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Crist, Fasano: Property Tax System Flawed

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By CATHERINE DOLINSKI

Cdolinski@tampatrib.com

Published: February 18, 2009

TALLAHASSEE - State Sen. Mike Fasano wants to eliminate a quirk in state law that can cause property taxes to rise even as home values drop.

The Save Our Homes program keeps taxes low on primary homes by keeping tax assessments of those properties from rising more than 3 percent annually.

That's a bonus for homeowners during boom years when property values can experience double-digit increases. Here's the rub: The program guarantees a rise in assessments, even when the market value of a home falls.

Known as "recapture," this rule increases annual tax assessments of homesteaded properties by 3 percent or the percentage change in the Consumer Price Index, whichever is lower. In 2008, that translated into a full 3 percent increase.

"We started getting phone calls from people who were surprised that their taxes had stayed the same or actually went up" despite the property tax cut amendment that passed in 2008, said Fasano, R-New Port Richey. "For all of us who have enjoyed the Save Our Homes cap for many years, all of a sudden it's come back to bite us a bit because of the recapture rule."

Recapture is expected to raise property assessments in 2009 by slightly less than 1 percent, even as market values of those same properties are expected to lose more than 10 percent on average.

Local schools districts, counties and cities have relied on recapture to ensure some stability in the property tax collections that pay for many of their operations. But Fasano said enough is enough.

His proposal would put the question to voters as a constitutional amendment. If 60 percent of voters approve it, the measure would ensure that the assessed value of a homesteaded property would not increase if the market value of the property decreased.

Fasano's bill will have to pass by supermajority in the House and Senate to reach the 2010 ballot. It would take effect in 2011.

The idea has backing from Gov. Charlie Crist, who is preparing to unveil a series of property tax cut proposals - despite a projected $1 billion drop in property tax collections, which provide the lion's share of funding for K-12 public schools.

Some lawmakers, including Senate budget chief JD Alexander, R-Lake Wales, have raised the specter of property tax increases to plug the hole in the schools budget.

Crist said he hopes that stimulus dollars from the federal government can fill in some or all of that gap. By the governor's calculations, Florida stands to receive as much as $12 billion from Washington in the next three years, though much of the money will come with strings attached that will dictate it must be spent.

Fasano confirmed that Crist's staff is sharing proposals with lawmakers that include caps on government spending, to be achieved by capping how much cities and counties can collect in taxes. A proposal to increase the homestead property tax exemption also is expected, as is a lower cap on annual assessment increases on commercial and vacation properties.

Amendment 1 limits growth in assessments on commercial and vacation properties to 10 percent annually. Crist wants to tighten that restriction to 5 percent.

"That's a great idea," said Fasano, who filed a similar proposal several years ago. "Businesses need to know what their maximum tax is going to be, especially when the economy starts to grow again."

Democratic Rep. Marty Kiar, D-Davie, said he would support cutting property taxes, too, provided schools don't suffer as a result. Kiar, the ranking minority member of the House schools budget committee, said the state needs to look at new revenue sources to support education, such as a hike in the cigarette tax. "No matter what, we have to hold schools harmless."

Anticipated cuts to property taxes have worried Florida's counties, which decried the plan this week.

"It is our counties, not big government, which should be choosing the look and feel of our communities from critical services to quality of life," Association of Counties President Rodney J. Long says in a written statement. "Over the last three years local governments have reduced revenues on average by 9.3 percent. These reductions have resulted in cuts in services, construction, and employees in almost every county.

"With Amendment 1 and more dramatically the crash of Florida's economy, everyone is cutting costs and making dramatic reductions. Counties are no exception. While some reductions have increased efficiencies, an artificial, one-size-fit all gimmick will prohibit counties from being able to provide critical services that are in higher demand due to Florida's struggling economy."

Told that counties were complaining, Crist said he hears complaints every day from residents about their property tax bills.

"There have been some reductions, but I think, as we all know and recognize, the people are hurting out there. All of us are," he said. "And they deserve to have more of their hard-earned money in their pocket. And I'm more sympathetic to them than anyone else."

Reporter Catherine Dolinski can be reached at (850) 222-8382.

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