Two weeks ago, we celebrated the 250th anniversary of the Declaration of Independence. Much of the conflict between Great Britain and the colonies was over taxation. Two hundred and fifty years later, the state of Florida is still fighting over taxation, only this time it’s property taxes, not tea.
In November, Florida residents will be asked to vote on a change to the property tax system that would significantly overhaul the current system. If passed, many homeowners would have their taxes lowered at the potential expense of local government. The governor removed the elimination of funding for schools, making it more acceptable to voters. However, 60% of voters will need to vote for the change before it is adopted.
As property values rose in Florida, tax bills also became larger for homesteaded homeowners – and even higher for non-homesteaded homeowners. Property taxes for homesteaded properties represent 35% of the property taxes paid. Non-homesteaded properties represent 65% of the taxes paid.
The constitutional amendment would increase the assessment exemption on homesteaded property from the current $50,000 to $150,000 the first year, $250,000 the second year and leave the door open for potential future cuts. Non-homesteaded properties would also get a reduction on the cap on the annual increase in assessments to 5% from 10%, reducing their taxes as well.
Since Florida already benefits from an attractive real estate market because of a favorable tax policy, it’s likely if this constitutional amendment passes it will enhance that benefit substantially. But what about the hit that local government budgets will be taking with reduced revenue from property taxes?
Some residents will say too bad the local governments spent money irresponsibly when property values were zooming, without giving any thought to the future. That might have some truth to it but the local governments still need to pay the bills for essential services like roads and fire rescue facilities, not to mention maintenance of our beautiful beaches and parks.
So, get ready for higher fees for construction and renovation improvements which could backfire on the real estate market. The fear for local government is that they will be forced to ask the state for financial assistance risking their independence.
To complicate matters more, Gov. Ron DeSantis has announced he will not campaign to pass an amendment reducing property taxes in the state because the measure approved by the legislature is not the amendment he proposed. He says he will vote for the measure, but he will not spend any time in his remaining months as governor encouraging others to follow his lead. He goes on to say that he thinks most people are going to be supportive of the amendment even though it does not contain his vision for a larger historic change to the property tax system.
When it comes to politics, no one is ever completely happy, including the governor of the state with the third-largest population in the country. DeSantis is fond of saying homeowners are paying increasing rent to the state in the form of property taxes on homes they already own and it’s time to put the brakes on.
No one likes to pay taxes – not us and not our forefathers. We’ve been fighting this war for 250 years and I doubt it will end this November. Most people vote for a change in their own best interest, that is why I think this amendment will pass but be careful what you wish for.
