If there is a silver lining in Florida's real estate bust, it may be this: Inequities created under the state's Save Our Homes property tax limit have been greatly diminished, meaning neighbors in identical homes are far more likely to be paying closer to the same tax bills. But none of that seems to matter in Tallahassee, where legislators are seeking voter approval for a new set of niche tax breaks. Despite what clever campaign ads financed by special interests say, Amendment 4 on the November ballot will do far more harm than good. It will be up to voters to see past the charade and just say no.
If citizens had tried to get Amendment 4 on the ballot, they never would have succeeded because rules governing the initiative process never would have allowed multiple subjects or such lengthy ballot language. But when there are special interests to please, the Legislature does not concern itself with those same rules. In all, lawmakers lumped three different provisions in the measure — all of which will also undermine funding for local governments. It is telling that lawmakers significantly shielded the state's public school property tax from some of the tax breaks. Lawmakers were willing to restrict local governments' ability to raise revenue, but not their own. The three provisions, if approved by 60 percent of November's voters, would:
Rewrite the Constitution to cap the annual increase in taxable value for nonhomesteaded properties at 5 percent instead of the current 10 percent. Supporters contend this will bring certainty for businesses and investors. But the long-term impact would make the state less attractive. Consider, for example, two gas stations at the same intersection. Depending on when the owners bought their properties, they could pay radically different tax bills, making it harder for newer businesses to compete.
Change the tax structure for new home buyers so that they pay dramatically lower property taxes in the first five years of home ownership. The first year they would pay taxes on the equivalent of 50 percent of the home's taxable value and gradually more each year until they are at 100 percent in the sixth year. The irony? Lawmakers — at the urging of Florida Realtors — have concocted a scheme that mimics subprime lending, which contributed so greatly to Florida's real estate crash. Homeowners would be enticed to buy a home based on an artificially low monthly cost. What's more, the scheme is unfair to neighbors who have held on to the homes throughout the crisis and may be underwater on their own mortgages but will be paying higher taxes.
Allow the Legislature to vote to ignore the so-called "recapture rule." This would all but assure that the one mechanism Florida has left to restore fairness to the state's property tax system would be abandoned. Under the recapture rule, properties assessed below market value because they benefit from Save Our Homes, or the similar cap for nonhomestead properties, can see their taxable values increase even when property values decline. But it is never more than 3 percent a year. The rule drew heavy fire in recent years as longtime homeowners saw their taxes rise even as the real estate market plunged. Yet they were still paying less than their neighbors who bought more recently, and they had been paying far less in taxes for years.
The Florida Realtors, the primary backers of the "Tax Your Assets Off" campaign that has started running televisions ads supporting Amendment 4, would have you believe the state's property tax system remains out of whack. It is not. Property taxes collected statewide have fallen precipitously during the recession and won't rebound anytime soon even with the recapture rule. What will increase, if voters approve Amendment 4, is inequity between like-situated taxpayers. Lawmakers have abandoned all pretense that they stand for fairness in taxes. Florida voters should not.