Florida Property Tax Update - UGH! The Media is messing it up again!

The PalmBeachPost.com had a new opinion piece on the state of the Florida Property Tax reforms as they stand in news releases coming directly from Tallahassee, Florida.

Here is a link to the article...Property-tax plans cut off from reality.

In this article - Glenn Henderson writes that everyone has lost their mind and that the House and Senate have proposed a scenario which would basically be the end of all state, county and city programs, jobs and infrastructure.

• What has not been recognized is that there are duplicate services and functions of governments all over the State that WILL need to be cut.
  
• What Mr. Henderson has also failed to recognize is that there is a LOT of fluff at the local level that really isn't the State's responsibility to fund.
  

What Mr. Henderson has seemed to downright ignore is that we are NOT a Socialist Government! We are a REPUBLIC and the Federal and State Governments need to be more lean for us to spend our monies in the RIGHT PLACES.

• What difference would it make if we did not cut taxes so that we have the monies for Port St Lucie, Florida to institute Juvenile Justice programs if the Juveniles' families can no longer afford to live in Florida anyway??
  
• What difference would it make if Martin County got the State funded Aquatics complex if no one could afford to live there and to swim!
  
• Who would care if the gas stations along major arteries have hurricane generators if no one lives here that needs that gas??
  

A REPUBLIC...

• A form of Government where the Federal Government provides certain services such as Law Making, Military and Foreign Relations and passes other monies and functions down to the State Governments. The monies come from Federal Taxes.
  
• State Governments have to take care of the State as a Whole and send representation in the form of 2 Senators back to the Federal Government's Senate. The State provides monies and services for Statewide programs... the best current example is State of Emergency services for wildfire fighting and rebuilding the eroded beaches from Sub-Tropical Storm Andrea. Without the rebuilt beaches, the STATE is susceptible to widespread damage from a major Hurricane in the upcoming Hurricane Season. The State must have its own tax system to fund such programs where Federal Monies don't fill in. This is where the vast majority of our property taxes go since we have no State Income Tax
  
• County Governments... in our case, Counties really have a lot of authority. They offer Sheriff services, land development services, parks, schools etc. Rich counties and poor counties are supposed to be getting equitable tax monies from the state so that all citizens get fair services.
  
• City Governments... the trickle down has slowed a lot at this point. Cities are supposed to govern only the most local needs of a city/township. Things like very local development plans, very local law enforcement and planning inside of the bounds of the County's master plan.
  
• Local Governments... these are the lowest form but serve the most specific needs. They can be community associations or minor municipalities. They can be just a citizen formed group that creates a Political Action Committee to represent a demographic area with a unified voice.
  

Under this structure... it is OBVIOUS that TAX CUTS will hurt the lowest common denominator if those upstream don't trim their fat as well.

Where the journalist falls off the horse altogether is:

Even crazier is the fact that the real estate market is taking care of itself, coming back down to the point tax bills will ease up on their own - without government doing a thing.

Ummm... don't we understand that the property tax issue is NOT self correcting like the market? Don't we see that a lot of the reasons the market is in the shape it is would be because of the tax issues? A lot of the people that are running for the hills are doing so because taxes are so high. Reassessing all the property values to bring down taxes is actually something wrapped up in these bills!

I think the State is at a crossroads... they MUST do something... and nothing will ever come without criticism.

The issue that rests on their shoulders right now is this:

• Cities and Counties had HUGE budgets over the past few years... they got spoiled.
• There was huge growth in city and county jobs... people got on board to easy money
• Everyone had the money they needed to fund street art and raise salaries to all city and county employees
• There was a lot of WASTE and important projects were put off
• Important projects are now possibly going to miss funding requests

SURE - the state has to cut the fat. But the Cities and Counties will just have to do the same.

The news is blasting that there were 12,000 jobs lost last quarter in South Florida.... well... why don't they compare that to how many people got their real estate licenses and now are filing for unemployment? Why don't they compare that to the number of developers that moved down here, hired sales teams and left Dodge.

In my eyes smaller government is better. We don't need a Minister of Sidewalk Number Painting getting $60,000 a year that will buy a police car, or books for a school, or a van for a hospice facility.

We do need our taxes to come down... if they don't then there will be a lot of employed people in foreclosure looking at some nicely painted curbsides.

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More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
The Mortgage Go To Guy
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

Florida Property Tax Update - The Compromise is Near!!

After some interesting phone calls from people wanting to know more and learn my opinion about what's going on in Florida Taxes, and some people who didn't get what I was saying, here's some more breaking News from the SunSentinel.com regarding the Florida Property Tax:

House Speaker unveils new approach to property tax relief that could halve bill

This afternoon Florida House Speaker Marco Rubio R-Miami announced that there was a compromise on the table during a special joint session of the Florida House and Senate including the attendance of Governor Charlie Crist.

Mr. Rubio outlined his plan in an Op-Ed piece published in today's Orlando Sentinel Newspaper.

In it, he tells of how lawmakers are taking a different approach to property tax reduction that will offer large exemptions - but not wipe out property tax altogether.

In recent weeks, many people have signed a petition hoping for a total eradication of property taxes... something the House Democrats favored but is wholly unrealistic from any perspective.

Instead, the new plan would reduce all property tax and even offer measures of reductions to business owners and renters. The method that would be used would be a percentage-based exemption system. It appears that this system would be more fair and equitable to different types of property owners - while remaining flexibile enough to remain easy to manage for tax collecting authorities.

While there is yet to be a consensus as to the formulas and the exact percentages offered per property type, House Speaker Rubio offered an example as follows:

• On the home's first $300,000 in just value, 80 percent would be exempt from property taxes.
• On the next $700,000 in just value, 70 percent would be exempt.
• On just value above $1,000,000, 30 percent would be exempt.

Essentially the exemption for a $300,000 house would be $240,000. For a $500,000 house it would be $240,000+$140,000 or $380,000. For a $1,000,000 property it would be $240,000 + $490,000 or $730,000.

This is something that would likely be seen for a Homesteaded property in the state. Businesses, Commercial Property owners, Seasonal Residents, Investors and 2nd Home owners would all have their own unique formulae.

The debate continues as House and Senate leaders now need to decide the exact percentages everyone wants to save per property type.

This plan is a variation of what House Representative David Simmons R-Maitland suggested in an earlier idea. The goal of the plan was to target the hardest hit tax payers - which are currently the homeowners with valued between $200,000 and $500,000.

The other nice effect of this plan is that there is no Sales Tax Swap... an issue much discussed in local and national media. Raising Sales Tax to accomodate lost revenue would not only cut city and state budgets to the core, but also tax lower income citizens and businesses harder than higher income citizens. It also neglects our seasonal residents and foreign nationals.

This bill would cut the overall tax-cut from $50Billion as the House originally offered to something closer to the $34Billion plan of Governor Crist - which is still much higher than the $24Billion planned cut of the Senate.

This plan may offer a choice to taxpayers benefitting under the current Save Our Homes Amendment. If the new plan would raise their taxes they may be offered the choice to stick to their old plan to save money. This will mainly affect those who bought years ago and whose property values increased the most over the past few years. With the expected rollback, to which year we don't know, this will definitely create some questions for such citizens whose property taxes will be much lower based on their long term ownership.

Also addressed was Portability... so tax payers could take a lower tax base with them when they move.

The only evident negative of this idea right now is that it may have to be issued as an amendment - which would mean it would have to wait for a November '08 vote rather than being able to claim Bill status and take effect immediately.

Local governments that have put some capital projects on hold, will be relieved if this is the case as they will still have enough budget to complete some of the most pressing projects like renovating and upgrading hospitals, firehouses and other public facilities still in disrepair from the hurricanes of 2004-2005. It will also help them afford to rebuild the beaches from this past week's mass erosion due to SubTropical storm Andrea.

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More Florida Mortgage and Real Estate News You Can Use From
David A. Podgursky, MBA
The Mortgage Go To Guy
Your Source for Residential, Commercial, Investment and Relocation Mortgages in Florida

Affordable Housing Initiatives in South Florida: Part 6 - The Battle for Mordor Begins

The Sun Sentinel (yes ... it is one of my primary news sources as it is the best paper down here) had a great update on where the property tax battle is headed.

Basically the scene is set that the Republicans and Democrats agree (WHOA!) that something has to be done. They also agree that their plans both have merits (WHOA WHOA!)... but the biggest changes are just not striking the fancy of either side.

State Senators seem to be tense about the entire subject but only a handful are standing up for what could be the most important legislation of their term(s) in office!

Note, the (S) was not only for those incumbents.. but for the lack of incumbents should changes not manifest.

Oddly (for Florida) the Democrats seem to be the ones with the most ideas of compromise. They're dismissing the 2.5 cent raise in Sales Tax as too high. They're offering 1 cent instead. Their reasoning is that the State needs to make back some of the revenues it is giving up by rolling back taxes.

The Democrats want to cap property tax increases and increase Homestead Exemptions to 1/2 of the MEDIAN property value of all homes in the county. This is actually an amazing idea. In Palm Beach County with the median household over $400,000, it would definitely benefit a huge number of citizens... but more importantly it would benefit the RIGHT Citizens.

Anyone who owns a house under homestead which is valued UNDER the Median will be assessed taxes on HALF the value of the improvements! This idea definitely benefits the lower and middle income homeowners as well as the seniors.

The higher income homeowners will get a break - it just won't be equitable to their lower income neighbors. There is sure to be a stink raised about this - especially by lobbyists... but it should calm down once the higher income homeowners realize that 1/2 the median property value is considerably higher than $25,000.

There will also be a cap on ALL increases that will help snowbirds and other non-homesteaded property owners.

The biggest sign of bi-partisan politics was in the area of valuation. The war between Palm Beach County and Broward County appraisers Gary Nikolits and Lori Parrish has spilled over into the capitol. Senators side with Ms. Parrish in her war of words that you cannot assess or appraise a property based on Potential Use but on Current Use. Her idea is that it is not the County's job to speculate on HABU (highest and best use) but instead to assess what is actually drawing in dollars.

Millions of dollars would be lost in revenue under this plan though. The 1% hike in sales tax will make up a portion of it but lawmakers will have to make some other concessions to be able to fund cities, counties, public hospitals, school districts and state government. Some of the things that could be affected instead of or along side sales tax are Slot Machines, Bio-Fuels, and Off Shore Drilling.

The best quote thus far is by State Rep. Carlos Lopez-Cantera R(Miami) "As far as I'm concerned, they [public agencies] weren't supposed to have this money in the first place."

On a Side note.. us Cell phone abusing Realtors and Mortgage Brokers are likely to get as much as a 30% break in taxes on our cell service... the average $50 cellphone bill has $15 in taxes! That should be cut soon! Think of how that money would help the state!

But now its time for me to go...
the Autumn moon light my way...
......
But I know I've got one thing I've got to do...
Ramble On...

Led Zeppelin