Florida property taxes badly need reform. But it has to be sensible reform.
In Florida, largely because of skyrocketing home values, the average homeowner's property-tax bill has doubled over the past seven years. The increases have been considerably greater than that in some places, such as booming Miami. It's no wonder that the property tax has become a hot issue for Governor Charlie Crist and the legislature this year. But property values aren't the only reason. Florida's property-tax system is filled with inequities. Some of the ideas that have been proposed could serve to make those problems worse.
A dozen years ago, Floridians passed a property-tax initiative known as Save Our Homes. It limits property-tax rate increases to 3 percent per year, as long as the homeowner stays put. But properties get reassessed each time they are sold, meaning new buyers get much higher tax bills than the original owners. There's also no break for commercial real estate or snowbirds living in a second home.
The result is that all these groups have to pay much higher rates to make up for the discounts given to people who have remained in one place since 1995. And many of the intended beneficiaries are complaining now, too. They say they are trapped in their homes because their property taxes would shoot up if they moved, even into a smaller place.
Crist wants to let people keep some of their Save Our Homes discounts when they move. But before Florida agrees to that idea, it might take a look at what has happened in Nevada, which took exactly the opposite tack two years ago and has seen it work pretty well. Nevada put an overall cap on increases in the property-tax rate--including commercial real estate and second homes. When a home is sold, the property-tax bill stays the same, even when the value has gone up.
In other words, the discount stays with the property, rather than with the individual homeowner. "I don't know of any tax changes that are perfect," says Carole Vilardo, president of the Nevada Taxpayers Association, "but the partial abatement that was created by the legislature minimized considerably the impacts of increased values."
It's not clear what product the Florida legislature will come up with, if any. But none of the proposals on the table would address the underlying question of property-tax fairness as well as the Nevada solution.