Tax break prompts concern

Governments fear revenue loss

Voters will get a chance to give themselves a property tax break next year, and local governments are bracing for the financial hit.

The state Legislature is placing an increased homestead exemption on the November 2018 ballot. South Florida officials are under no illusion that voters will turn down the chance to save money.

The proposed increase will provide the average homeowner a savings of about $240 a year, officials said, while Broward, Palm Beach and Miami-Dade governments can expect to see their revenues decreased by more than $200 million.

Government leaders say they are only now getting back to the services provided from before the Great Recession. The cuts will mean less money to deal

with pressing issues such as reducing the opioid crisis, providing affordable housing and getting the homeless off the streets and into housing. The tax reduction could affect every aspect of government, from the police on the streets and the upkeep of parks to how vigilant code officers can be in catching neighborhood eyesores.

The effects of the proposed tax reduction vary, from a couple of thousand dollars in small towns like Pembroke Park and Mangonia Park, to about $2.5 million for cities like Fort Lauderdale and West Palm Beach. Broward County officials say they face a $32 million cut, while Palm Beach County officials have been anticipating a $28 million reduction in property tax revenue and MiamiDade County is looking at closer to $50 million loss, according to preliminary projections.

The loss in Broward County, would be less than 4 percent of the property taxes it budgeted this year and less than 2 percent of this year’s total operating revenues.

While South Florida officials have begun looking at how they will deal with the projected cuts, which won’t be felt for two more years, Broward commissioners are also talking about challenging the referendum in court. Some commissioners have suggested encouraging a lawsuit through a statewide organization like the Florida Association of Counties, but Mayor Barbara Sharief is willing for the county to go it alone even though she admitted legislators “structured [the] package in a way that it will make it even more difficult to prevail.”

Cragin Mosteller, spokeswoman for the Florida Association of Counties, said the association’s members will probably consider the issue later this year.

“At this point, we’re simply analyzing the impacts of the bill and what options, if any, are available to the membership,” Mosteller said.

The state already has two homestead exemptions, one on the first $25,000 of a home’s property value, and a second $25,000 exemption on a home’s value between $50,000 and $75,000. The proposed exemption would give eligible homeowners a third $25,000 break, on the value of their home between $100,000 and $125,000.

Broward Commissioner Steve Geller said he plans to get the word out about the devastating effect the ballot item will have on local governments.

“I will be actively campaigning against this constitutional amendment,” Geller said.

But Palm Beach County Commissioner Melissa McKinlay, no fan of the ballot issue, said that won’t be her approach.

“My approach is not going to be ‘Vote yes’ or ‘Vote no’ on this. It’s just going to be, this is what’s going to happen,” McKinlay said. “When you’re talking almost $30 million, it’s going to be hard to avoid cuts in services.”

Palm Beach commissioners have discussed the possibility of asking voters to approve an additional halfcent sales tax to pay for emergency services, but McKinlay said that won’t have an effect on the lost tax revenue from an increased homestead exemption.

In Miami-Dade County, officials are considering privatizing 14 low-ridership bus routes, which could save about $12 million a year, said Mike Hernandez, spokesman for Mayor Carlos Gimenez. Finding similar cost efficiencies are key to meeting the challenge, he said. The county also will be looking for savings in new employee labor agreements that take effect Oct. 1, he said.

“It doesn’t hurt to prepare. Whether or not it’s approved, you still have to be prepared,” Hernandez said. “We are being impacted. We do not plan on increasing taxes.”

Bertha Henry, Broward’s county administrator, told the same thing to the county’s constitutional officers — including the sheriff and property appraiser — about the budgets they submit.

Those leaders say it’s too early to be forcing cuts.

“It is premature and overly reactive to make any budget cuts to public safety and other vital services before all the facts are known,” Sheriff Scott Israel said in response to Henry’s request.

Property Appraiser Marty Kiar also questioned the 4.9 percent budget increase the county has suggested for the upcoming fiscal year, given that another robust increase in property values is expected. Kiar said the county is looking at about a 9 percent increase in values this year.

The increase should provide an extra $75 million in property taxes for the county, Kiar said, far more than what is expected to be lost by an increased homestead exemption.

Hernandez said MiamiDade County is looking at a similar increase in property value this year, which will soften the future blow of any lost taxes.

“It’s not quite as drastic until a recession hits,” Hernandez said.

The Legislature took steps to protect 29 financially constrained counties that have small populations, that are already near their maximum taxing capacity and that would be severely affected by a property tax reduction. Under a separate bill approved this year, the state would provide money to those counties to offset the losses.

While that may help poor counties, it does nothing for poor cities that are part of larger counties, McKinlay said.

“They carved out the fiscally constrained counties, but there’s no consideration for fiscally constrained cities,” McKinlay said. “I’ve got three of the four poorest cities in the state of Florida in my district,” she said, referring to Belle Glade, Pahokee and South Bay.