Weekend Rewind: Understanding Florida Amendments 1 & 2

Earlier this week I shared these entries... In case you missed them...

The Florida Amendment Series: Amendment 1 

Bottom Line: This is the first in a twelve-part series covering Florida’s proposed constitutional amendments. Amendments can be confusing enough to understand but furthering the confusion, while there were originally thirteen amendments scheduled for November’s ballot, a court ruling knocked the 8th off of the ballot. For that reason, you’ll see amendments 1 through 7 and 9 through 13. Each proposed amendment requires a minimum of 60% support to pass. Here’s how it will appear on the ballot: 

No. 1 Constitutional Amendment 

BALLOT TITLE: Increased Homestead Property Tax Exemption  

BALLOT SUMMARY: Proposing an amendment to the State Constitution to increase the homestead exemption by exempting the assessed valuation of homestead property greater than $100,000 and up to $125,000 for all levies other than school district levies. The amendment shall take effect January 1, 2019.  

Like all amendments the verbiage on the ballot will be wordy and potentially confusing. Here’s what would change if passed...  

Amendment one would expand the two existing homestead exemptions which total $50,000 of the first $75,000 of property assessed value (meaning you only have to pay taxes on $25k of the first $75k in value). The expansion would be for an additional $25,000 exception on property value up to $125,000. In other words, if this passes $75,000 of the first $125,000 of property value will be exempt from property taxes. Notably as cited in the ballot summary, school assessments aren’t exempt (not impacted) if this passes.  

Final Thoughts: The estimated year one savings on property taxes would be $645 million statewide. Clearly, you’re not going to have that kind of revenue opportunity go away without opposition and that’s very much the case. Virtually every local government is opposed to this amendment. Some local governments have promised tax increases to offset the impact of this Amendment should it pass. Some have gone so far as to actually already passed mileage rate increases with the expectation that it will pass.  

As for my thoughts... I take a hard line with property taxes. I think they’re the most repressive of any existing tax and oppose them generally. I principally don’t believe the roof over one’s head should be an ongoing taxable event. I believe that all governments, including local, should seek revenue from other sources. I understand that many local governments will likely take action to raise taxes rather than attempt to act with more fiscal restraint and discipline. As a matter of principal, I support all efforts to limit, or eliminate any taxation on homesteaded property which is why I’ll be voting in favor of Amendment 1.

The Florida Amendment Series: Amendment 2 

BALLOT TITLE: Limitations on Property Tax Assessments  

BALLOT SUMMARY: Proposing an amendment to the State Constitution to permanently retain provisions currently in effect, which limit property tax assessment increases on specified nonhomestead real property, except for school district taxes, to 10 percent each year. If approved, the amendment removes the scheduled repeal of such provisions in 2019 and shall take effect January 1, 2019.  

Of all of the proposed Amendments this is one of the most straight forward. On non-homesteaded properties there are currently no limitations on property taxes increases one year to the next. While we’ve had multiple homestead protections put in place for primary homesteaded properties, under the premise of “Saving Our Homes”, nothing has been done for rentals and businesses.  

Entering 2018, 35.9% of households were rentals in Florida. That means that more than a third of Floridians are negatively impacted by the lack of limitations on the rate of increase in property taxes. While high rent rates are often discussed as a problem in South Florida from an affordability standpoint, seldom is the impact of property taxes discussed. It’s a huge part of the picture as the increases are passed along to renters from landlords. For businesses, especially local, the rising property tax rates have often been prohibitive. I’ve spoken with multiple small business owners who’ve closed over the years specific to increases in rent/property tax rates and the threat of future increases for planning purposes.  

Final Thoughts: For the reasons cited I’m supportive of a cap of 10% annually for non-homestead property taxes. Frankly, I feel it should be a lot lower. When was the last time the economy grew at 10%? When was the last time the average person or local business earned 10% more annually? Why then should taxes be allowed to rise to that level? Yes on 2 and more can be done. 

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