Any property tax cut plan will involve a cost – either in a reduction in local government services, or in shifting the tax burden.
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- Proposals to cut Florida property taxes will likely shift the tax burden to other groups or reduce local government services, Florida TaxWatch suggests.
- TaxWatch has outlined five potential tax-cutting scenarios for lawmakers to consider.
- Gov. Ron DeSantis supports property tax cuts and has suggested using state funds to help rural counties that could be negatively impacted.
Any proposal to slash property taxes will involve a cost – either in a reduction in local government services, or in a shift from the segment paying less taxes to those paying more.
In economics parlance it’s called a “trade-off.” Officials with Florida TaxWatch, a Tallahassee-based tax watchdog, said those costs are inevitable. Property taxes produce $55 billion in revenue, with homestead property owners paying $19 billion.
“With property taxes if you give exemptions to one class of taxpayers, no matter what, that is going to end up getting it shifted,” Kurt Wenner, Florida TaxWatch senior vice president of research, told reporters Sept. 19. “It might reduce the tax bill for some taxpayers but it doesn’t have the effect of really slowing down property taxes statewide.”
Depending on the proposal advanced by the Legislature, those tradeoffs could pit homestead property owners against renters; low-income households against high-income households; or elderly homestead owners against other property owners.
Ahead of the Sept. 22-23 meetings of the Florida House Select Committee on Property Taxes, TaxWatch laid out five possible tax cutting scenarios for lawmakers to consider:
- Phase out property taxes for homestead property owners. One option is a 10-year phase-out, while another would do it over 30 years. This would “provide predictability for local governments as they adapt to reduced revenue,” the report states. The plan would switch the current exemption, which goes up to $50,000, to an exemption based on the percentage of the assessed value of the home, with the percentage increasing each year.
- Eliminate property taxes for seniors, even while phasing out the tax for homestead property owners. Under this plan, those 65 and older who have claimed a homestead property for at least 10 years would be exempt from property taxes.
- While phasing out property taxes for homestead properties, keep an exemption for school taxes. Homestead properties contribute $7 billion in taxes for K-12 schools, and the plan would keep that revenue stream in place for public schools.
- An overall cut by reducing the assessed value of all properties, while requiring local governments to adopt the “rollback rate” – the property tax rate needed to collect the same amount of revenue as the prior year. The TaxWatch report noted the Legislature could restrict this option to just homesteaded properties.
- Install transparency standards in state law, such as improving Truth in Millage (TRIM) notice warnings if local governments plan to approve a tax rate above the rollback rate. This wouldn’t be an automatic cut, but wouldn’t require an amendment to be placed on the ballot for voter approval, either.
Gov. Ron DeSantis has led the push for property tax cuts, and while the Legislature didn’t advance his plan to give rebates to homestead owners this year, he’s promised they’ll put a measure before voters on next year’s ballot to trim the tax rolls.
Ideally, he wants the elimination of property taxes for homestead owners – at a minimum.
“If you’re a Florida resident, and you have a primary residence here, your homesteaded property, I think you should be able to own that free and clear of the government,” DeSantis has said.
But DeSantis also has noted some rural counties that don’t have a large property tax base could see significant cuts if a major property tax reduction were to pass. He’s said he’s open to using state funds to restore revenue to those “fiscally constrained counties,” as they’re known in state law.
“Obviously, any reform would have to find a way to hold fiscally constrained counties harmless,” said TaxWatch executive vice president and general counsel, Jeff Kottkamp, a former lieutenant governor. “It’s really important, whatever we do, that in all 67 counties core government functions can still be carried out.”
Gray Rohrer is a reporter with the USA TODAY Network-Florida Capital Bureau. He can be reached at grohrer@gannett.com. Follow him on X: @GrayRohrer.