What You Need to Know About Property Tax Reform Before Going to the Polls January 29th

December 19, 2007

By:  Commissioner Karen T. Marcus

The Florida Legislature has passed a constitutional amendment that will be placed on the January 29 election ballot.  Below are the four (4) components of the amendment that will be presented before the voters.

An additional $25,000 homestead exemption is provided for the value of homestead property above $50,000.  This exemption does not apply to school taxes.  The way this would work is if you live in a homesteaded property you will be exempt from paying taxes on the 1st $25,000 in value (this is the current Homestead exemption), you will pay full taxes on the 2nd $25,000 in value ($25,000- $50,000 in value), you will be exempt from all taxes except school taxes on the 3rd $25,000 in value ($50,000 - $75,000 in value).

Under the second provision, Portability, homestead property owners will be able to transfer their Save Our Homes benefit (the difference between the assessed and market value of their home up to $500,000) to a new homestead within two years of giving up their previous homestead.  If the just value of the new homestead is more than the previous home's market value, the entire differential can be transferred; if the new homestead has a lower market value, the amount of the accumulated benefit that may be transferred is proportional to the value of the new homestead.

A $25,000 Tangible Personal Property Tax Exemption is provided for each tangible personal property return. This exemption will allow businesses to receive a break on the taxes they pay on equipment. Those property owners with less than $25,000 worth of tangible personal property will no longer have to file detailed returns, thereby alleviating an often cumbersome administrative burden.  This creates savings of $450 (assuming an aggregate tax rate of 17 mills, which is near the statewide average).  Approximately 1 million of Florida=s 1.3 million businesses will receive a total exemption from the tangible personal property tax. This provision does apply to school tax levies.

And finally, a 10% Assessment Cap for Non-homestead Property (similar to Save Our Homes) will be provided for this classification of property owner, but the cap will apply only to non-school levies.  In Palm Beach County, we have seen over the past five years an increase in property vales at exponential rates.  Certain property assessments have increased at yearly rates of 20, 50, 100, and some at over 200%.  It will cap assessments so that the highest rate of increase can be no more than 10% a year.  This does not mean that their assessments will go up by 10% each year, it merely provides that number as a ceiling for all non-homesteaded property owners.

While some of the components of this proposal may seem very beneficial to property owners, it is important to consider not only how it will affect your tax bills, but also what it means to the local government services you are currently being provided.  For example, approximately $15 million in the County MSTU that funds fire rescue services will be reduced next year if this amendment passes.  There will be an approximate $3 million reduction in the Library MSTU.  Since it is highly unlikely that millage will be raised to offset these reductions, services, at some level, will have to be reduced to correspond with these shortfalls.  The Palm Beach County School Board will be forced to trim $21 million from their current budget, as well.  These numbers only take into account the first year of reduced services.  This past budget year, the County Commission reduced the County=s budget by approximately $75 million, with the majority of that funding coming from capital projects.

The proposed tax reform package, according to estimates released by the Florida Senate, will have the following five year fiscal impact totals:

It is estimated that the total five-year non-school revenue impacts to counties, cities and special districts is $9.62 billion, and the five-year revenue impact to schools statewide is $2.76 billion.  This would equate to a total statewide five-year revenue impact to schools and all local government of $12.38 billion.

In Palm Beach County, the impact to the County, cities, special districts and schools is almost $1.5 billion.

Over the next two months, you will hear from many groups and organizations that both support and oppose this property tax reform package.  The most important thing you can do is take time to fully understand the benefits and impacts of this important constitutional amendment before going to vote on January 29th. 

 In an effort to provide our residents with information on the County=s budget and to receive more public input on decisions affecting our budget, Palm Beach County is holding a several public input budget forums across the County in January.  The North County Public Input Budget Forum will be held on Wednesday, January 16, 2008 at 7:00 p.m. at the William T. Dwyer High School Auditorium, located at 13601 North Military Trail in Palm Beach Gardens.

As always, if you have any questions or concerns, please contact my office at 355-2201 or by e-mail at kmarcus@pbcgov.com.