League News and Publicity

PROPERTY TAX AMENDMENT: PROS/CONS

by League of Women Voters of Florida

AMENDMENT # 1 - PROPERTY TAXES

Summary: This revision proposes changes to the State Constitution relating to property taxation. With respect to homestead property, this revision: (1) increases the homestead exemption except for school district taxes and (2) allows homestead property owners to transfer up to $500,000 of their Save-Our-Homes benefits to their next homestead. With respect to non-homestead property, this revision (3) provides a $25,000 exemption for tangible personal property and (4) limits assessment increases for specified non-homestead real property except for school district taxes.

Sponsor: The Florida Legislature

Background: This amendment was placed on the ballot by the Florida Legislature at a special session in October 2007, after a Florida court struck down the Legislature's earlier proposal for property tax cutbacks. This Joint Resolution proposes changes to the following sections of Article VII (Finance and Taxation) of the Florida Constitution: Section 3 (Taxes; exemptions); Section 4 (Taxation; assessments); and Section 6 (Homestead Exemptions). It also adds a new Section 27 (Property tax exemptions and limitations on property tax assessments) to Article XII (Schedule).

PRO:

• Adds a new $25,000 homestead exemption applicable only to county property taxes (not school taxes).
• Allows homestead property owners to apply up to $500,000 in existing Save Our Homes tax savings to a new homestead.
• Provides businesses with a new $25,000 tax exemption on tangible personal property.
• Limits county property tax assessment increases on non-homestead real property to 10% per year (this is not applicable to school taxes).
• May help stimulate sales of real property by allowing homestead property owners to transfer Save Our Homes tax savings to a new homestead.

CON:

• Cities and counties will lose $9.6 billion in tax money over the next 5 years.
• Public schools will lose $2.8 billion in tax money over the next 5 years.
• Making Save Our Homes portable extends the present inequality in property tax assessments between homestead owners and owners of non-homestead property.
• The tax breaks will apply to all homeowners, even those who can afford to pay.
• Counties may raise developer impact fees or other taxes or fees to pay for cuts in property taxes.
• May be unconstitutional because it treats long-time homestead owners differently from new arrivals to Florida.
• Changes state property taxes while the constitutionally mandated Florida Taxation and Budget Reform Commission is still working on its once in twenty years study of the taxation system.