Senate's bipartisan tax reform package gets mixed reaction

BY BILL KACZOR

ASSOCIATED PRESS WRITER

TALLAHASSEE, Fla. -- A tax-protest leader told a Senate committee Friday the chamber's bipartisan property tax reform package is too weak, while business interests and local government officials offered mixed reactions.

Republican and Democratic Senate leaders released their plan Thursday. It includes a rollback of city and county taxes to 2005-06 levels, then a two-year freeze and cap on future increases.

The plan is expected to save taxpayers $11 billion over the next five years. A competing proposal offered by House Republicans would slash taxes by more than $25 billion over the same span. Most Democrats and local government officials oppose the House GOP plan.

"The Senate plan leaves a lot to be desired, I'm sorry to say," said Dr. David McKalip, a St. Petersburg neurosurgeon and spokesman for the Florida Taxpayers Alliance. "The rollbacks are not enough."

McKalip told the Finance and Tax Committee the alliance is pushing for rollbacks to 2001 as included in the House GOP plan.

Citizens across the state have been organizing such groups to protest inequities and sharp increases in property taxes prompted by soaring real estate values in recent years. Gov. Charlie Crist and legislative leaders have responded by making tax relief a top legislative issue.

McKalip also criticized provisions in both chambers that would allow what he called "irresponsible local governments" to lift the tax caps through votes of more than a simple majority. Only voters should be allowed to remove the tax caps, he said.

Committee Chairman Mike Haridopolos, R-Indialantic, later said the one-year rollback was chosen to prevent a sudden and steep drop in local government budgets. The Senate is using a "glide slope" approach to phase-in the tax cuts from $1.14 billion the first year to $3.23 billion in the fifth year, he said.

"This spike (in taxes) did not happen overnight and you're not going to solve it overnight," Haridopolos said.

Florida League of Cities lobbyist John W. Smith called that aspect "well thought-out." Smith, though, said while the Legislature is freezing local taxes, it also should freeze new spending requirements that it puts on local governments.

Florida Chamber of Commerce lobbyist Victoria Weber said her members like most of what they see in the Senate plan. She also questioned the rollback but said she wasn't sure how far back it should go.

"We understand it's a balancing act," Weber said. "We don't want to cripple local governments."

She lauded provisions that offer extra relief for affordable rental housing, first-time home buyers and small businesses.

Weber, though, joined lobbyists for homebuilders and the real estate industry who asked lawmakers to add provisions that would also limit the ability of cities and counties to make up for property tax losses by increasing impact fees, which raise the prices of new homes, and other taxes.

Sen. Jim King, R-Jacksonville, raised a thorny question about the proposal to increase the standard $25,000 exemption on primary homes, known as homesteads, to $50,000 for first-time home buyers. The extra $25,000 would drop over time as a new homeowner gains benefits from the existing Save Our Homes Amendment, which limits tax increases on homesteads to no more than 3 percent a year.

King wondered how tax officials could verify if someone was a first-time home buyer, particularly if they move from another state. Haridopolos said they would have to rely on the honor system but later acknowledged a better solution may be needed.

Sen. Steve Geller, D-Cooper City, also admitted the Senate has offered a "hideously complicated" solution to an unexpected consequence of the Save Our Homes Amendment voters approved in 1992.

Many owners feel trapped in their existing homes because they would lose Save Our Homes benefits if they move. The Senate plan includes a "portability" provision that would let them apply at least part of their benefits to a new home. After the first year, the tax would increase by 10 percent annually until it equals what the homeowner would have paid without portability. The 3 percent cap would then kick back in.