Senate Democrats offer wide-ranging tax reform proposal
 

TALLAHASSEE, Fla. (AP) – March 28, 2007 – Senate Democrats released a wide-ranging plan Tuesday to reform property taxes and cut them for most Floridians – though longtime homeowners, who already receive significant breaks, would pay more.

The first comprehensive plan offered by either party in the Senate includes elements or variations of proposals by Gov. Charlie Crist, local governments and House Republicans.

It pointedly does not, though, call for swapping more sales tax for less property tax – a key part of the House GOP plan.

“We are not going to do something which will result in a substantial increase in taxes on the poorer people of the state of Florida while again giving larger tax breaks to the wealthiest people,” said Senate Democratic Leader Steve Geller of Cooper City.

Crist applauded Senate Democrats for presenting a plan before the 60-day legislative session hits the halfway point next week, and encouraged others to offer even more ideas so efforts can begin to build a consensus in the second half.

“Once we reach that point, I think it’s important that we have as many of these competing ideas on the table as possible,” Crist said. “It doesn’t have to be my plan to be good. I have no pride of authorship.”

Besides making property taxes fairer, Geller said, the Democrats’ plan could cut them by $1.14 billion the first budget year that begins July 1. Those savings would gradually decline in subsequent years to $651 million in the 2012-13 budget year.

That compares to net savings of at least $5.5 billion and up to $6.8 billion under the House Republicans’ two-part proposal. The higher number assumes an increase in the statewide sales tax from 6 percent to 8.5 percent in exchange for eliminating property taxes on primary homes, known as homesteads. The first 1 percent would be automatic if a proposed state constitutional amendment is adopted but the rest would be at the discretion of local governments and voters.

Part of the Senate Democrats’ plan focuses on reducing inequities caused by the Save Our Homes Amendment voters approved in 1992.

That amendment limits annual tax increases on homesteads to the inflation rate or 3 percent, whichever is less. Longtime homeowners have benefited, but it has meant higher taxes – often much higher – for new homeowners, businesses, rental properties, second homes and other non-homestead real estate.

Another problem is many homeowners feel trapped because they would lose their Save Our Homes benefits if they move, in some cases paying higher taxes even if they buy less-expensive homes.

Crist has proposed letting homeowners apply at least some Save Our Homes benefits to a new homestead, a concept called portability.

The Democratic proposal would flesh out that idea. It would exempt homeowners from taxes on the difference between the values of the old and new homes – up to a maximum of $250,000 – if they move to a more expensive house. If they go to a cheaper one, they would pay no more than they did on their old house.

The portability provision would be linked to reducing Save Our Homes benefits. The annual tax limit would go to 3 percent plus inflation as measured by the Consumer Price Index, but no more than 6 percent total. The result would be higher taxes for homesteads.

Geller said that’s necessary to stave off legal challenges to Save Our Homes and the portability concept under anti-discrimination provisions of the U.S. Constitution. A lawsuit has been filed by out-of-state residents who own second homes in Florida, arguing Save Our Homes is discriminatory because they pay much more than primary homeowners.

Portability could widen the gap, making it more likely courts will rule against Save Our Homes unless the disparity can be reduced, Geller said.

Senate Majority Leader Daniel Webster, R-Winter Garden, said the plan is “well thought out” and something Republicans will look at, but the Save Our Homes revision won’t fly with Republicans, who control both chambers.

“We’re not raising taxes,” Webster said. He declined, though, to criticize the House GOP’s sales tax increase, saying he’ll withhold judgment until something passes out of the House.

It would take a state constitutional amendment, subject to voter approval, to make the Save Our Homes and portability changes.

Homeowners would not see an increase in the first year under the Senate Democrats’ plan because it also has a tax rollback and cap for all properties, although not as severe as in the House Republicans’ plan.

The Democratic plan also targets reductions for affordable rental housing, working waterfronts such as marinas, first-time home buyers and business equipment and other personal property.

Pinellas County Commissioner Susan Latvala, who is president of the Florida Association of Counties, thanked Democrats for listening to local officials who have been advocating some of the same ideas.

The $1.14 billion tax reduction, though, still is too much and would “result in devastating cuts to local programs and services,” Latvala said in a statement.
 

Copyright 2007 The Associated Press, Bill Kaczor, (Associated Press Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.