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Following the Currents that Guide Florida's Future
Amendment 4: Would property-tax relief help housing market? Or hurt local governments?
Joe Saunders
Facilitator
Amendment 4 might be the most complex of the lengthy list Florida voters will face in November, but it's on an issue that literally hits close to home: tax breaks and tax relief for property owners claiming homestead exemptions and those who own non-homesteaded properties, as well as tax relief for homeowners whose property value declined from the previous year. Supporters say it could be key to helping the Sunshine State's housing market recover -- and with it, the job market and economy as a whole. Critics, though, say it will hit local governments hard, increasing the budget pressures they're already facing.
Mike Fasano
REPUBLICAN STATE SENATOR FROM NEW PORT RICHEY

Floridians entrust lawmakers at all levels to tell unbiased, straight forward truths as they execute their duties. Regardless of importance, I believe every issue must be debated within the confines of merit rather than misinformation and distortion.

After witnessing local politicians publicly spread misinformation, I felt it necessary to tell you the real story about Amendment 4 and what it means to your pocketbook and Florida's economy.

Over the last several years, Floridians have fought through one of the toughest recessions in history. Hundreds of thousands of jobs were shed each month, countless small businesses shut their doors and a sharp increase in foreclosed properties devastated neighborhoods across our state. Today, Florida still ranks first in the nation for foreclosures.

In 2011, I sponsored a bill that would put forward a multi-faceted, market-based solution to our housing market woes. I worked closely with the Florida Realtors, economists and housing experts to ensure that this bill would create jobs and boost Florida's housing market by putting more money back into your pocket. And with that, Amendment 4 was placed on the ballot this year for your consideration.

Amendment 4 does three things:

1) Creates an additional homestead exemption for first-time homebuyers. This will cause more qualified buyers to purchase foreclosed properties that currently sit vacant and drag the current home values to unnecessarily low levels. This benefits both current and prospective homeowners.

2) Reduces the cap on assessment increases for nonhomestead properties, such as small businesses, from an overwhelming 10 percent to a more reasonable 5 percent. This will allow small businesses to better plan investments in local economies.

3) Provides a way to stop assessment increases on properties with declining market value. Especially in the last several years, thousands of Floridians have seen their home values decline, but their taxes increase through rising assessments. Amendment 4 will stop this painful practice.

Over the last 30 days, I have seen local politicians choose their own interests over the interests of hard working Floridians by opposing Amendment 4. Using taxpayer-funded resources, they advocate against Amendment 4 because they believe more money in your pocket means less money in theirs.

They have even resorted to dishonest claims about Amendment 4 by saying that it extends the homestead exemption to second and third homes. Friends, trust me when I tell you this is completely untrue. Amendment 4 does what I have written above and nothing more.

The truth about taxes is that when you lower the burden on Florida's homeowners and small businesses, our economy creates jobs and tax revenue rises. The nonpartisan Florida TaxWatch estimates that the provisions in Amendment 4 will result in an estimated 20,000 jobs over 10 years and boost Florida's economy by over a billion dollars. Home values will rise and more taxpayers will be created. This results in higher tax revenues without having to raise taxes during what we all hope is a recovery.

Because local government budgets grew faster than the rate of the economy in many cases, they had to make reductions in spending in recent times. And now these same politicians who irresponsibly increased spending in the first place are telling us that they can grow our economy better than hard working Floridians can. Politicians should recognize that no one was hit during this recession harder than Florida's homeowners and small businesses.

Economists estimate that Amendment 4 will result in an additional 380,000 home sales in Florida over ten years. That is exactly what our housing market needs most right now; not swollen government budgets.

Join me in bringing responsible growth back to our housing market and thousands of new jobs to our beautiful state.

Please vote “yes” on Amendment 4.

 

Christopher L. Holley
Executive Director, Florida Association of Counties

This time, they’re calling it Amendment 4. In November, voters will decide the fate of this Trojan Horse measure – the latest complex and confusing brand of Tallahassee “tax reform” that signals little relief for Florida’s full-time homeowners but plenty of carve-outs for out-of-state investors and well-connected insiders at the expense of the Sunshine State’s year-round residents.

While the problems with Amendment 4 are many, two emerge as the most deeply troubling.

First, if adopted, Amendment 4 would extend the homestead assessment cap to investment
properties and second (or third) homes – a move that is likely to shift a greater share of the property tax bill to Florida’s full-time residents. (Note: This sentence has been changed from the original to clarify the amendment would extend the homestead assessment cap to investment properties, rather than the homestead exemption itself.)

State lawmakers may call Amendment 4 tax reform, but that just means somebody else benefits and the rest of us pay for it. Amendment 4 would toss hefty tax breaks toward well-heeled out-of-state snowbirds at the expense of Florida’s year-round Florida residents, who would inevitably inherit a larger share of the tax burden.

Over four years, the cost to Florida’s local communities could approach $2 billion in order to subsidize these newly minted special tax breaks for snowbirds. At a time when too many Florida families are struggling to make ends meet, that’s just not right.

Second, we can’t trust Tallahassee politicians to control budget decisions for our local communities. It is an essential truth of our democratic experience that government closest to the people tends to govern best. Local government is also the most visible, accessible and accountable to the people and it makes little sense to outsource local budget decisions to Tallahassee (or Washington). After all, local decision-making should be the job of local decision-makers: Florida’s towns, taxpayers and community leaders, not politicians seated in a distant Capitol.

Why should we force Jacksonville into the same sledgehammer solution as West Palm Beach, Fort Lauderdale or Naples? Any why should politicians from the Panhandle micromanage the budgets of communities in Central Florida, or vice-versa? There is no good reason for that type of heavy-handed, Tallahassee-knows-best approach when Florida’s communities are so unique and different.

Tallahassee politicians should not be dictating a one-size-fits-all approach to how local communities manage their budgets. More importantly, state lawmakers should focus their energies on more pressing concerns like addressing troublingly high unemployment, public education and state government spending.  

Too often, elected officials on both sides of the aisle boast of “belt-tightening” while foisting new backdoor tax mandates onto local communities. This typically occurs when state lawmakers find it difficult to trim their own budgets and are tempted to micromanage the budgets of Florida’s local communities and label it a political victory. It’s a shallow shell game designed to score political points at the expense of local communities without taking the tough medicine of truly addressing the state budget.

Too much Tallahassee-style “reform” driven by poll-tested political rhetoric rather than sensible policymaking has left Florida’s property tax code convoluted and unbalanced. Unfortunately, Amendment 4 would intensify these property tax problems, threaten the effectiveness of local services and shift a heavier share of the tax burden onto Florida’s year-round residents in order to bail out investment properties, well-positioned businesses and snow birds. 

Florida is a big and diverse state. The right policy for Pensacola may not be right for Miami, and vice-versa. That’s why Florida voters have routinely urged lawmakers to respect the distinctly American principle of “governing close to home” where the voters are best positioned to hold their officials accountable.

Voters should say “no” to tax breaks for out-of-state residents paid for by Florida’s full-time homeowners. Voters should say “no” to Amendment 4.

 

John Sebree
Senior Vice President for Public Policy, Florida Realtors

In the 2011 legislative session, Florida Realtors worked with various trade associations, small businesses, and the Florida Legislature in order to solve the many challenges our real estate market had experienced in recent years. Experts believed the solution needed to somehow get Florida’s home values back on the rise while protecting homeowners and small businesses from unfair assessment increases.

After conducting thorough research and hearing from homeowners and small businesses across Florida, lawmakers placed Amendment 4 on the 2012 ballot with overwhelming bipartisan support.

If approved by voters this November, Amendment 4 would create an additional homestead exemption for first-time homebuyers, reduce the annual assessment cap on small-business property, and provide a way to stop assessment increases on homeowner’s who have recently seen their property values decline.

The additional homestead exemption in Amendment 4 will give new homebuyers incentive to join Florida’s housing market. Because new homebuyers are often young, working families looking for a deal, many of them will likely purchase the foreclosed properties that sit vacant and remain a drag on home values in neighborhoods across Florida.

Providing a healthy cushion for new homebuyers, this exemption will responsibly phase out over the first five years of ownership while savings from “Save Our Homes” protections are phasing in.

Second, Amendment 4 will add predictability and stability to Florida’s small businesses by lowering their annual assessment increase cap from a burdensome 10 percent to a more reasonable 5 percent. This will allow Florida’s small businesses the opportunity to plan larger investments in local economies through job creation.

But don’t take my word for it. When Florida TaxWatch, our state’s most prestigious nonpartisan watchdog group, conducted a comprehensive study on the long-term effects of Amendment 4, it determined that Amendment 4 would create about 20,000 private sector jobs over 10 years. This is exactly what our economy needs right now.

Finally, Amendment 4 would give the authority to the Florida Legislature to stop assessments from increasing when their home values have declined. This has happened to thousands of taxpayers and we must put an end to it.

In recent weeks, I have heard local politicians complaining that Amendment 4 is just a “tax break for snowbirds” and will cripple the budgets of local governments.

These criticisms are unfounded and rooted in a philosophy that opposes lowering taxes for anyone at anytime. To the contrary, Amendment 4 will benefit current homeowners, prospective homeowners, small businesses, renters, and citizens across our state by boosting Florida’s economy and increasing home values. And when the economy grows, so does local government revenue.

In fact, Florida TaxWatch estimates that Amendment 4 will add $1.1 billion to Florida’s GDP and increase personal wealth by over $5.3 billion. That is what happens when you put more money back into the pockets of the people who actually create jobs and grow our economy.

The stories of people affected by Florida’s devastated housing market are as numerous as they are painful. Amendment 4 is the only thoroughly researched, bipartisan initiative on this year’s ballot that provides a multifaceted solution to Florida’s housing market challenges.

I encourage all Floridians to join me in voting "yes" on Amendment 4.

Marilynn Wills
Second Vice President, League of Women Voters of Florida.

Amendment 4 (Property Tax Limitation) is another “wolf in sheep’s clothing” amendment that will appear on this year’s ballot. Supporters say that it will encourage new business startups in Florida. The fact is, it will do just the opposite. Instead of giving new businesses a break, owners will have to pay higher property taxes than older, more established businesses. It’s just like buyers of new residential homes, who pay higher property taxes than longtime homeowners – protected by the Save Our Homes amendment.

Amendment 4 is just one more attempt to remedy the inequities created by Save Our Homes and magically heal a flawed property tax system. Why should a voter be convinced that yet another amendment is the answer?

The 5 percent cap proposed in Amendment 4 will cut taxes for established businesses and non- homestead property owners. Out-of-state corporations own some of these businesses, and many owners of second or third homes spend much of their time, as well as their money, outside of Florida.

That’s not all. Right now in Florida, most homeowners do not pay property taxes on the full value of their home (due, primarily, to the Save Our Homes law). By seeking to expand exemptions for first-time homebuyers and eliminate the recapture rule for all homestead property owners (preventing their homes’ artificially deflated assessed values from ever rising back to match the fair market value), Amendment 4 ensures that Florida’s property tax system will continue to be wildly unfair.

Of course, the heart of Amendment 4’s problem is the effect that it will have on local governments and schools. According to the Center for Budget and Policy Priorities, the 5 percent cap will cost local governments $243 million in 2016, while the first-time homeowner tax break will cost $78 million. Eliminating the recapture rule on homestead properties will cost local governments and schools $188.3 million. Altogether, this amendment will decrease local government revenue by an estimated $1.7 billion over the next four years alone.

In recent years, local governments have had to slash their budgets and decrease their workforces as well as the services that they provide to the public. On top of those losses, the Legislature has burdened local governments with numerous unfunded mandates, and citizens cannot afford more cuts to essential services like education, fire and emergency medical services, sheriff’s and police departments, road maintenance, public transportation, parks and libraries.

In order to sustain funding for the services that citizens expect, local governments will have no recourse but to increase property tax rates. The result? Year-round homeowners will be paying higher taxes to finance tax cuts for business owners and other non-homestead property owners, first-time homebuyers and property owners who benefit from the recapture rule.

As for attracting new businesses to the state, what incentive would you have to relocate your business to Florida if you know that you’ll be paying higher property taxes than your established competitor on the next block? Couple that with the fact that local governments are too financially strapped to provide decent schools as well as the amenities your employees would want to ensure a good quality of life, and you might think twice before moving to the Sunshine State.

The bottom line: Amendment 4 will create more harm than good. Florida’s citizens would be much better served if the Legislature revisited the state’s entire tax structure, and the League urges a vote “no” on Amendment 4.

 

David Klement
Executive Director, Institute for Strategic Policy Solutions, St. Petersburg College

If you’re a Realtor or Chamber of Commerce leader, you’ll probably love Amendment 4. If you’re a snowbird, landlord or business property owner, you’ll probably also like most of what No. 4 would do.

But if you’re a mayor, county administrator, city or county commissioner in Florida, you’re probably losing sleep over Amendment 4.

What if you’re none of the above – just an ordinary citizen who may or may not own a home? Should you like 4? That depends. If you’re a young couple living in an apartment, putting away savings for a down payment on your first home, you’ll cheer. If you’re a long-term homeowner who has seen the value of your home plummet in the bursting of the real estate bubble, you also may smile as you choose the “yes” box. But if you recently bought a home next-door to the one that young couple is about to buy if No. 4 passes, you may feel cheated.

How can one amendment have so many facets to love or hate? Easy. Amendment 4 is at least three amendments in one – a catch-all put on the ballot by the Legislature to stimulate the housing and real estate market, generate economic activity, and restore equity to the state’s patchwork property tax structure – to rectify inequities caused by previous property tax reform amendments. To borrow from Meryl Streep in the 2009 movie by the same name, it’s complicated.

Is it ever! Amendment 4 gives new meaning to the term “bed-sheet ballot.” This one would fit a king-size bed. The official ballot summary runs more than 660 words. Constitutional purists argue that amending the Florida Constitution may not be the best vehicle for economic stimulation. Yet this would be one effect of Amendment 4 if passed – to the delight of the Florida Realtors Association and Florida Chamber of Commerce. Florida TaxWatch estimates that over 10 years, Amendment 4 would create more than 19,000 jobs, increase gross domestic product by $1.1 billion, and boost personal income by $5.3 billion in 10 years.

Here’s what the amendment would do:

Exempt 50 percent of the market value – up to $150,000 – of a home from property taxes for five years for first-time home buyers or those who have not owned property for three or more years.

Give owners of non-homestead properties – snowbirds with second homes in Florida, owners of rental and commercial properties – a break on property taxes as the market recovers from the Great Recession. Currently, those non-homesteaded properties have a 10 percent cap on the annual increase in assessments subject to property tax. Amendment 4 would reduce that tax cap to 5 percent.

Repeal one of the most hated side-effects of previous property tax amendments, the so-called “recapture” rule. Because of plunging property assessments in the housing bust, the value on which next year’s tax bill is calculated may be higher than the current market value of your home. Lots of irate taxpayers have complained to their elected officials about their taxes going up while their property values are going down.

So, tax breaks all around – for snowbirds, landlords, first-time home buyers and underwater home owners.

What’s the downside? City and county officials say it would be devastating to local governmen funding. Estimates of the revenue cost to local government range from $1 billion to $1.6 billion over four years. With cities and counties already struggling to maintain essential services – counties have cut spending by $3 billion since ’07 – the additional cuts imposed by Amendment 4 could put local government in a real bind. Either essential services would have to be slashed – think closed parks, laid-off cops, potholed streets – or else millage rates would have to go up. Which means higher taxes for all – except those lucky enough to be exempted.

Opponents say Amendment 4 is merely tax shifting and represents a fundamental change in current Florida tax policy that favors year-round residents over part-time residents. Rather than simplifying and restoring equity to the tax code, it would make the code more complicated and less equitable, they argue.

Proponents like Tax Watch argue that the property tax cuts would spur enough growth to offset losses in city and county revenues. Whether that optimistic projection will pan out is what concerns local government officials.

To summarize, these are the issues of contention on Amendment 4:

Tax breaks to help first-time home buyers get into the market, thereby giving the real estate industry a shot of adrenalin. Current homeowners looking to upsize or downsize would get no such tax breaks.

Tax relief for non-homesteaded properties, which may attract more second-home buyers. Opponents say it would discourage investment as it makes new businesses less competitive with existing businesses.

Tax relief for underwater homeowners if values keep dropping.

From all three components, less revenue for local government to provide essential services.

That is a lot to consider. And, as we have seen with previous property tax tinkering through the constitutional amendment process, the unintended consequences can be unsettling.

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FloridaVoices User Comments

Rocky Thomas - Tue, 2012-10-23 09:28.

Taken together, the amendments on the ballot will give homestead exemptions to first time homebuyers, many veterans and their families, and seniors. Why not just exempt everyone? Why not just eliminate property taxes altogether? According to the notion carried to its logical conclusion, no taxes means the most robust economy in the history of the world. If you add in Amendment 8, what little that is left of the property taxes can go to church schools, so they can teach that evolution is false. Come to think of it, when you look at this list of amendments, maybe they're right.

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