Florida's Tax Relief Legislation
The
Legislature adjourned Sine Die at 6:28 pm bringing the 2007 Special Session
on Property Tax Reform to a close. Both the House and Senate passed all
three bills making up the property tax reform package. The package
includes a statutory rollback and cap of property tax rates, a proposed
constitutional amendment creating a "super homestead exemption" and a
bill designating the upcoming January 29, 2008 presidential preference primary
as the date for Floridians to vote on the "super homestead exemption"
amendment. FAR is very excited about the work that the Florida Legislature
was able to complete in 3 short days!
Below
is some additional detail on what is included in the final deal. Also,
attached is an updated chart (side by side) that you will find useful. We
had an amazing response to our call-to-action and Legislators assured us that
this is only the beginning. They will continue to work on reforms that we
consider the top priorities such as "highest and best use."
The
agreement consists of a two-tiered approach to achieve immediate relief and
long-term reform. The combined elements of the plan offer $31.6 billion in
tax relief over the next five years. This is touted by House and Senate
leaders as by far the largest tax cut in the history of
1.
The Statutory Component - Immediate Tax Relief
Cities
and counties must lower their tax rates a certain percentage based on their past
taxing conduct. This component of the plan offers $15.6 billion of tax
relief over five years, with savings beginning this year. The
statutory component affects all properties in a positive way (homestead, non
homestead, commercial).
.
First, all cities and counties must adopt the rolled-back rate for the coming
fiscal year. In other words, tax levies for FY 2007-08 must be equal to
tax levies for FY 2006-07, excluding taxes levied from new construction. Then...
.
After adopting the rolled-back rate, the bill requires each city and county to
further reduce taxes based on their recent taxing history (from 2001 to 2006,
the period in which property values rapidly increased). To delve into this
further, there will be five tiers. Between 2001 and 2006, if a County had
an average annual tax levy increase of a certain percentage then they'd have to
roll back a certain percentage more. So, if their tax increase was below
5% the cut is 0; over 5 to 7% tax increase the cut is additional 3%; over 7 to
9% tax increase the cut is 5%; over 9% to 11% the cut is 7%; and over 11% tax
increase the cut is an additional 9%. The City cuts are similar. The
bottom line is that those counties and cities that increased taxes at a faster
rate than the statewide average must offer larger tax cuts. Those that
modestly increased tax levies will in turn sustain smaller tax cuts.
.
Beginning in 2008-2009 and every year thereafter, the bill requires all local ad
valorem taxing authorities except school districts to set millage rates in
accordance with the rolled-back rate, adjusted by the annual growth of
2.
The Constitutional Component - Long-term Reform
The
constitutional amendment cures the inequities in the property tax system by
transforming Save Our Homes through a new "super" homestead exemption.
The new exemption covers 75% of the first $200,000 of homestead value and 15% of
the next $300,000, with all homesteads receiving at least a $50,000 exemption.
Current homestead owners will be given a choice as to whether to keep their
benefits and assessment cap under Save Our Homes or to use the new super
exemption. The bill also authorizes a $25,000 Tangible Personal Property
exemption and allows targeted relief for affordable housing, low-income seniors,
and working waterfronts. This component offers $16 billion of tax relief.
3.
The Special Election
This
bill authorizes a special election for #2 above. Voters will have the
opportunity to adopt the proposed constitutional amendment during the
presidential preference primary on January 29, 2008. If voters approve the
amendment, it will lower property tax bills in 2008. If the vote on the
constitutional amendment is delayed until the general election in 2008, the
reforms will not take effect
until tax bills are calculated in 2009.