Monday, May 21, 2018
Editorials

Editorial: New homestead exemption would hurt many, benefit few

The impact of the Florida Legislature's foolish attempt to cut taxes by asking voters to increase the homestead exemption is becoming clearer throughout Tampa Bay. Hint: It would not be pretty, and it would not be fair.

With Hillsborough County facing an overall first-year loss of more than $30 million if the constitutional amendment passes next year, county administrator Mike Merrill told his staff earlier this month not to fill openings or promote internally. Other counties have yet to take such preliminary steps, but they will have to dig far deeper if voters approve increasing the homestead exemption by $25,000 in November 2018.

In Pinellas County, the overall impact would be a loss of $36.9 million. That would include a loss of $17 million by county government, $3.9 million in St. Petersburg and $1.5 million in Clearwater. Keep in mind that in St. Petersburg, property tax revenue now is entirely allocated to covering police costs and revenue from other sources covers everything else. Hillsborough County government would lose more than $30 million, and Tampa would lose more than $4.4 million. Pasco County expects to lose $13 million, and Hernando County expects to lose $2.8 million. With most areas still not entirely recovered from the recession even as growth has resumed, putting new demands on government services, the Legislature's timing is way off.

So is any suggestion that this would be a fair, broad-based tax cut. It's obvious that increasing the homestead exemption would shift more of the tax burden onto businesses, renters and owners of second homes that don't benefit from the exemption. Now it's also obvious that this is really a tax cut for middle-class homeowners at the expense of everyone else.

Here's why. The first $25,000 in homestead exemption applies to all owner-occupied homes. The second $25,000 exemption approved by voters in 2008 applies to the home value between $50,000 and $75,000. This spring, the Legislature first considered a third $25,000 exemption that would apply to the home value between $75,000 and $100,000. But the overall loss of tax revenue in Florida — $795 million a year — proved even too much for this Republican-controlled Legislature. So to reduce the overall cost to $645 million, the Legislature agreed that the third $25,000 exemption would apply to the home value between $100,000 and $125,000. Translation: Only homeowners with houses valued at $125,000 and above would get the full benefit of the homestead exemption increase.

The result, according to county property appraisers' offices in Pinellas and Hillsborough counties, is that more than two-thirds of all households in Hillsborough and Pinellas (living in either nonhomesteaded or homesteaded properties) would not benefit from this new tax break. In fact, only 55 percent of homesteaded Pinellas properties and 58 percent of homesteaded properties in Hillsborough would benefit.

Would it be smart to approve millions in property tax cuts that likely would result in deep cuts to government services and property tax increases for businesses and renters to benefit just one-third of the households?

The answer should be obvious.

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