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We All Need Property Tax Reform

By Commissioner Jeff Koons

We’re about halfway through the 2007 Legislative Session and, as expected, property tax reform is the hot topic. My fellow commissioners and I firmly support lobbying efforts to reduce the enormous tax burden that homeowners and business owners currently face. After careful consideration, we have issued the following recommendations to address inequities in the present system.

• Commercial and rental property should be assessed based on the purchase price of the property or the amount of income it generates. Right now, commercial and non-homesteaded properties are appraised and assessed based on the artificially inflated “highest and best use” method. The owners of small waterfront marinas and rental properties are justifiably upset that they have to pay taxes based on the highest potential value of their land, rather than the way it is actually being used. It is time that the small marina or boatyard owner who chooses not to sell out to a high-rise condo developer be rewarded for that decision, not punished. The BCC supports an amendment to the Florida Constitution that would provide for appraisals and assessments to be based on an income approach.
• Allow portability of the Save Our Homes cap. The Save Our Homes amendment places a three-percent cap on the amount that taxes on a homesteaded property can be raised each year. This means that while real estate prices are three to four times higher than when Save Our Homes was first adopted in 1992, your property taxes – assuming you’ve stayed in the same house – have increased no more than 45 percent. But you lose that protection if you decide to sell your current home to move somewhere else in the county. You’ll be hit with a huge property tax hike because that new home will be assessed at today’s market value. Thousands of young families wanting to trade up, as well as empty-nesters seeking a smaller place to live, are no doubt feeling trapped. We feel homeowners should be allowed to transfer their lower tax rate to new a home, since it will still be their primary residence. The BCC supports a similar cap of 7 to 10 percent per year for non-homesteaded commercial and residential properties.
• Do not adopt an additional $25,000 homestead exemption. The current homestead exemption is $25,000. On the surface, doubling that amount would seem to be a good idea; more tax savings for everyone. But it would really help only those who already benefit from the Save Our Homes provision and would have detrimental effects on a number of older cities and rural counties. Many would lose so much in property tax revenue, they could no longer function. The burden of continuing to provide services to their residents would fall mainly on the owners of non-homesteaded properties, who are already getting hammered.
• Require more consistency between counties in the way property is assessed. My fellow commissioners and I believe there is too much flexibility in how property is appraised and assessed in different counties. The Palm Beach County Property Appraiser insists that by law he must use the “highest and best use” approach with regard to commercial property. This opinion is certainly debatable (see Broward County). The state needs to step in and apply a uniform method of assessments for all counties or at least provide clarification on the degree of discretion that property appraisers may exercise.
• Tighten the rules for agricultural exemptions. For decades, the Florida Constitution has allowed property tax breaks for agricultural purposes. But some land owners are taking advantage of a loophole by allowing a few cows to graze on large parcels that would otherwise be assessed at residential or commercial tax rates. The existing guidelines for determining “legitimate” agricultural uses need to be revamped.
• Oppose across-the-board revenue or expenditure caps. Local city and county government officials, not the state, are in a better position to determine where and how to raise funds for the programs they deem important. Setting arbitrary revenue and spending limits in Tallahassee, without regard to each city’s and county’s economic situation, is not the way to solve inequities that currently exist in the appraisal/assessment system. Furthermore, unless there are a number of cap exceptions, a local government’s ability to solve its own problems with programs and initiatives that are in its citizens’ best interest would be severely compromised. Palm Beach County should not be forced to operate under a capricious cap our residents didn’t vote for. My fellow commissioners and I are prepared to take full responsibility for the taxes we levy and the programs they fund.