Lawmakers Wednesday sent a property tax cap provision to voters following debate over whether the expansion of current law would further widen the gap between property owners who have owned for a long time and those who have not.
Following more than an hour of debate, the Senate approved a measure (HJR 381) that asks voters to approve a constitutional amendment to lower property tax assessment caps on commercial property and prevent assessments on homestead property from going up when market values fall.
The bill will be on the ballot in November 2012. It was approved by a 25-12 vote, one more than the two-thirds needed to put the issue before voters.
Wednesdays vote sparked a debate over the underlying premise of providing some property owners with tax protections that are unavailable to others. Passed in the early 1990s, the Save our Homes initiative has led to wide disparities in the taxes paid on similarly situated properties depending on when the property was purchased. The measure originally capped homestead property tax assessments at 3 percent or less. It has since been expanded to include nonhomestead property, though increases in nonhomestead assessments are capped at 10 percent a year.
Backers of the new resolution said it will provide needed relief to commercial property owners, new homebuyers and renters at a time of declining property values and sputtering economic growth. Critics say the proposal would further reduce the tax base of cities and counties already hamstrung by plummeting property values and sluggish growth.
The bill would reduce the cap on property tax assessment increases on commercial property from 10 percent a year to 5 percent. For homeowners, the proposal would prevent local officials from raising assessments when market value falls in any given year.
The proposal would also provide buyers who have not owned a home in Florida within the last three years an additional exemption that would be phased out over time. The discount would equal 50 percent of the homes assessed value, not to exceed 50 percent of the median home price in that county. The super exemption would end after five years.
The bill will encourage people to buy homes, said Sen. Mike Fasano, R-New Port Richey, the sponsor of the Senate bill. It will encourage people to invest and open a business again and create jobs.
The Save Our Homes amendment caps assessment growth to the lesser of 3 percent or the growth in the Consumer Price Index, a commonly used barometer of inflation. But the 1994 amendment did not envision deflation, in which the CPI or property values fall, as they did following the 2007 housing bust.
Critics say the proposal to lower the caps on nonhomestead property as written would cause local governments to lose money by further restricting the growth of property assessments on commercial and other nonhomestead property when values rise.
This is a $2 billion hit to our cities, said Sen. Chris Smith, D-Fort Lauderdale. This is the unfunded mandate of this session.
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