Q&A – Should It Be Harder for Local Governments to Raise Property Taxes?
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Today’s Entry: I’d like to hear your take on the bill that would make it harder for local governments to raise taxes. The last thing I want is higher taxes but aren’t we basically talking about protecting people from the local officials they elected? Also, are there any other examples where the state government requires more than a majority vote for a local government to decide policy? Thanks I'll be listening.
Bottom Line: Good points, observations and questions. Today’s question is in reference to the Millage Rates bill that’s currently under consideration in the state’s legislative session and that has gained some attention in the news this week as issues pertaining to property taxes and Florida’s Home Rule often do. The crux of the proposal is that it would require a two-thirds vote by local governments to raise millage rates as opposed to a simple majority vote as it currently stands under Florida law. The bill passed the House Ways and Means Committee on a party-line vote and there’s been growing concern in certain circles about the implications of the proposal if passed as proposed. Before diving into the implications of raising the threshold for mileage rate increases by local governments, let’s start with what the current policy is pertaining to mileage rates with local governments. Doing so will also answer one of today’s questions.
Florida law heavily regulates mileage rate policy. As is noted by the state in the analysis for this proposed legislation:
Ad valorem taxes are annual taxes levied by counties, cities, school districts and certain special districts. These taxes are based on the just value of real and tangible personal property as determined by county property appraisers on January 1 of each year. Each year, local governing boards levy millage rates (i.e., tax rates) on the taxable value of property to generate the property tax revenue contemplated in their annual budgets.
The Florida Constitution prescribes specific maximum millage rates that can be levied by each local government, except for special districts, which can levy a maximum rate as determined by voters. To ensure that local governments collect roughly the same amount of ad valorem revenue as the prior year, statute provides a formula for calculating the yearly maximum millage rates that local governments can charge.
The governing body of a county, a municipality, or an independent special district votes to adopt the yearly millage rates. By a majority vote, a governing board can adopt the maximum millage rate calculated using the formula. Local governments are allowed to override this maximum rate by extraordinary votes of their governing boards or by referendum. A higher rate may be adopted only under the following conditions:
- A rate of not more than 110 percent of the maximum rate must be adopted by a two-thirds vote of the governing body; or
- A rate in excess of 110 percent of the maximum rate must be adopted by a unanimous vote the governing body or by a three-fourths vote of the membership of the governing body if the governing body has nine or more members, or if the rate is approved by a referendum.
Even the simplest explanation, which that is, might sound a bit confusing but you get the jest of the extent to which mileage rates are already regulated by the state government. And you also have the answer to the question as to whether a two-thirds vote of a local government is already required under existing law – it is if local governments want to raise millage rates above the state’s maximum rate. And that’s probably the most straightforward way to view this issue.
The newly proposed Millage bill doesn’t represent a sweeping new change to Home Rule, or Florida’s consideration for local governance. It wouldn’t set a precedent. What the proposal would do is to take the existing standard that’s in place for local governments to exceed the maximum mileage rates outlined annually by the state and to make that the standard for any mileage rate increases. It could still be reasonably argued that the proposal is effectively an effort to attempt to protect voters from the local officials they elect, but on that note, there’s recent precedent on our intent.
In 2018 Floridians approved a constitutional amendment (Amendment 5 that year) which raised the threshold for the Florida Legislature to raise taxes from a simple majority vote to a two-thirds vote. It could reasonably be argued that if Floridians want the threshold for raising taxes at a super majority for state government, the same very well may be true locally as well if we were given the opportunity to vote on it.
For the reasons I’ve outlined, the existing precedent within existing mileage law and the precedent Floridians set when given an opportunity to vote on the issue at the state level, I’m of the view that Home Rule and related overreach arguments fall flat with this issue. I do think that if it were to pass there might be unintended consequences. For example, might local governments look to raise rates higher than they otherwise might when they have the votes to do so because they know generally it’s harder to do so? I could see isolated instances like that playing out which could potentially lead to high property taxes for some. As always there are two sides to stories and one side to the facts, those are the facts. You can decide...