Property tax outrage spreads across the country

WASHINGTON – April 24, 2007 – In one YouTube video, an elderly woman in Pennsylvania explains how she lost her home because she couldn’t afford her taxes. Cartoon characters in another clip mock a New Jersey city official for telling tax critics to move out of town.

Florida is far from alone in public outrage over property taxes.

Years of rapidly rising real estate values have ignited a tax revolt across the nation.

Battles are raging from Idaho to Texas to Vermont over whether to cut property taxes, cap government spending and change how homes and businesses are assessed. Grassroots taxpayer coalitions, business groups, local officials and labor unions have fought repeatedly over the past year about how to ease a record-high tax burden.

“What has happened has been staggering because governments are collecting twice as much in property taxes than they were just a few years ago,” said Brian Phillips, spokesman for the nonpartisan Tax Foundation.

The Tax Foundation, which has long tracked tax policies around the country, concluded in a study this month that state and local taxes have hit an all-time high, accounting for 11 percent of personal income on average nationally.

Only 12 states have a smaller tax burden than Florida, with Alaska and New Hampshire the least taxed states and Vermont the highest taxed. But the real estate boom since 2001 has Florida moving up the ranks in taxation.

The taxable value of property has increased double-digit percentages for the past five years in Broward and Palm Beach counties. That has generated more than $2 billion in extra revenue for local governments in the two counties.

Rhode Island capped local government spending, as has been suggested by Florida’s House and Senate leaders. South Carolina, New Jersey and Idaho raised their sales tax 1 cent so they could cut property taxes, the same concept proposed by the Republican leadership of Florida’s House.

Anti-tax activists caution that short-term fixes often win out because of politics. Legislators are loath to tackle sensitive issues of government duplication and employee pensions that will keep driving up costs and taxes, activists say.

Take New Jersey.

Gov. Jon Corzine urged lawmakers last year to think big about overhauling taxes. But pensions and government merger soon became forbidden subjects, particularly after government employees rallied at the Capitol and threatened to defeat politicians who disagree with them.

New Jersey homeowners will receive tax breaks this year of 10 percent to 20 percent depending on their income, but critics are questioning how the state will pay for the cuts, particularly without more attention to trimming government spending.

“They catered to the special interests and didn’t give us true reform,” said Cy Thannikary, chairman of Citizens for Property Tax Reform. “This is the greatest fraud ever perpetrated on the taxpayers of New Jersey.” One of the biggest stumbling blocks lawmakers will face in Tallahassee is how to provide tax relief without deep cuts to services. Local government officials across the country have challenged tax cuts and spending caps as too destructive, just as their Florida counterparts are beginning to do.

When Connecticut Gov. Jodi Rell proposed an annual cap of 3 percent on local government spending increases last month, the mayors of the state’s largest cities charged their communities would be thrown into chaos. Local officials in Texas made similar claims when a blue-ribbon panel suggested tightening spending caps there, a suggestion that has gone nowhere. The fights around the country over taxes also show Floridians shouldn’t expect easy answers on who will benefit, how sustainable any tax cut is or whether spending caps on local government will succeed.

Texas lawmakers agreed to cut property taxes last year, but had to exceed limits set in the state constitution on spending to replace the lost property tax revenue at local school districts. In South Carolina, 20 school districts raised tax rates before new state spending caps went into effect.

Emerson Read, the leader of South Carolina’s tax revolt, said the key to meaningful change is public involvement, like the rally in Tallahassee of people demanding property tax relief. The 82-year-old Charleston real estate agent organized activists statewide last year and launched an ad campaign to sway reluctant lawmakers.

“Government had just gotten out of control, and a lot of people were hurting,” Read said.