October 31, 2014

Taxes

Tax Squeeze

Save Our Homes has divided Florida into tax-break haves and Have-Nots

Mike Vogel | 12/1/2006
As property values have increased, Save Our Homes has produced a sharp divergence in the fortunes of Florida property owners.

? The Haves: Homeowners with Save Our Homes caps. Low inflation has meant that their tax assessments under the cap have risen by an average of only 2.4% annually. They've felt little pain -- as long as they stay put. Moving to a different home means a reassessment at prevailing, uncapped values, resulting in neighbors with similar homes paying widely dissimilar taxes. Even downsizing can result in a higher tax bill.

? The Have-Nots: Property owners like Patel -- including landlords, second-home owners, snowbirds and commercial property owners. Their uncapped assessments have risen along with their property values. And in the process, more of the tax burden has shifted their way.


Payment due: "This year we won't make a profit, or we'll have to borrow money to pay the taxes," says Hemant Patel, who owns a 50-room motel in Miami.

"It's tough to survive," says Patel. "We are literally being forced to sell our business and get out of Miami." Lee County Property Appraiser Ken Wilkinson, who created Save Our Homes and led the drive to put it in the constitution, cites an unintended consequence of his creation. He expected it to control local government spending. Just the opposite happened, and local government spending has followed appraised property values skyward, with some government budgets doubling in a few years. "Whereas I thought it would bring more accountability to the spending side, it didn't," Wilkinson acknowledges. "I thought (Save Our Homes) would put pressure on them to control their millage. It just whetted their appetite.

" Research by Florida State University professor Dean Gatzlaff explains why. Save Our Homes, he says, created a new political dynamic as it shifted the tax burden away from homeowners with Save Our Homes protection. The majority of voters -- those homeowners, who normally would lean on city and county governments to control spending have had no incentive to try to limit increased spending by local governments, Gatzlaff says. The reason? Since their tax assessments are capped, they're not paying their share of the cost of new services, which has fallen on the uncapped.

In Volusia County this year, for instance, only 4% of the annual increase in property tax was borne by Save Our Homes-capped property owners; those not covered by the cap carried the rest, says property appraiser Morgan Gilreath. The average homestead property in Volusia, with the combination of the $25,000 homestead exemption and Save Our Homes protection, gets $110,000 taken off the tax value of the home.

The average value of the break to owneroccupants of Florida homes is nearly $800 as of 2004, Gatzlaff says. His research indicates that those in more affluent homes, wealthier suburban counties and high-growth, highappreciation coastal counties see the greatest benefit in total dollars and in percentage terms. Ironically, given the intent of the Save Our Homes amendment to keep seniors and low-income people from being taxed out of their homes, those who have seen the least benefit are seniors, rural Floridians and owners of lowerincome housing such as mobile homes, Gatzlaff finds.

Florida TaxWatch CEO Dominic Calabro calls the tax shift from homeowners to non-exempt property owners "phenomenal." Save Our Homes, he says, "created more inequities than it solved. It's making Florida increasingly non-competitive" and threatening such traditional economic engines as real estate and snowbirds, he says. Rising taxes and insurance costs are "going to choke off additional supply" of housing, pushing up costs for tenants, predicts apartment developer Joel Altman, chairman of Boca Raton-based The Altman Cos.

Indeed, Save Our Homes now gets blamed for slowing home sales, the lack of affordable housing and unequal and regressive taxation. Talk to city and county officials throughout Florida about who came this year to their budget hearings to complain about taxes, and the consistent answer is those not protected by Save Our Homes.

Tags: Banking & Finance, Housing/Construction

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