04/13/2007
Senate releases property tax reform plan
We are examining details of the Senate Property Tax Reform proposal released Thursday. Our efforts to include an exemption on the first $25,000 of equipment subject to the tangible personal property tax are meeting with success, as the exemption is now contained in both the House and Senate proposals. If adopted by voters, one million of the 1.3 million businesses that file a tangible personal property tax return will receive a total exemption.
The remainder of the Senate plan differs greatly from the House proposal. If adopted, the plan will roll back property tax rates to the 2005-06 level plus growth in population and personal income, and then freeze those rates for one year. In 2008, property taxes would be capped with an allowable increase equal to population growth only with no allowance to exceed the cap. Beginning in 2009 and thereafter, property tax rates would be capped at population growth plus personal income. Local governing boards could exceed the cap with a two-thirds vote.
The Senate estimates the plan would save Florida taxpayers $11 billion over the next five years. The House estimates their plan -- which in addition to the $25,000 tangible personal property tax exemption includes a rate rollback to 2001, a revenue cap of inflation plus population growth, elimination of property taxes on homesteaded property and a 2.5 percent increase in the state sales tax -- would save taxpayers $25 billion over the same period.
We appreciate the hard work that legislators in both chambers have done on this issue, and we are optimistic that the $25,000 exemption on tangible property will be part of the final package. As negotiators work in conference over the coming weeks to develop that package, we will encourage them to give serious consideration to a significant rollback to at least 2003-04 levels, a cap tied either to inflation or a flat percentage cap, and allow local governments to exceed the cap only by referenda.
Changes to property valuation methods move forward
The Senate proposal also seeks to end the "highest and best use" method of assessing property value. Details will be available when the actual bill language is released. On the House side, HB 261 was withdrawn from its final committee and is scheduled to be heard on the floor Tuesday. HB 261 seeks to change the method by which property is appraised, ending the practice of basing a property's value on its "highest and best use" rather than its current use. The bill would also shift the burden of proof in appraisal disputes to property appraisers, who are currently presumed to be correct, requiring the taxpayer to prove an appraisal is mistaken.
Commercial property mitigation study approved by Senate
The full Senate Thursday passed an amendment to provide $1.6 million for a wind-loss mitigation study that would evaluate construction features on commercial and residential properties to determine actuarially sound mitigation rate factors and premium discounts. Such a study is critical for commercial property owners to realize the benefits of mitigation measures passed in the January special session. The House proposal contains funding for the residential portion only. We will continue to push for full funding in the House throughout the budgeting process.
Sincerely,
Bill Herrle
NFIB/Florida Executive Director
bill.herrle@nfib.org
