Q&A – The Implications of Repealing Property Taxes in Florida Part 2
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
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Today’s Entry: Today’s Q&A is a continuation of yesterday’s note addressing the concerns of a retired listener with a homesteaded property.
Bottom Line: The topic of property taxes and the potential repealing of them continues to be an especially hot topic across our state. In yesterday’s Q&A I broke down what’s in the current proposal and discussed a few important points that should be considered as homesteaded property owners locally are wondering if they would really be better off if property taxes were eliminated.
- The proposal would eliminate all property taxes regardless of property type
- A state study, if authorized by the legislature, would cover all aspects of the elimination of property taxes including the potential pros and cons of replacing property taxes with a consumption tax
- The property tax burden has significantly shifted from homesteaded properties to non-homestead properties creating an affordability crisis for renters, and affordability challenges for many businesses leading to increased commercial vacancies
Let’s pickup there...
In Palm Beach County, property tax collections have increased by 222% over the prior nine years. Some of that is due to the county’s growth and increased tax base with more properties. Some of that is due to people selling previously homesteaded properties and having property taxes reset under new owners. Much of it has come from rising assessments. If you’ve held a homesteaded property in Palm Beach County over the prior nine years your maximum increase in property tax assessments has been 30%. However, if you’ve owned non-homestead property over that same period it’s possible for your property taxes to have risen by 136%. That reality has led to businesses being taxed out of business and renters effectively being taxed out of their homes through increased rent rates compensating for the large increases. Importantly, as we’re talking about affordability considerations, it’s also passed along to you through the cost of goods and services every time you make a purchase.
Palm Beach County, for example, not only is among the highest for property taxes in Florida, but out of 3143 counties across the country, ranks as the 166th most expensive. That means the county, by way of property taxes, is less affordable than 95% of locations nationwide.
The cost of living in Palm Beach County, in large part due to these factors, is 14.1% higher than the national average, and 3.4% higher than the average other community in Florida. Statewide, but especially throughout the Palm Beaches, the potential to reduce the net cost of living exists through the elimination of commercial property taxes. Prices for goods and services are more expensive because businesses must account for the higher costs of operating a business due to extremely high and ever rising property tax bills.
There is a good chance that ending property taxes on non-homesteaded properties would actually improve long-term affordability for owners of homesteaded properties given that property taxes would be replaced with consumption taxes. That’s all part of what we need to learn from the study. Speaking of the study...
Since my previous update there have been two additional steps that have taken place as it’s been referred to the Community Affairs; Finance and Tax; Rules committees for consideration, and most recently the bill has been introduced meaning that it is up for consideration. But just as was the case with Smokey and the Bandit, this bill has a long way to go and a short time to get there. The bill needs to clear three senate committees before there’s the potential for a full vote before the chamber, and just as importantly this bill currently lacks a House companion which is a necessity. The yet to be introduced companion bill would also have to clear committee hearings in order to achieve a floor vote and there’s only 51 days to go in the state legislative session. There’s time to get it done, however it’s clearly not currently a priority in either chamber.
But let’s say that the study does pass. What happens? Between July 1st and October 1st, the state will conduct the study.
Based on the results of the study, the legislature could a) choose not to act on it b) draft legislation aimed at placing a constitutional amendment on our ballots. From there the proposed ballot would have to go through the legislative process all over again. And only then, if the proposed amendment were to pass the legislature, would it be placed on our ballots in November of 2026. If that occurred, you along with every other Florida voter would have your say as to if you’d want to repeal property taxes and for it to pass it’d need a minimum of 60% support. If it were to pass the earliest possible date for the change to being to take place would be in 2027. Also, based on how the amendment could be written, it could be a phased in situation over time. For example, Florida’s minimum wage Amendment passed in 2020 but isn’t fully phased in September of 2027. This is to say that it’s way too early to worry about what the implications may be to you.
67.3% of Floridians own their homes and are homesteaded. It’s safe to say that legislators wouldn’t put forth a proposal that would make affordably worse for over two-thirds of the residents of this state for the potential benefit of less than a third. It’s also safe to say 60%+ Floridians wouldn’t support such a proposal either.