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Tax Cap Fever
The initiatives are based loosely on Proposition 13, the 1978 measure that cut local property tax revenues in California by some 51% in a single year. The exact impact of the Florida initiatives can't be calculated yet. But from the standpoint of local governments, it likely would be crater-sized.
The main initiative would reduce property taxes by restricting taxable values for homesteads (usually principal residences). Its most significant provision would limit the taxable value of homestead property to two-thirds of assessed value.
Homestead property accounts for a big chunk of the state's total property value - about 35%. Thus, local governments would see substantial decreases in the overall taxes they could collect. (The decrease for homeowners, however, would be something less than a simple one-third because the state's $25,000 homestead exemption already precludes some of those taxes.)
Entitled "Limiting Assessed Values and Taxes on Homestead Property," the initiative also would roll back homestead valuations to 1992 levels, where that assessment was less than the present value. Moreover, it would forbid future valuation increases on homesteads for people 65 and older.
A companion initiative would prevent local governments from boosting rates to compensate for the effects of the cap on taxable value. This measure would forbid millage rate increases from rising in a year by more than 3% or the Consumer Price Index, whichever is lower. Yet another initiative being circulated by anti-tax activists would require voter approval of all new taxes - state as well as local.
Combined with the state's three-year-old initiative capping valuations for principal residences, the new restrictions could make it harder to raise property taxes in Florida than in just about any other state, according to Scott Mackey of the National Conference of State Legislatures. California is considered to have the toughest restrictions, thanks to Proposition 13. Prop 13 limited local property taxes to 1% of assessed value, and screwed a tight lid on assessment increases, in addition to requiring super-majority votes for future tax rate increases.
But California was - and still is - a high-tax state. What happens when ultra-restrictive property tax limits are adopted by a state like Florida that lacks an income tax or many other revenue sources?
"It's the public that loses," says Cathy Kelly of Florida Teaching Profession-National Education Association, one of the state's big teachers unions.
"Potentially disastrous," says Dominic Calabro, CEO of Florida TaxWatch, a business-sponsored watchdog group, of the initiatives being circulated this year.
The restrictions would have their most dramatic impact on Florida's school spending. Local revenue sources such as property taxes make up a big portion of Florida's school budgets - 42% in 1993-94 - so any reduction would hit hard, especially if not accompanied by huge increases in the efficiency of Florida's public schools.
California per-pupil revenues have lagged behind Florida's, in no small measure because of Prop 13. Some economists say California's deteriorating schools and public services are at least partly to blame for that state's economic problems. In Florida, where poor educational performance already is a significant disincentive to business relocations and expansions, the effects of a property-tax revolt could be even more drastic.
Not only would Florida schools likely get worse, but existing businesses wouldn't even share in most of the tax relief benefits. While millage rates could be capped for all local taxpayers, government is likely to make up at least some of the revenue loss with new or higher taxes.
"The danger is that they shift the burden to business," says Jodi Chase, a lobbyist for Associated Industries of Florida.
An Orlando-based group called Save Our State is spearheading most of the initiatives. It includes volunteers from the successful 1992 Save Our Homes crusade.
Backers of Save Our Homes (SOS) say they're reacting in part to a little-noticed trend: Businesses have been paying a smaller share of property taxes in recent years, in part because of reduced valuations during the last recession. Maybe so, business leaders counter, but the initiatives being circulated are an overreaction by homeowners. The effect of the initiatives could be to harm the economy instead of improving it, they say.
Many of the initiatives "tend to further distort Florida's tax policy and make it a more uncertain state in which to employ people, raise capital and conduct enterprises," says Calabro of Florida TaxWatch. "They become potentially disastrous and really wind up hurting the senior citizens that some attempt to serve."
SOS's executive director, campaign consultant Doug Guetzloe, says he expects tremendous opposition from the state's political establishment. "As we get closer to the ballot, I'm sure we'll see the hounds of hell unleashed," he says.
SOS also is pushing measures aimed at taking government benefits away from illegal aliens and establishing property tax exemptions for parents who home-school their kids or send them to private schools. A New Smyrna Beach group called the Tax Cap Committee is circulating others, including an initiative that would require voter approval of all new taxes or tax increases. All the initiatives face legal and financial hurdles before they reach the November ballot.
Nevertheless, the Florida establishment is taking the measures seriously, as well it should. "Any time you try to restrict property taxes in Florida it has a chance," says Wayne Blanton, executive director of the Florida School Boards Association.
Jeb Bush, Author
Jeb Bush and co-author Brian Yablonski's new book, "Profiles in Character," is a paean to old-fashioned virtue. Published by Bush's public policy organization, Foundation for Florida's Future, the book asserts that public policy is being based on politically correct, malleable values ("All kinds of values are now used to justify all kinds of behavior") instead of "those moral absolutes common to all the world."
Clearly aimed at showing Bush's strong ties to the state, the 284-page book includes profiles of Floridians the authors deem to be virtuous. And while the book is not overtly political, Bush couldn't resist a swipe at the only announced candidate for the 1998 Florida Gubernatorial race, Lt. Gov. Buddy MacKay. Recalling the 1994 race, he quotes MacKay saying that government is the best means by which we have organized ourselves to solve problems. "His statement was reflective of a cult of government," writes the expected Republican contender.
Cyber-taxes
Behind the blustering by the Florida Chamber of Commerce and other business groups over the so-called Internet tax is a serious question for state lawmakers. With the state budget facing huge revenue shortfalls, it's obviously worth the state's while to consider adding the gross-receipts tax to established computer on-line services like America Online and CompuServe.
Some, such as Florida Department of Revenue (DOR) chief Larry Fuchs, believe these services are already subject to Florida taxes. The gross-receipts tax originally was conceived as a tax on monopoly utilities. Following the Bell system's breakup in 1984, the Legislature expanded the tax to cover the myriad separate telephone services that resulted, along with what the Legislature described as "computer exchange service."
No one remembers anymore what the Legislature meant by that term, but Fuchs' agency believes it now clearly applies to many types of commercial on-line services. With good reason: The law's definition extended to "the privilege of intercommunication by [computer] with substantially all persons ... constituting a part of the same ... computer exchange system." The tax would be imposed on the fees paid by subscribers. DOR also has proposed levying the state's 7% business-telecommunications sales tax on the on-line service fees.
The proposals have set off a frenzy of faxing and - ironically - e-mailing, even though the initial impact of the tax is estimated at only $7 million to $12 million. "Our dairy farm relies heavily on the Internet for information," says an anonymous agribusiness person who was quoted by the Florida Chamber of Commerce. "We cannot pass on the increased cost to our customers."
Protesters say the state also runs the risk of driving off startup computer services - just the kind of clean, high-wage businesses that can help Florida find a place in the world of high-tech. But Fuchs and other defenders counter that the state needs the money for school construction and other needs, and that if some forms of telecommunications remain untaxed, the fast-changing industry will find ways of avoiding the taxes now paid on traditional telephone services.
Florida Business, Audit Thyself
Big businesses again are seeking environmental reforms that would let them off the hook for many violations they discover and fix themselves. In what's expected to be a tough legislative session for environmentalists, the changes appear likely.
In its simplest form, the so-called "environmental self-audit" legislation would allow businesses to check on their own compliance without opening themselves to penalties and civil liability. The results of the audits would remain confidential, unless the business failed to correct problems or engaged in other bad-faith practices.
Business representatives in Florida argue that they're only trying to encourage better compliance. Too often in the past, consultant reports for which businesses paid big bucks later have been used against them in enforcement proceedings or even private suits, they say.
But environmentalists and plaintiff lawyers worry that the new privilege will be too broad. In fact, lawyers say that some forms of the legislation under consideration around the country could even protect tobacco companies from potential liability in smoking-related lawsuits.
Those arguments helped defeat environmental self-audit legislation in the Legislature last year. But another reason might have been the opposition of the U.S. Environmental Protection Agency, which threatened to increase scrutiny of compliance with federal laws in states that adopted such legislation. Now, a year later, EPA is faced with reduced enforcement funding from a hostile Congress. In a new spirit of cooperation, it has recently issued a policy for "the optimum way to encourage voluntary self-policing while preserving fair and effective enforcement." Gov. Chiles' administration also has indicated a willingness to compromise.
