Governor’s Tax Cap Plan Hurts Local Governments

By Commissioner Jeff Koons

Gov. Charlie Crist wants to place more tax-cut amendments on the statewide ballot in 2010. If approved by voters, they would theoretically mean more money in taxpayers’ pockets. While this may seem like a good idea, the governor’s plan is unrealistic and could have a disastrous effect on local governments. Let’s take a closer look.

The governor is proposing a total of four property tax cuts in three constitutional amendments: a Save Our Homes recapture; revenue caps that would limit local tax collection at the rate of inflation; and an assessment cap for non-homesteaded properties combined with a tax cut for first-time home buyers. Passage of all three amendments would result in statewide revenue losses to schools and local governments of about $1.8 billion over the next three years.

It is no coincidence that the enormously popular Mr. Crist himself will likely be on the same ballot as his tax-cut plan, either seeking reelection as governor, or as a candidate for the U.S. Senate.  Being known for cutting taxes certainly won’t hurt his chances, but these continued tax “patches” could seriously hurt our struggling South Florida economy.

Since 2007, state-mandated revenue cuts, shrinking property values, a weak construction market, and the passage of Amendment 1 have combined to drastically reduce the amount of tax revenue Palm Beach County government takes in. At the same time, demand for government services keeps increasing. We had to chop about $100 million from the county budget last year and further cost cutting will be required this year. This will likely mean more job cuts and service reductions. On top of that, Amendment 1, which doubled the homestead exemption and created portability (transferable Save Our Homes benefits), has done little to turn around the collapsed housing market.

County government provides law enforcement, fire protection, ambulance/EMT service, emergency management, airport operations, roads, public transportation, parks and recreation, and other services citizens sometimes take for granted. County government also pays for state-operated courts, and many social and health-care programs. Yet, our state leader wants to cut more local services without addressing the true inequities of the state’s property tax system.

If there is a cap on revenue, how will local governments continue to address rising expenses for security, technology, fuel, education, research, and health-care and social services? Ideally, these costs would also be capped, but it cannot be mandated or enforced in a market-driven democratic society.

To balance any budget, expenses and revenue must flow hand in hand. Right now, Palm Beach County government has one hand tied behind its back, and the governor’s proposal would pretty much bind the other. We will not be able to provide financial assistance and support to local communities as we have in the past, hampering and delaying any substantive economic recovery.

Reducing the assessment cap to 5 percent for non-homestead properties places an unfair burden on homesteaded homeowners, and tying it in with a break for first-time home buyers completely misses the mark of true property tax reform.   Instead of continued attacks on local governments, the state must address the inequities in the current tax structure and develop a system that is fair and equitable for all Floridians, not a feel-good sound bite that prolongs the recession and devastates critical services.

As always, I welcome your comments and questions. Please feel free to contact me or my staff at 355-2202.