Tax plan's effect on schools may spell trouble
When Legislators arrived last week to agree on a property tax cut package, one of their major goals was to minimize the impact on public schools.
But if the House is successful in providing a new tax break for business and other nonhomestead property, school budgets could be reduced by $6-billion to $9-billion over the next decade.
“Those are just not acceptable cuts,” said Wayne Blanton, executive director of the Florida School Boards Association. “Quite frankly, I think this may endanger the entire plan.”
Blanton is right.
“Based on what I’m seeing, I think it will be difficult for the Senate to pass this with a 5 percent cap,” Sen. Steve Geller, D-Cooper City, said Tuesday, a day after the House overwhelmingly approved its plan.
To Rep. Dean Cannon, the House’s lead property tax negotiator, the gloomy predictions miss the point. The 5 percent cap on annual assessments for nonhomestead property, he said, is long overdue.
“It really is fantastic policy,” Cannon said. “This helps take gross inequities in our current system and makes it much more fair.”
The inequities are the byproduct of a tax cap that already exists: the 3 percent limit on annual increases in assessments on homestead properties known as Save Our Homes.
Ever since then, businesses and snowbirds have been picking up more of the property tax burden. Today, each now pays about 25 percent more in property taxes than they would have if Save Our Homes did not exist.
Businesses and second-home owners, of course, welcome the new tax break. But even one of the state’s top business lobbyists thinks now is the wrong time to push for it.
"I’m not willing to aggravate the Senate to get something now that we can get in the regular session in March,” said Barney Bishop, chief executive of Associated Industries of Florida. “We can wait.”
The House proposal represents a major point of disagreement between the House and Senate, which otherwise have somewhat similar proposals. (The chambers also take a different approach to homestead exemptions and that could be a problem during negotiations.) Save for a break for low-income seniors and a more modest cut on taxes on business equipment, every other proposal to reduce property taxes exempts schools.
During debate Monday night, House Democrats tried to exempt public schools from the effects of the 5 percent tax cuts. It was defeated on an unrecorded voice vote.
Democrats expressed concern about the cap, but all but two voted for the overall tax plan as a bipartisan glow came over the House.
On Tuesday, buyer’s remorse seemed to set in. The top Democrat in the House, Rep. Dan Gelber of Miami Beach, said the 5 percent cap left many unanswered questions and suggested it be left on the negotiating room floor with the Senate.
“We shouldn’t do anything that inspires opposition” Gelber said, invoking the 60 percent threshold needed to pass the plan during a statewide referendum. (Democrats’ votes are needed to even get something on the Jan. 29 ballot.)
Republican Rep. David Rivera of Miami accused Gelber of flip-flopping and “advocating gridlock.”
Lawmakers in both parties and Gov. Charlie Crist have said for months that any tax cut plan must ensure that school funding is not reduced. The Senate barely passed its version of the plan after long debate in which moderate Republicans echoed that concern.
“The fact that were weren’t going to hurt education is the linchpin of the support we have,” said Sen. Jim King, R-Jacksonville.
Original estimates last week showed the cap having a $1.5-billion impact over four years, with a cost to schools somewhere around $600-million. Two new studies released Tuesday gave a longer-term picture.
The House analysis showed the cuts to schools at nearly $9-billion over 10 years and overall cuts including local government at $20.5-billion. A projection by the Legislature’s Office of Economic and Demographic Research put the school figure closer to $6-billion.
House leaders fear the projections will be used as a wedge to defeat what they consider solid public policy.
“Estimates are only that — estimates,” Cannon said. He noted that the figures are artificially high because they do not take into account, for instance, that when a nonhomestead homeowner sells the property, the value is reset to current market value, resulting in higher tax payments for the new owner.
Whatever the bottom line, House Republicans say it should not be viewed as a cut to local government and schools, rather a reflection of how much less money can be taken out of people’s pockets.
“If government has to shrink itself, that’s a good thing,” said Rep. Ellyn Bogdanoff, R-Fort Lauderdale. “That’s what people want.”