The mission of the Martin County Taxpayer’s Association (MCTA) is:
To monitor and review all fiscal and tax matters affecting Martin County. To engage public officials, community leaders and private sector organizations who may influence the economy and efficiency of the County of Martin, the School District, municipalities and other taxing authorities in the matter of taxes and the financial resources of the County.
In accordance with this mission, a review was undertaken by the MCTA of Amendment One on the November ballot.
When studying this issue, it was impossible to not comment on the entire Florida real estate tax system. This brief paper is in no way an exhaustive study of that system. In order to adequately explain 2018’s Amendment One, this analysis needs to touch on other exemptions and aspects of the real estate tax system.
While there could be as many as 18 constitutional amendments on the ballot this November, Amendment One is a legislative initiative to give a third Homestead Exemption. Like all constitutional initiatives in Florida, it must pass with 60% of the vote.
Before analyzing the impact of Amendment One, it is important the ballot language be understood. Like so many other initiatives, the Florida Legislature has decided to make deciphering what is being proposed in as complex a manner as possible.
The ballot reads as follows:
Amendment 1 would provide for a homestead exemption on the portion of home values between $100,000 and $125,000, meaning the $25,000 between $100,000 and $125,000 of a home’s value would be exempted from property taxes other than school district taxes. As of 2018, Section 6(a) of Article VII of the Florida Constitution provides for a homestead exemption on the portion of home values between (a) $0 and $25,000 and (b) $50,000 and $75,000. If voters approve Amendment 1, the homestead exemption for a home valued at $200,000 would be $75,000. If voters reject Amendment 1, the homestead exemption for a home valued at $200,000 would remain at $50,000.
It is estimated by the Florida League of Cities that, if passed, this amendment would benefit 12% of the homeowners in Florida. It would have no effect on the school taxes levied. School Board taxes in many instances are higher than municipal and/or county taxes paid by a homesteaded homeowner or condo owner. Anyone who has a home with an assessment of under $100,000 would see no benefit. There would be no benefit to any resident paying rent. There would be no benefit to any non-homesteaded property owner. There would be no benefit to business property owners.
It is anticipated that Martin County will see a loss of $6,500,000 in real estate tax collection. The County and the City are already anticipating mild millage increases. The passage of this amendment may precipitate a larger increase in the tax rate. One Florida Senator who is in favor of passage said on the Senate floor that localities can just raise the millage to make up the difference.
Since roughly 88% of the properties in Florida will see no benefit, this is a “tax shift” and not a reduction. The Florida Legislature has for the past decade tried to reduce “home rule” authority. Using artificial property tax cuts, local government’s ability to pay for services become more and more constrained. At the same time the Legislature has increased mandates without adequate state funding.
The property tax system in Florida is broken. As the tax burden has shifted to fewer and fewer property owners through the use of exemptions, caps and other legislative sleights of hand, there has been a disconnect for a substantial number of people between services demanded and the costs of such services. This situation is becoming more and more unsustainable.
Besides being poor tax policy, it is also bad social and economic policy. Two identical homes owned by residents that are side by side can have two different tax amounts based on each property’s exemptions and caps. This removes another element of fairness in the real estate tax system. Economically, by the shifting of the tax burden to tenants, business owners and nonresidents, you inhibit growth and the creation of new business. “Ad valorem” means a tax levied as to the value of the property assessed. This clearly is no longer the case in Florida.
MCTA believes that property taxes should be best left to localities to levy and not artificially dictated by Tallahassee. MCTA further believes that a millage rate should be applied equally to as many taxpayers as possible. An unequal system of taxation has developed because of the subversion of what ad valorem taxes should be.
Amendment One is not a tax cut but a tax shift and therefore the amendment should be defeated in November.