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Sunday, October 06, 2024

On amendment, governments and homeowners split

Get put on hold by Gov. Charlie Crist's office these days, and you won't hear easy listening music.

Instead, the phone plays a voiceover praising the controversial Amendment 1, a proposal to decrease property taxes on the ballot on Tuesday.

Crist set out on a bus tour Jan. 16 encouraging voters around the state to vote "yes" on the amendment to the state constitution, and he's been promoting it for much longer than that.

If the amendment passed, it would save each Florida homeowner an average of $240 a year in property taxes - $336 in Alachua County - and allow owners to keep a percentage of their tax breaks if they move.

But not everyone is pleased. Alachua County Commissioner Rodney Long announced Tuesday the county is officially opposed to the amendment, stating that it imposes on local governments and budgets.

"Amendment 1 makes a broken tax system even worse," Long said.

Financial Relief

The value of houses nationwide has increased dramatically over the past five years, according to Global Insight, a global economic forecaster.

But under a 1995 Florida amendment called Save Our Homes, homeowners have only had to pay taxes on a 3 percent increase in their homes' values each year, said Bryan Pollak, a South Florida mortgage broker.

So, if someone bought a home for $100,000, and the market value skyrocketed to $200,000 the next year, Save Our Homes guaranteed the owner could only be taxed on $103,000, Pollack said.

"If you're a widow and you're on a fixed income, it's not your fault if the value of your house goes up," he said. "It's a very nice social welfare thing, so to speak."

But owners who move lose that tax break and have to pay taxes on the complete and inflated value of their new homes. So why would anyone move, and who can afford to?

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Not many, and that's the problem Amendment 1 aims to solve. It would allow people to take a percentage of their savings with them when they move.

The idea is to spur property sales in a stagnant market.

Michael Kitchens, executive vice president of Bosshardt Realty Services, said he thinks the amendment would encourage both movers and first-time buyers.

"Affordability is becoming more and more of an issue," Kitchens said, "especially for a first-time home buyer."

Alachua County has one of the highest property taxes in the state, he said. He said he hopes this amendment, if passed, brings financial relief.

"They're taxing us at just about the highest rate they possibly can," he said. "In order to afford housing in Alachua County, for some people, this is a necessity."

State Rep. Larry Cretul, who represents parts of Alachua County, said he's in favor of the amendment and would support even more cuts.

"I don't know if it's going to do enough to generate the kind of recovery we need in the housing market at this moment," he said.

Pollak agreed that this particular amendment might not be the most effective solution to the housing problem.

He said he thinks all homes should be reassessed at current market values, so that taxes are more fair. Doing that would allow the state to collect the same amount of tax revenue, while encouraging people to buy homes.

Homeowner and UF law student Jason Boffey said he planned to vote in favor of the amendment.

He said he wants to sell his house soon, and thinks he can save a few hundred dollars in taxes with the new amendment.

"I think it's going to be a worthwhile thing," he said. "It may cost the local government, but they'll adjust."

Budget Woes

Though Gainesville has not issued an official statement against Amendment 1 like Alachua County has, city spokesman Bob Woods said the city cannot afford the tax cuts.

Property tax cuts could carve at least $3 million out of the city's budget, he said.

The city currently has a budget of about $95 million, he said, but $18.9 million of that is untouchable, set aside for credit, insurance, vehicle upkeep and utilities. About $47 million is budgeted for public safety - police and fire departments - which the city would rather not touch, he said.

That means the $3 million would come out of the remaining $29.3 million, which is budgeted for social services and "niceties."

Woods said the city commission hasn't decided what to cut yet.

"They're going to look across the board at all the city departments," he said. "I don't think any department is exempt from consideration."

City Commissioner Scherwin Henry said that while the city will not cut from public safety departments, it may have to institute a "fire assessment fee."

"Fire service needs to be provided," he said, "but it doesn't come free."

The new cuts would be on top of $4 million that was trimmed from the budget last year as a result of other tax cuts. At the time, Woods said, the city was able to make most of its cuts internally. He's not sure they can do it again.

"Undoubtedly some of those cuts will begin to affect the service level to taxpayers," he said.

Alachua County Commissioner Mike Byerly said now is a bad time for a tax cut.

"There aren't a lot of frills left for us to cut," Byerly said. "And of course, one person's frills are another person's top priority."

Not the End

To be voted into the constitution, the amendment must be approved by 60 percent of voters, rather than a traditional simple majority.

But even if the amendment doesn't pass, voters could see more property tax proposals on the ballot in November. The Taxation and Budget Reform Commission, a committee appointed by the governor and Legislature, is studying Florida's property tax structure to come up with its own recommendation.

The House will be back in session in March and discuss whether more needs to be done, Cretul said.

"There are other things moving along at the same time, and I don't know who's going to make it to the finish line," he said.

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