TALLAHASSEE — A state judge stripped a controversial "tax swap" from the November ballot Thursday, saying it would mislead voters about the future of school funding.
Gov. Charlie Crist and other backers pledged a swift appeal. But the decision leaves state leaders again grappling to meet public demand for lower property taxes.
The decision, secured by a powerful and diverse coalition of opponents, was also a preview of the battle ahead if an appellate court returns Amendment 5 to the ballot.
The proposed amendment to the state Constitution called for eliminating most school property taxes, resulting in at least a 25 percent tax cut for all property owners. The Legislature would have to replace the money, an estimated $9-billion to $11-billion, by increasing the sales tax, eliminating sales tax exemptions or cutting the budget.
Many critics felt it was an impossible calculation, since a 1-cent sales tax increase would raise just $4-billion.
The lawsuit argued that voters were being led to believe all lost school funding would be replaced. In fact, the guarantee was only for one year, 2010-2011, after which the Legislature would have discretion on how much money to spend on education.
"The ballot title and summary give no indication of this significant limitation on the 'hold harmless' provision," Leon County Circuit Judge John C. Cooper wrote in a 13-page decision. "To the contrary, (they) convey the distinct impression that the balance of lost revenue and replacement revenue are continuing."
It is the second time in a year that a judge has dismissed a property tax plan, and it is one of a string of recent court decisions against tax proposals, highlighting their complexity.
Last summer, a legislative plan to offer a much larger homestead exemption was thrown out because a judge found it did not fully inform voters that Save Our Homes, the wildly successful 3 percent annual assessment cap, would be phased out. The Legislature opted not to appeal that decision but instead passed a new tax cut plan, Amendment 1, which voters approved in January.
The appeal of Thursday's decision will likely bypass the 1st District Court of Appeal and go immediately before the Florida Supreme Court, as has happened with other ballot measures challenged this year.
Crist, who just last week said he would push to pass Amendment 5, had a cool reaction Thursday, saying the final court decision is what counts, "not the first." He said the tight ballot language is akin to a newspaper headline.
"A headline is supposed to give you an idea about what's in the body of the story," Crist said. "It didn't seem inaccurate to me."
The Florida Association of Realtors viewed the plan as a panacea to an ailing housing market. "We are shocked that the court decided to deny property owners the ability to dramatically lower their property tax rates," said the group's president, Chuck Bonfiglio.
Yet some legislative leaders were relieved at the potential of not inheriting the divisive task of finding replacement revenue. Business groups not only resist a higher sales tax but also fear a return of the ill-fated tax on services, such as accountants and dry cleaning, that was passed in 1987 and quickly repealed.
School officials and unions were equally fearful about losing funding, mindful of past promises that have gone unfulfilled.
"This amendment is a bad deal for Florida and a bait-and-switch proposal of the worst kind," said state Sen. Mike Haridopolos, an Indialantic Republican in line to be Senate president in 2010.
The amendment was the product of the Taxation and Budget Reform Commission, a 25-member panel appointed by the governor, House speaker and Senate president.
A former Senate president, John McKay, led the commission's charge for Amendment 5. Thursday marked the third time the Bradenton real estate developer has seen a court cast aside his plans for revamping the state's tax structure. In 2002 and 2004, his efforts to review the state's sales tax exemptions were rejected by the courts.
"It's disappointing but it doesn't really change a whole lot," McKay said of the decision, noting that either side would have appealed.
He said supporters would offer a better argument in court why the funding guarantee is limited to one year. Student enrollment changes annually, he said, so a rigid funding formula is not prudent.
"I'm confident we'll prevail," McKay said. "People want high property taxes eliminated and they'd like special interest tax breaks eliminated."
Allan Bense, a former House speaker who chaired the taxation commission, said he was disappointed. "However, I do know that there are three branches of government."
One option — barring a successful appeal — would be for the panel to reconvene and craft a new plan. But Bense said he was not sure that would happen, in part because the Legislature would have to provide funding.
The Florida Chamber of Commerce, part of the opposition, cast the decision as an opportunity to work on a better property tax plan. It urged Crist to call a special legislative session after the November elections.
The governor said he wanted to focus on the appeal. "I hope it stays on the ballot. Most important to me is that the people have the opportunity to make the call. It's their Constitution."