The Florida Legislature’s Special Session concluded on the evening of June 14^th. The result for the average Florida homeowner is a $1,300 annual property tax reduction by the fall of 2008. There are still hurdles to overcome, but if all goes as “planned,” this reform will put significant dollars back into the pocketbooks of citizens. As if often the case, however, in tax reform what individuals may be gaining could result in losses for communities in other areas.

Two measures were passed. The first measure involves statutory reform to how much property tax revenue local governments can collect this coming fiscal year and in future years. Property tax rates are now frozen at last fiscal year levels,  and the legislature is calling for a roll back over time to the frozen rate by a specific percentage for groups of counties and cities. The actual impact will vary from county to county (or city to city). The variance is dependent upon how much a particular county or city increased property tax rates over the past five years (and how this increase positioned them in comparison to the state average for tax rates). In short , counties and cities are being asked to roll back their rates from the FY 2006-2007 levels, by 3%, 5%, 7%, or 9%.

Finally, the statute places a cap on how much local governments can raise property tax rates in future years.

The roll backs are now official, and local governments must make decisions on how to operate to these cuts for the upcoming FY 2007-2008. As compared to some of the other property tax reform plans floated by the Legislature earlier this year, this part of the recently-passed reform package is much less draconian in the cuts required.

The Immediate Impact in Tampa Bay
In Tampa Bay, our ‘big five governments’ are affected to varying degrees. Hillsborough County, City of Tampa, and City of St. Petersburg must all roll back their rates by 5% in their upcoming budgets. This will likely result in noticeable cuts in budgets for this upcoming fiscal year, which begins in October. For example, for Hillsborough County this first part of property tax reform means cutting approximately $40 million from the coming year’s budget (out of an over $1 billion budget).

Pinellas County and City of Clearwater are required to roll back their rates by 7% each. For Pinellas County, this means budgeting with $32 million less than last year. For all special taxing districts – including the Children’s Board (Hillsborough) and the Junior Welfare Board (Pinellas), a roll back of 3% is mandated.

At this time, it is impossible to identify the details of any cutbacks to services. Currently, government officials and staff are no doubt crunching numbers to identify options and ideas as to how best to reach these new, lower, budget levels. Their process will most likely last through mid- to end-July. While we simply cannot know exactly what their decisions will mean until they are made, we do anticipate that local governments will be considering the reduction or elimination of any direct funding to human service non-profits, as well as “complimentary” services such as parks, neighborhood recreation centers, and libraries.Given the size of the cutbacks, it is highly unlikely that alternative sources of funding from United Ways, other non-government funding bodies, and the private sector will be able to make up for the loss revenues in any significant ways.  

Constitutional Amendment
The second measure passed last week in Special Session is a proposed state constitutional amendment, which the people will have the opportunity to vote on as a part of Florida’s Presidential Primary ballot next January 29, 2008.

The amendment involves a number of complexities, but its bottom line is that it calls for future changes that would attempt to reduce property tax costs to homeowners. This will occur by giving homeowners who currently have a Save Our Homes exemption a “choice” to keep this exemption or to take advantage of a new Super-Exemption that caps rates on the property based on its value. For those people without a current Save Our Homes Exemption, it is believed that by utilizing this new Super-Exemption, they would experience a lessened tax burden. Essentially, the idea is to reduce the inequity of taxes paid by neighbors for similar homes by reducing both neighbors’ taxes.

 More Tax Reductions… More Budget Cuts
With more significant tax reductions comes the certainty of more budget-cutting by local governments. This could involve much more sizeable cuts to local government over the next four fiscal years. The Legislature also proposes cuts of $7.1 billion to Education (although the Legislature has promised to maintain Education funding levels by shifting more money to it from the state budget).

Of the two measures passed last week, local governments are more concerned about this second one. Even as the Legislature was finalizing details, the Florida Association of Counties was meeting in Orlando to begin to determine their strategy for successfully defeating this measure next January.

Because of the newly implemented rule, this Property Tax Amendment will be the first on a ballot that will require 60% voter approval. This is a potential stumbling block for the Legislature in implementing its plan, because very few if any of the previous amendments to the state constitution have received 60% of the vote. (It is worth mentioning that not even the amendment that changed the constitution to require a 60% vote for approval received 60% of the vote!) 

Currently United Way is undertaking an assessment of its funded organizations and programs to increase our understanding of how vulnerable they are to government cutbacks. Once we have done so, we will be more able to consider what roles we might play in working with the community and governments to continue the important work of building and nurturing strong families throughout Tampa Bay.