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Amendment One Simply Is A Bad Idea

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By MICHAEL R. WEEKS

Published: January 25, 2008

My family and I are new to Florida. As with many newcomers, we were dismayed by local property tax rates and hoped the Legislature would address the issue.

Unfortunately, we got Amendment 1. Rather than solve the problems of our current system, Amendment One will only exacerbate the situation.

Any tax system should have three key ingredients. First, it should be fair; second, it should promote fiscal responsibility; and finally, it should ensure accountability.

Unfortunately, Save Our Homes created a system which does not meet any of these criteria. While the bill was enacted with the best intentions, its legacy is one of unintended consequences.

Let's tackle fairness first. Fairness implies that people of similar means bear similar burdens. This is not the case in Florida. Neighbors with equivalent homes frequently pay wildly different tax bills.

Under Amendment One, The Tampa Tribune estimates that two local families in similar homes will receive a $300 annual reduction - even if one family has a $10,000 tax bill and the other has a $4,000 tax bill. Amendment One does nothing to address these fundamental inequities. Moreover, adding portability will ensure the problems persist.

Does the current system promote fiscal responsibility? No. The system provided increasing revenues for local governments during boom times with little incentive to prioritize or reduce spending.

Now that the real estate market is declining, spending priorities are not likely to be evaluated systematically.

Consequently, spending will be cut in areas where most taxpayers value stability, like education and infrastructure. Tying revenues to a volatile real estate market requires that leaders spend carefully and wisely. Amendment 1 does nothing to help this goal.

Since local governments are not encouraged to spend wisely under the current system, can we at least be assured that they will be held accountable when things go wrong? Not likely. The Save Our Homes system guarantees that Florida is a state of haves and have-nots. The "haves" have lived in their homes for many years and enjoy substantially lower tax bills than the "have-nots."

Thus, only part of the electorate is sensitive to local government spending and tax policies. Voters with significant protection under the Save Our Homes system have less incentive to call for fiscal responsibility. A divided electorate means no accountability.

Given the problems with the current system, what should be done? Frankly, Save Our Homes has got to go.

One silver lining to our current real estate market is that we have a chance to restore a process where assessments reflect market value equitably. The Save Our Homes system should be phased out over a 10-year period by raising the 3 percent cap to a 7 percent gradually (1 percent per year) over a four-year period, with a 7 percent rate thereafter.

Hopefully, this will bring all assessments to market value at the end of the phase-out period. Regardless, after 10 years Save Our Homes caps would be eliminated.

To mitigate the effects for those on fixed incomes, a hybrid structure could maintain Save Our Homes caps for senior citizens or others in need.

When sanity is restored and everyone is equally vested in the system, we can have a serious discussion about spending priorities.

What we need are spending restraints - not unequal and unfair revenue constraints. A "Taxpayer Bill of Rights" approach would be a much more effective policy.

The current structure is unsustainable and will have to be revised in the future. We should send the Legislature back to the drawing board. We deserve better.

Michael R. Weeks is an assistant professor of management at the University of Tampa and a retired Air Force officer.

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