Property Tax Reform Is A Local Issue

The Florida Legislature was called to special session this past week to deal with several pressing issues. Of immediate concern is the necessity to revisit the language of the proposed Tax Reform Amendment, originally slated to be on the ballot for the Jan. 29, 2008 presidential primary election. A circuit court judge has ruled that the amendment's language is "unconstitutionally vague and confusing." Most voters now concede that the proposed amendment's wording and intention is at best difficult to understand.

Should we consider that the language is confusing because the issue of tax reform is extremely complex? Legislators have been trying to uncover a simple statewide solution in effort to remedy the interwoven economic issues created by unchecked increases in property taxes. Unfortunately, there is no single choice, no "one size fits all" solution, available to Florida homeowners that can be chosen as the surefire "winner."

Voting "yes" or "no" to the proposed Tax Reform Amendment compels us to critically analyze this issue beyond the perspective of our individual situation. We have been asked to vote on what is best for homeowners throughout Florida. Have we been educated enough about this proposal that we can actually be expected to vote decisively on this complex issue? Is there a clear-cut choice in the options presented to us that benefits the majority of homeowners as would be expected from a constitutional amendment?

Keeping this very simplistic, it appears that for people owning their homes a long period of time previous to 2003, the Save-Our-Homes cap would most likely be the best choice. For those buying a home after 2004, most likely the best option would be to take the proposed Super Homestead exemption. Even if accepting these simple guidelines as correct, voting for the amendment requires us to think hard about what might be best for future home purchases as well. Thoughtfully voting "yes" or "no" for this amendment will force us to consider factors such as our age, the likelihood of upsizing or downsizing in the future as well as what level of taxation do we want to choose for our children.

For some homeowners, specifically those that bought at certain price points at the beginning of the property boom (2003-2004), a decision to keep their Save-Our-Homes cap or to switch to the Super Homestead exemption will never be crystal clear. Property taxes with no cap will vary over time due to economic forces beyond our individual ability to predict or calculate. Other factors such as age of the improvements on the property will determine the future taxable valuation in relation to other properties. None of this can be predicted with any certainty.

In spite of the uncertainty, tax reform is an issue critical to our local and state-wide economy. Over the past 10 years, workers have averaged a 3.8 percent statewide growth in income per year. On the other hand, property taxes over the past 10 years have increased by an average of 99 percent statewide, according to the Florida Association of Realtors. In Highlands County, the tax increase from 2005 to 2006 was 42 percent! After factoring in the ever-increasing homeowner insurance premiums every year, we can see why the citizens of Highlands County, especially those on fixed or lower incomes, have been taxed and insured to a breaking point.

Unfortunately, insurance regulation is a state and federal issue that must be addressed on those levels. On the other hand, our county taxes are controlled by our locally elected county officials. This is the governing body that determines our county's tax millage rates, thereby the amount of taxes we will pay each year. Simply stated, it is the lack of adjustment of the millage rate in the face of escalating property values that has caused our property taxes to soar upward beyond many property owners' ability to pay them.

Under normal economic circumstances, a rise in a property's value is seen as an increased value of a tangible asset. This increase has been deemed an economic indicator of personal wealth. The increase in property values from 2003 to 2006 should have allowed us to experience more wealth with more disposable income in the form of rising home equity, and an increased ability to enjoy our homes as both a place to live and a source of current and future wealth.

Unfortunately, most of these economic benefits have been eroded by property insurers and unchecked taxation. For some people, home ownership has become a source of daily stress. Others are experiencing deep anguish when unable to unburden themselves of their mortgage obligations.

Most sellers cannot sell their homes quickly enough, as many locally employed buyers cannot afford the levels of increased taxes and property insurance now required to own a home. We have reached a crisis point that must be addressed in the very near future. Record foreclosures as well as a two and half year's inventory of homes for sale, are evidence of the damage being done to homeowners.

Home ownership has always been part of the American dream. Productive citizens should not be forced to sell their homes because they cannot pay for both insurance and taxes. If tax reform comes off the ballot, what can be done to remedy this situation? If we cannot fight big business to do anything meaningful with insurance reductions, we should do what we can, where we can. Our only choice is to pursue this on the local level.

Our property values are determined by assessment guidelines established by the state. Assuming in the property tax calculation that the property valuation is fixed, the millage rate is the only variable in the equation that can change our yearly tax payment.

Gov. Crist attempted tax reform at a statewide level because local governments have not addressed the issue. The choice to cap valuations at 2006 rates was the equivalent of no roll back as the 2006 tax rates are the highest on record. These same record valuations have produced for Highlands County the 42 percent windfall increase in revenue generated by property taxes and will do so, again, in 2008.

The state's mandated 3 percent cut in revenues was directed toward the county's revenues, not the millage rate. Consequently, some property owners saw increases to their 2007 tax bill. The end result is little to no tax adjustment from the state's mandates that will substantively benefit the taxpayers of Highlands County.

The proposed Tax Reform Amendment is a one-sized fits all attempt to force tax reform on local governments that have been too slow to react to this important issue. As most people know, a one-sized fits all garment doesn't work too well. Only a select few would even consider trying it on, much less to buy it. Although tax reform is overdue, the Tax Reform Amendment may not have been our very best option.

Putting state and national concerns aside, we need tax reform that works specifically for Highlands County. Tax reform does not have to be a partisan issue or one requiring a constitutional amendment. Local government can make changes to benefit all property owners if and when they choose to do so.

Let's ask our county officials to help us with this critical issue. We must request a significant reduction in the millage rate even if it requires less county spending in the immediate future. If elected officials know for certain that this issue is of uppermost importance to property owners, we may be able to obtain a reasonable property tax resolution for Highlands County.

Lisa Lucas lives in Sebring.