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Editorial: Don't increase homestead exemption

Here's another bad idea that should die quietly during these last two weeks of the legislative session. The House is poised to vote to put a constitutional amendment on the 2018 ballot that would raise the standard homestead exemption from $50,000 to $75,000, knocking a couple of hundred dollars off the typical homeowner's bill. That would exacerbate the inequities in Florida's tax code and cost millions that local governments need for basic services such as parks, libraries and public safety.

The homestead exemption started as a way to protect homeowners from being taxed out of their houses as property values rose. In 1980, Florida made the first $25,000 of the value of a primary home exempt from property taxes. In 2008, voters increased the threshold to $50,000. The homestead exemption saves Florida homeowners several hundred dollars a year in taxes and provides stability against market volatility. The proposed constitutional amendment, HJR 7105, would raise the exemption to $75,000 and has no sound economic or policy basis. To too many lawmakers, any tax cut is a good tax cut.

As Times/Herald Tallahassee bureau chief Steve Bousquet reported, the change would, in effect, tax a $100,000 home as if it were worth $25,000. That may look like a sweet deal for homeowners — the added savings in Hillsborough and Pinellas counties would be about $300 a year on average. But those residents still need local governments to maintain their streets, keep the parks clean and patrol their neighborhoods. This change would undercut the ability of cities and counties to keep up with the demand for those services from a growing population. In the Tampa Bay area, the hit would be substantial. Hillsborough County would lose $45 million in revenue. Pinellas: $27 million. Pasco: $10.5 million. Public safety — police, fire and emergency medical services — are most vulnerable because they usually represent the largest chunk of local budgets.

Then there's the equity problem. The homestead exemption already eases the tax burden on homeowners and shifts more of it to owners of apartment complexes, commercial and office buildings and vacation homes. This change would increase the imbalance. Homeowners also enjoy a 3 percent cap on annual tax increases, known as Save Our Homes, which owners of other types of property don't get. And when a homeowner moves, they can take that savings with them under a provision known as portability. Within the homestead exemption are yet more carve-outs for certain groups: disabled first responders, disabled veterans, surviving spouses of veterans killed in the line of duty and low-income seniors who have been in their homes more than 25 years. Florida needs a tax system that is equitable and fair and that fairly spreads the burden of paying for services everyone uses.

This constitutional amendment is unnecessary, and it is nothing more than an attempt to curry election-year favor with voters. It's likely to pass the House, but the Senate should put on the brakes.

Editorial: Don't increase homestead exemption 04/24/17 [Last modified: Monday, April 24, 2017 11:34am]
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