Some fear plans for homestead exemption
Leaders foresee big losses if break expands
Thanks to state lawmakers, Florida voters will have the chance to give themselves a property-tax break worth about $275 for the average homeowner next year.
But Central Florida government officials warn that if the ballot measure passes in November 2018, it will lead to a drastic loss in property-tax revenues — potentially more than $59 million across the region in 2020. The losses could force cuts to services such as public safety, parks, libraries and community health centers, critics say.
“That’s a gift to you from the people in Tallahassee, but it comes out of your local dollars,” Seminole County Commissioner Brenda Carey said at a recent meeting. “We’re the ones that provide you with your services, and we pay for it through your ad valorem [property] tax. … There are going to be consequences.”
Many local governments would have the leeway to increase taxes to make up the shortfall. But elected officials often are loath to jack up tax rates to bring in more dollars.
“This is putting counties in a really tough choice: Whether to cut services or raise taxes,” said Cragin Mosteller, spokeswoman
for Florida Association of Counties. “The savings for homeowners, that’s a fairly small amount. But it’s going to affect our quality of life.”
Estimates show if the new exemption passes in the November 2018 referendum, Seminole stands to lose $11.2 million in tax revenue, including nearly $3 million for the fire department and more than $4.5 million for the Sheriff ’s Office.
Elsewhere, Orange County would face a nearly $23 million cut in revenue, including $4.5 million for the fire department, $3.6 million for the Sheriff’s Office and about $14.9 million for the county’s general fund.
“This would be a big hit to Orange County and result in some significant funding challenges, especially for public safety functions, such as Fire Rescue and the Sheriff’s Office,” said Doreen Overstreet, an Orange County spokeswoman.
Property-tax losses would amount to about $3.9 million in Orlando, $693,209 in Apopka and $478,628 in Sanford, estimates show. Lake County would take a $7.6 million hit, while Osceola would lose $4.6 million.
Statewide, the exemption would cost counties and cities a total of $587.5 million, according to the Florida Association of Counties.
School districts would be shielded from cuts as the exemption would not be applied to school taxes.
Supporters of the additional homestead exemption say property values in Central Florida are expected to rise in the coming years, so local governments should be able to make up shortfalls through increased revenues brought by increased tax bases.
Not all local government elected officials are sounding alarms about the additional homestead exemption.
“I’m always in favor of giving residents their money back,” said Seminole Tax Collector Joel Greenberg, who supports the additional exemption. “Governments will always play the game that we’ll have to cut services. … But what they should be doing is cutting staff and other expenses.”
Passage will require a high threshold — 60 percent of the vote. The break would take effect in 2019, adding to the current homestead exemption that lowers the taxable value of a homeowner’s primary residence by $50,000 for most taxes — $25,000 of that amount doesn’t apply to school taxes.
Not every homeowner would get the extra exemption, however. It would apply only to homes with taxable values above $100,000. If the ballot question passes, the owner of a home with a taxable value of $200,000 would see that reduced to $125,000 when tax rates are applied.
Still, not all property owners would count savings.
Amber Hughes, senior legislative advocate for the Florida League of Cities, said the extra homestead exemption would mean an increased tax burden on owners of rental properties and commercial properties, who don’t enjoy the same property tax breaks as homeowners.
Some lawmakers struggled with the issue, which weighs the public’s right to decide against the potential effect of the extra exemption.
For example, state Sen. David Simmons, R-Altamonte Springs, said the proposed homestead exemption isn’t a fair way to reduce taxes.
“Local governments will simply raise their millage [tax] rates and transfer the tax liabilities to businesses and renters, so we end up shifting more of the burden to the people who can least afford it,” he said. “And also to people who own businesses.”
Even so, Simmons voted to place the constitutional amendment on the ballot. However, he hopes legislators correct inequities this fall before the issue goes before the voters in 2018.
“I’m in favor of tax cuts, but there is a much better way to have done this so it wouldn’t have be so problematic for local governments,” he said. “But even a bad tax cut is better than no tax cut. But I would say that this one is a bad tax cut. But it’s up for the voters to decide. … There is time to correct this.”
State Sen. Linda Stewart, D-Orlando, opposes the additional exemption but agreed voters should decide.
“I’ve always felt that residents should have the right to vote on these issues,” she said. “Seminole, Orange, or whatever county, they’re going to be impacted. And it’s up to them to tell their voters that it’s not in their best interest.”
Seminole commissioners said legislators could cut the state sales tax from 6 cents on the dollar to 51⁄2 cents or even 5 cents if they were eager to slash taxes.
Seminole Commission Chairman John Horan said counties and cities should start warning residents about the impact an additional homestead exemption would have on local governments.
“It hits law enforcement. It hits firefighters,” he said. “So call your friends and neighbors and explain to them that the Legislature didn’t cut your taxes. They just cut our revenues. That’s what they did.”