Florida property tax proposals would cut $1.2 billion in 3 years, and dent local coffers

TALLAHASSEE — Business owners, snowbirds and first-time home buyers could save $1.2 billion over three years if a pair of property tax cut plans are adopted.

But one person's cut is another's burden. The same amount would be drained from local government coffers and, officials warn, services would be cut when people need them most.

"We'll have to close the doors," said Pinellas County Commissioner Susan Latvala, who said the Amendment 1 cuts passed in 2008 have been made worse by declining home values and foreclosures.

The new numbers, generated by state economic forecasters over the weekend, put the cumulative three-year savings for a 5 percent assessment cap on nonhomestead property at $550 million and a new exemption for first-time home buyers at $650 million.

Both tax plans, which would require voter approval in November 2010, are tentative. Many lawmakers are not eager to pursue tax cuts when they are having to slash state spending. They are also mindful of past cuts and the intense battle pitting state and local government.

But Gov. Charlie Crist and others, perhaps with an eye on re-election, are at least trying to force a discussion and casting the proposals as economic stimulus.

There are many plans in circulation, but the economists took a look at two over the weekend:

5 percent nonhomestead assessment cap.

The plan to help nonhomestead property owners calls for reducing the 10 percent assessment cap under Amendment 1 to 5 percent.

It would still not be as good as the 3 percent protection primary homeowners get under Save Our Homes, but businesses say the 10 percent cap does little, if anything.

If approved by voters in November 2010, the lower cap would result in $100 million in savings for businesses and second-home owners in 2011, $185 million in 2012 and $266 million in 2013.

The figure increases over time as the benefit compounds but also because the economy is supposed to rebound by then and market values will increase.

The plan economists looked at does not apply to property taxes for schools.

Homestead exemption for first-time buyers.

The proposal, also subject to voter approval, would provide a new exemption worth 50 percent of a home value during the first year of purchase, capped at $250,000. The benefit would be phased out over the next four years.

It would result in a $120 million savings (or loss, depending on one's viewpoint) in 2011 for schools and local governments combined. Over three years, it would save $654 million, according to estimates.

Though the chances of passage this year are uncertain at best, the proposal got a favorable reception during a House committee meeting last week.

"This is the answer to what you can do to help stimulate the market," said David Hart, a lobbyist for the Florida Home Builders Association.