Awkward Utopia

This week, UES welcomed Dr. Dewey of UF’s Bureau of Economic and Business Research to our meeting. He spoke on the topic of Florida’s proposed property tax reforms and their relation to education financing. With his permission and in lieu of our usual meeting minutes, I’ve decided to turn this topic into a pseudo-scholarly project for AU. In this post, I’ll lay out a rudimentary overview of the property tax question as related by Dr. Dewey and supplemented by outside sources; my next post will focus more on his thoughts about the impact of the state legislature’s proposed “solutions” on the funding of our K-12 school system.

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One result of through-the-roof real estate appreciation is that recent years have seen a rapid escalation of Florida property owners’ property tax burdens. In January of this year and within weeks of his swearing in, Governor Crist announced his intention to press for sweeping reform. Early talk centered around increasing by 100% the Homestead Exemption and expanding Save Our Homes (a piece of 1992 legislation that capped the rate at which the property tax burden of a person’s primary residence could increase from year to year) to non-homestead properties.

By Spring the State Legislature was evaluating a plan that would do away with property taxes altogether and replace them with a 2.5 cent addition to the statewide sales tax. Florida TaxWatch among others responded promptly to the proposal with studies showing that (1) such a measure would — surprise! — benefit homeowners while hurting home-renters, and (2) increasing the sales tax would do unnecessary net-damage to Florida’s economy.

In June, a Special Sesson of the State Legislature concluded with two measures. First, they statutorily “rolled back” the property tax millage rate so that districts can collect no more in one year than they did in the last (adjusted for inflation and a few other things). Second, they placed a constitutional amendment on the January primary ballot that would repeal Save Our Homes — though only kinda — in favor of a new, tiered homestead “superexemption.” The upshot of all this deal-brokering might just be cause for concern about Florida’s schools, who, as a result, expect to face at least a billion dollar shortfall in revenues from property taxes in the immediate future.

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At this point, irrespective of the education question in particular, I’m extremely interested in my fellow UESers’ takes on the property tax issue at large.