Taxes

Q&A: Lower bill won't arrive for months

By the St. Petersburg Times staff
Published June 15, 2007

When will I see lower taxes?
In November, the tax bill you get will be an average of about 7 percent lower than it was last year. This is the result of the rollback plan and tax cap that was approved by lawmakers Thursday. It requires local governments to reduce their tax collections.

I thought the plan was in trouble. What happened?
The rollback plan never was in trouble, but the proposal to create a new "superhomestead" exemption to replace Save Our Homes had drawn skepticism from some GOP senators. Very late Wednesday night, lawmakers agreed to one final change that provided the comfort the skeptics needed to support the new homestead plan, and they did.

That change will allow homeowners to decide between keeping the existing Save Our Homes tax cap, which favors longtime owners, and the new superhomestead, which would offer the best tax breaks for relative newcomers.

So, is it all done?
Not exactly. The rollback needs only the signature of Gov. Charlie Crist, who will likely sign it soon, but the homestead exemption change must be approved by Florida voters. It will appear on the ballot Jan. 29, the day Florida holds its presidential primary.

However, since it's an amendment to the state Constitution, the new homestead plan will have to win a 60 percent majority, which is a very high threshold. Not many constitutional amendments have been that popular.

So, how would the superhomestead exemption work?
Under the proposal, 75 percent of the first $200, 000 in home value would be exempt from taxation. Then another 15 percent of the next $300, 000 in home value would be tax exempt. A minimum exemption of $50, 000 would be guaranteed for homes worth less than $200, 000, and a maximum exemption of $195, 000 would guaranteed for homes worth more than $500, 000.

When will I get to decide between keeping Save Our Homes and taking the new superhomestead?
Not until after the Jan. 29 election. If voters approve the new superhomestead, then homeowners will have a decision to make.

How will that process work?
The details are still to be ironed out, but here's what we know: The Save Our Homes exemption will remain on your house until you decide to switch. If you want to have the superhomestead applied to your house, you will have to contact county officials, probably your tax collector, and let them know. But, once you've switched to the new homestead, you won't be able to switch back.

How long would I be able to keep Save Our Homes?
For as long as you live in your house. Once you move, you would lose your Save Our Homes exemption and you would be switched to the new superhomestead.

How will I decide between taking the new superexemption and sticking with Save Our Homes?
That's a tricky question. For most homeowners, the new exemption would lower your tax bill right away. But it is possible that Save Our Homes could be a better deal on your tax bill over the long term. Even though the new homestead exemption offers a steep cut in the taxable value on your home, that may not be as beneficial as having the Save Our Homes cap, especially in areas where property values are likely to keep rising.

When they talk about "rolling back" taxes for cities and counties, what exactly would get rolled back?
The "rollback" refers to the revenue that cities and counties collect from property taxes; it's not the entire budget. Local governments also raise money through such things as fees and franchise agreements with cable companies, which wouldn't be affected. Still, property taxes are an enormous part of a local government's revenue stream, and property taxes also fund an array of specialty taxing districts for such things as mosquito control and hospital service. All of those tax-raising groups would have to roll back their tax rates.

What about school districts?
School districts would be exempt from the rollback.

How much money would I get back under the rollback?
There are tons of variables for individuals because each city and county has many different taxing districts with many different tax rates. But lawmakers have calculated a statewide average of $174 for homeowners. Commercial land owners would save $941.

Can my local government refuse to lower my tax bill and override these plans?
Yes, but it's difficult. Depending on the cuts they want to override, they will need anywhere between a simple majority to a unanimous vote. Also, if they want to raise your taxes, they would have to ask first by a public referendum.

Soaring Property Taxes Have Many in the Sunshine State Demanding Change

Homeowners in Florida — a state with no income tax — have been particularly hard hit by rising property taxes.Tax assessors base their judgments on real estate values, and in Florida, in just the last three years, property taxes have shot up about 50 percent statewide. (Preston C. Mack/Getty Images)

From Nightline

By CHRIS BURY and MARY-CLAUDE FOSTER as shown May 16, 2007 on ABC's Nightline

E-mail

Florida. The Sunshine State. America's own tropical delight — beautiful people with even more beautiful homes. But if you look behind that postcard image, you may find real trouble brewing in paradise.

In Florida, a storm is gathering over the state's soaring property taxes.

"If you have a significant difference between how much your taxes are going up and how much your income is going up, that is going to create a crisis very fast," said Marco Rubio, the state's young and ambitious speaker of the house. Over lunch with constituents in Miami, Rubio received an earful of complaints.

"I'm going to be working, I figure, 'til I'm 75 to pay my taxes," said Carol Kahn, a retired teacher.

Another constituent, Ignacio Mendez, said, "My tax base has gone up three times. I used to pay $4,000 and now I'm paying $12,000 a year in taxes."

And that, in a nutshell, is the crisis that now dominates the conversation in Florida. And drives the political career of Rubio, a 35-year-old Republican.

"It's the biggest issue in the state," he explained. "Usually people come to Florida to run away from the hassles, the cost of living of where they were from. And now they're telling us, 'You know, this is starting to look like the place that I came here to get away from,' and that's not the kind of talk we want to hear."

'Impossible to Move'

This problem is not unique to the Sunshine State. Tax protests are popping up in Michigan, Minnesota and Virginia, and testimonials from agitated homeowners are flooding the Internet.

But property owners in Florida — a state with no income tax — have been particularly hard hit. Tax assessors base their judgments on real estate values, and in Florida, in just the last three years, property taxes have shot up about 50 percent statewide as home prices have jumped.

Lori Parrish, the Broward County property appraiser, said that she has never seen taxpayers so angry. "I think the citizens are about to revolt in a way that you've never seen," she said. "[They are] fed up. And I think fed up with government spending in general — you can't outspend the public's ability to pay."

Those higher tax bills have left thousands of middle-class families financially trapped in their current homes.

"We bought our house 11 years ago," said Evan Feldman, who would like to trade up for the sake of his growing family, "and it's usually your starter house, you never think it's the house you could be in for 25, 30 years."

"It's a three bedroom house and we'd like to have a second child," said Laurie Feldman, Evan's wife, "and with the taxes, it makes it almost impossible to move."

The Feldmans said they feel trapped because, like all permanent Florida residents, their home property tax bills are capped to avoid dramatic increases. But only if they stay put. "We're not asking to go from something that's 1,600 square feet to something that's 3, 4, 5,000 square feet," said Evan. "These are people like myself that are looking for a couple of hundred square feet more, and they do feel trapped."

Middle Class Pushed Out

In Florida, a new owner of a home could easily pay three times more in property taxes than the owner of an identical home next door, who has lived there for several years.

"Soon, the only people who are going to be living here are the millionaires because the middle class are being pushed out," said Feldman. "The first time home buyers, pushed out. Retirees that want to downsize can't."

The higher taxes have their roots in a real estate market that began booming in 2004.

"Our sales prices for properties in 2004 to 2005 skyrocketed," said Parrish. "I mean there were bidding wars to pay more by buyers than the sellers were asking."

Then came the hurricanes. "Katrina came in the fall of 2005 and that slowed it back and then Wilma hit in October 2005 and devastated south Florida and Broward county," said Parrish. "People as far as 20 miles from the ocean had lost their roofs, fences — all sorts of damage."

All of a sudden, property owners were facing a double whammy: high taxes and higher insurance payments.

"The first insurance renewal premiums after Wilma skyrocketed…tripled, doubled, quadrupled. Scared people…" said Parrish. "The tax bills that people received in 2005 and 2006 were astronomical."

Hitting Bottom

After the hurricanes, the market cooled off quickly, and in Miami, a glut of unsold condominiums hangs over the city like a dark cloud.

"Yes, the real estate market was devastated," said Parrish. "Absolutely, the market was devastated, it hit bottom."

Now, the stalled real estate sales are also dragging down businesses that depend on housing just as their property tax bills have also shot through the roof.

All this has led Florida legislators like Rubio to consider radical changes. "I think the property tax is a horrible way to tax people," he said.

Rubio proposes eliminating the property tax and replacing it with a higher sales tax, an idea that ran into trouble when Democrats argued it would give the biggest breaks to the wealthiest homeowners.

Across Florida, local governments like the city of Delray Beach in Palm Beach County that have been raking in big bucks are now bracing for big budget cuts.

"I'm not saying we can't do without any of it," said David Harden, Delray Beach's city manager. "Think about your own family situation. How would you manage if your income suddenly dropped by 25 percent."

Some Cities Threaten Pushback

The city has already published a "hit list" of services it is threatening to reduce or eliminate if property taxes are cut back. That list includes nearly two dozen cops, fire station cutbacks, a brand new library, swimming pools, and even lifeguards at the beach. Rubio said he doesn't endorse these actions.

"That would be like my wife saying we're going to cut diapers and baby formula if I were to get a pay cut yesterday. Those are the last things you cut. And it shows what's wrong with the system," he said.

But would the Feldman family be willing to accept fewer services, poorer schools, or fewer firemen in exchange for lower taxes?

"Well, I don't know if our school systems could get any poorer," said Laurie Feldman. "And I have to ask the government, 'Where are all those tax dollars going?' A lot of my friends and neighbors are moving, reluctantly, to other states when they would prefer to stay here. And they can't afford it."

So, one way or another, the costs of living in paradise are going up. The painful choices ahead point to a showdown in the Sunshine State. And the bigger question is how far the tax revolt now under way there may spread.

Concerned Friends of Fernandina

Concerned Friends of Fernandina is a grassroots citizens group formed to inform and involve

residents wanting to preserve the small town identity of Fernandina Beach and its natural beauty.

"With public sentiment, nothing can fail; without it nothing can succeed." -- Abraham Lincoln

Legislators propose rollbacks and expanded exemptions.

Soaring Property Taxes Have Many in the Sunshine State Demanding Change

'Impossible to Move'

Middle Class Pushed Out

Hitting Bottom

Some Cities Threaten Pushback

For problems or questions regarding this web contact webmaster@fofgroup.org

"cfof" are residents of Fernandina Beach, Florida.

Last updated: May 14, 2008.