Do I really want that tax break?
This is a question Florida voters will need to ask themselves next year when the Florida constitutional amendment, HJR 7105, comes up for a vote.
If passed, this bill would increase the non-school homestead exemption by $25,000 for homes valued at over $100,000 and could potentially save 2.4 million homeowners $587 million annually, based on the current tax rates. Proponents of the bill say it would help senior homeowners on fixed incomes, and stimulate the housing market by enabling more people to afford homes.
The current homestead exemption is a property tax exemption of up to $50,000 on homestead property. The first $25,000 applies to all property taxes. The additional exemption up to $25,000 applies to the assessed value between $50,000 and $75,000 and only to non-school district taxes. The new exemption would be for an additional $25,000 on the assessed value between $100,000 and $125,000 and apply only to non-school district taxes. To qualify for homestead exemptions, the taxpayer must own the property and make it his or her permanent residence or the permanent residence of his or her dependent, as of January 1 of the tax year. If passed, the new exemption will go into effect January 1, 2019.
HJR7105 further directs the State Legislature to appropriate funds to offset property tax revenue losses in fiscally constrained counties (those with restricted revenue resources). There are presently 29 fiscally constrained counties within the state.
Opponents of the bill claim that such a large tax break could result in deep cuts in services supported with tax dollars. When taxes go down for any reason, local governments must make up for the loss somewhere else. They may try to make up for the loss in taxes by increasing the millage rate on property (one mill equals 1/10th of a percent, or $1 in tax for every $1,000 in home/property value). In areas where the millage rate is already near the cap set by the state, local governments will have to find other ways to recoup the loss. A tax break for homeowners could mean reduced services and stalled growth for their communities.
An increase in homestead exemption would also mean that everyone who owned an office, warehouse, apartment building, or other rental or commercial property, would pay more in taxes. These landlords and businesses would pass their increased tax cost on to their renters–small business owners, apartment dwellers and part-time residents, all of whom may already have fixed or limited incomes and strict budget constraints.
As evidenced by history, Americans hate taxes. But, to make an informed decision when it comes time to vote, residents need to know how an extension to the homestead exemption will affect their community in the long run. With that in mind, we submitted several questions to Hendry County officials to help voters prepare for the decision that lies ahead.
According to the Hendry County Property Appraiser’s Office, Hendry County currently has a tax base of $1,840,736,755. Currently 6,458 properties qualify for homestead exemption; of those, 1,365 would be impacted by the new legislation, if passed.
Based on current estimates this would mean about a $230,000 reduction in county property tax revenue.
The county’s current 2016 property tax rate is 8.4909 mills.
“Tax millage is given the reference ad valorem revenue in Hendry County’s budget,” explained Hendry County Administrator Charles Chapman. “Ad Valorem funds various general services and public safety departments. This list is not exhaustive, but for reference: Emergency Medical Services, Constitutional Officers (Clerk of Court, Property Appraiser, Supervisor of Election, Tax Collector, and Sheriff’s Office), Planning and Zoning, Code Enforcement, Human Resources, Libraries, Administration, Facilities Maintenance, Cemeteries, etc.”
Mr. Chapman said the county commission has not yet taken a position on the proposed change to the homestead exemption.
“In general, our Board has not taken an official position on this matter,’ he stated. “However, it would stand to reason that with our budget already experiencing issues with ad valorem values that a further exemption would not be beneficial to our budget. For reference, our budget is already approaching 50 percent tax exempt from homestead exemption, conservation land uses, tax exempted entities such as not-for-profits and churches, state owned lands and homes that are valued below the taxable value of current homestead exemptions.
“Any reduction in our revenue triggers a review of our expenses,” he explained. “If we lose revenue we have to make up the lost revenue elsewhere or we would have to reduce services. Which services would be impacted? I cannot answer that at this time. But, the state has included a fiscally constrained county offset. It may or may not be a hold harmless provision and the State funds may offset our losses However, we will be monitoring the legislation and ballot initiatives and make plans in our budgeting process accordingly.”
With regards to the State’s promise to help fiscally constrained counties, Cragin Mosteller, Director of Communications, Florida Association of Counties, stated: “This is not the first time the state has passed a resolution that would agree to hold the fiscally constrained counties harmless in its impacts. In 2008, Amendment 1 passed adding an additional homestead exemption to a total of $50,000. This addition also held the small counties harmless and to date the state has honored their commitment to reimburse fiscally constrained counties as a result of this impact. There is no reason to expect the legislature not to appropriate the necessary funds every year, however, it is a choice each legislative body must make and they can change their minds at any point.
“From the perspective of the Florida Association of Counties: We will be spending the next few months analyzing the impacts of this legislation on counties, talking with county commissioners across the state, and will ultimately seek direction from our membership in the fall on whether or not they would like the Association to be involved further.”
Why vote no on a tax break?
Community officials will tell you that their most pressing challenge is delivering the services taxpayers want and expect with the revenue available.
When you pay your property tax bill, the money you are spending goes to important programs. Municipal employees, such as police, fire fighters, and the local public works department, sidewalks, hiking and bike trails, public transportation, local government staff salaries, are all paid for through your property taxes as are libraries, museums, senior centers, sports complexes, and parks.
Any of the public lands in your community that aren’t owned or funded by the state are generally paid for by property taxes as well.
Your challenge as a voter is to be informed, understand the issues, learn the particulars, measure the gains against the losses, and cast your ballot.