all homeowners, Lacasa said he hopes to protect Save Our Homes from legal challenges on grounds that it penalizes second homeowners from out-of-state.
Reporter Catherine Dolinski can be reached at (850) 222-8382 or cdolinski@tampatrib.com.
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