Florida Senator David Simmons Withdraws Super Property Tax Exemption Effort; May Try Again

Jan 26, 2012

The following article was published by The Sunshine State News on January 26, 2012:

Simmons withdraws Super Property Tax Exemption Effort;  May Try Again

By Jim Turner

A statewide referendum designed to pump life into the housing market by creating a super property-tax exemption for first-time home buyers and seasonal or second home owners will remain in its original form on the November 2012 ballot.

With little support indicated from members of the Budget Subcommittee on Finance and Tax, as well as continued opposition from the League of Cities and Association of Counties, Sen. David Simmons, R-Altamonte Springs, on Wednesday withdrew — for now — his attempt to bring more equity to the state’s property-tax system.

Simmons said that he hopes to return his proposal, SJR 314, to replace language in Amendment 4.

The referendum, approved by legislators in 2011 and one of seven currently on the ballot, would:

  • Prohibit increases in the assessed value of homestead property if the fair market value of the property decreases.
  • Reduce the cap on annual assessment increases to nonhomestead property from 10 percent to 5 percent.
  • Provide first-time home buyers an exemption equal to 50 percent of the median home price in the county. The exemption would be gradually reduced until it expires within five years.

The proposal is seen as a means to entice interest into the housing market.

Simmons proposed instead to permanently tier the super exemption at 30 percent of the individual property value for homes under $200,000, and 15 percent for homes between $200,000 and $400,000.

Opponents of Simmons’ proposed change say there isn’t a need to rush into tinkering with numbers because the decline in the housing market has created its own sense of balance to a system that grew vastly disproportionate during the height of the boom.

“The proposal by Senator Simmons would cost cities a half billion dollars in the first four years of implementation,” said Scott Dudley, legislative affairs director for the Florida League of Cities.

Dudley also estimated that cities may not return to the 2005 assessment levels, just as the state was hitting its housing peak, until 2016 or 2017.

The drop in the market has also eased the gulf in taxable values.

While Save Our Homes caps how much a property assessment can grow when property values remain flat or increase, recapture is when values drop and the property appraiser must increase the assessed value to bring it closer to full market value. In other  words, the taxable assessment can grow more than 3 percent when property values drop.

“I believe the recapture has really resolved the issue and made it less burdensome,” said committee member Sen. Gwen Margolis, D-Miami.

Simmons defended his proposal.

“This bill does not do away with Save Our Homes,” he said. “You either get a percentage exemption, the super exemption, or Save Our Homes, whichever is better for you.”

Simmons predicts that the attempt to adjust property taxes under the currently proposed amendment will shift any future increases in taxes onto residential property owners.

“I’m trying to come up with a rational solution that creates equity,” Simmons said.

He said the only way to actually achieve equity would be to end the Save Our Homes exceptions that cap homesteaded property at 3 percent when prices rise. However, Simmons acknowledged that any attempt to repeal Save Our Homes is unrealistic.

“The demagoguery that would take place, trying to get rid of Save Our Homes, is not worth the effort it would take,” Simmons said. “What I’m trying to do is overlay Save Our Homes.”

The two-decades-old exemption has resulted in neighbors paying vastly different taxes on comparable homes based upon how long the owner has residence in the property.

Simmons said while many longtime homeowners have enjoyed the benefit of the low taxes, the 3 percent cap has proven to be a disincentive for people to buy new homes and remains part of the reason the state’s housing market has lagged.

A similar overlay effort was tried last year but rejected by the Supreme Court, which ruled the summary language wasn’t consistent with the ballot language.

Simmons argued that the League of Cities and Association of Counties, after years of legislative wrangling, have decided to fight the cap in the referendum rather than rework the language.

“Their strategy has moved from trying to fix it to trying to defeat it,” Simmons said.

Dudley and John Wayne Smith, legislative affairs directors for the Florida Association of Counties, rejected Simmons’ claim.

Smith said the association is only seeking a “pause” as Simmons continues to work on his proposal.

“We don’t believe the debate over equity issues should go away,” Smith said.

Find this article here:  http://www.sunshinestatenews.com/print/4448071