January 20, 2022

Making Cents

Voter-passed tax referenda generate a bonanza for local governments, inviting pushback from the Legislature

Amy Keller | 10/27/2021

DUVAL COUNTY

Backlog of Maintenance

Last election, 67.3% of Duval County voters gave a thumbs up to a 15-year, half-penny sales tax increase to upgrade its schools. Duval schools are the oldest in the state — 44 years old on average — and state funding cuts since 2008 reduced facility funding by nearly $300 million in the years since. That’s contributed to a $243-million maintenance backlog expected to balloon to $1 billion by 2024, given the age of the Duval schools. The county took in nearly $52 million in half-penny funds this year, and the school district expects to see $79 million by the end of the year. Plans are already underway to construct a new “prototype” elementary where Rutledge H. Pearson Elementary (built in 1956) currently sits. The new school — Duval’s first in a decade — will open in the fall of 2023.

VOLUSIA COUNTY

Environmental Boost

In 2020, more than 70% of Volusia County voters approved a 20-year extension of two property taxes — Volusia Forever, which levies 1/5 mill to preserve and protect environmentally sensitive lands in the county, and Volusia ECHO program, which uses 1/5 mill funds for facilities for environmental, cultural, historical and recreational purposes. More than 38,000 acres have been preserved under Volusia Forever since its inception. Grants from the ECHO program have been used for trails, parks, sports complexes, dog parks, playgrounds and many other projects. Grants have also supported museums, historic properties and environmental learning centers, such as the Marine Discovery Center in New Smyrna Beach that teach the public about the biodiversity of marine and plant life in Florida’s Indian River Lagoon.

ORANGE COUNTY

Possible Penny for Transportation

Orange County has levied a half-cent sales tax to support the renovation and construction of schools since 2002 — and local leaders have considered asking for a penny sales tax increase to help pay for transportation improvements. Orange County Mayor Jerry Demings hosted several workshops to explore the idea in 2019 and early 2020 but put it on hold when the COVID-19 pandemic hit. With the economy bouncing back, he renewed the push this fall, noting that it could potentially raise $600 million a year. If county commissioners agree, the penny tax will appear on the November 2022 ballot.

SARASOTA COUNTY

Tax Extension Vote

Sarasota County voters will vote next November on whether to renew the county’s one-cent sales tax for the fourth time since it was first passed in 1989. The pennies have paid for the renovation of a BMX racing facility, several libraries, septic-sewer conversions and other projects. If approved, the tax, which expires in 2024, will stay in effect through 2039.

COLLIER COUNTY

A First

In 2018, Collier County voters narrowly approved (50.9%) the region’s first penny tax, which is expected to raise $490 million for the next seven years. Two years in, it’s paid for a new fire rescue station in Marco Island, and county commissioners recently approved $27 million for 10 bridge replacements east of Immokalee and Ave Maria, according to the Naples News. Other projects in the works include:

  • Construction of the 150-acre Big Corkscrew Island Regional Park in Golden Gate Estates ($60 million)
  • Construction of a new mental health crisis center ($26.5 million)
  • Land purchases and incentives for affordable housing ($20 million)
  • A 120-bed nursing home for veterans ($30 million)
  • Upgrades to the county’s Domestic Animal Services Shelter ($6 million)
  • Where government Gets Its Money

Where Government Gets its Money

With no state income tax — the state constitution forbids it — Florida’s state government generates the bulk of general revenue (75% to 80% depending on the year) from sales tax collections. It gets the rest from a variety of sources, including documentary stamp taxes, insurance taxes and corporate income taxes. At the local level, the biggest two chunks of funding come from ad valorem/property taxes and charges for services (such as electricity, gas, garbage collections and building inspections). Counties can also levy up to 12 cents of local option fuel taxes.

Sales Tax History

In 1921, West Virginia became first state to implement a state sales tax. Florida enacted a state sales tax in 1949, setting it at 3% and raising it three times over the next four decades. Today, 45 states and the District of Columbia collect state sales taxes and 38 states (including Florida) collect them at the local level.

Sales Tax Rate in Florida:

  • 1949-1968 3%
  • 1968-1982 4%
  • 1982-1988 5%
  • 1988 6%

Source: Florida Department of Revenue

Sales Tax Sources

A popular selling point for sales tax hikes is that out-of-state visitors pay a decent portion of them. Here’s how the state’s sales tax collections broke down in FY 2017-18:

  • Households: 63.2%
  • Businesses: 23.5%
  • Tourists: 13.4%

Source: Legislative Office of Economic and Demographic Research

Florida vs. the Nation

Local sales tax rates in Florida are rising faster than the national average — up 0.39 percentage points from 0.62% in 2002 to an average local rate of 1.01% today. Nationally, local sales taxes have risen by an average of 0.29 percentage points over the same period.

“In Florida, local sales tax increases are referred to the voters and are tied to specific government functions, whereas in many states, they are treated as a general revenue source,” says Jared Walczak, vice president of state projects for the Tax Foundation.

“Voters tend to be more open to higher sales taxes when they are tied to services they care about than when they are simply associated with higher local government revenue,” he says.

Alabama and Georgia have seen even larger increases over the past decade, of 0.9% and 0.5%, respectively.

Florida Tax Facts

  • While Florida collects less taxes per capita at the state level than most other states — ranking 48th in the nation — it comes in close to the middle (28th) in terms of local tax burdens.
  • While the Florida Legislature has passed tax cuts every session for the past 12 years, Floridians have voted to increase their local taxes 142 times, approving taxes worth $4.8 billion on an annual basis. Taxpayers approved 72 bond issues totaling $6 billion over the same time period.
  • In 2018 alone, Florida voters approved 13 local sales tax increases, 15 local property tax hikes and 21 local bond issues. The $3.5 billion in tax increases and debt amounts to the largest state or local tax increase in Florida history.
  • More than half of all Florida government revenue — 52.6% — is raised at the local level, trailing only New York (54.8%).

 

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