The Wall Street Journal is carrying an article (subscriber link) discussing expectations for an upcoming special legislative session in Florida on property taxes.
Unlike Connecticut, Florida has some pretty stringent regulations limiting changes to property tax bills on existing “homesteaders” (homeowners living in their primary homes, as opposed to snowbirds who own a second home in the state). The net effect of this has been that there can be a huge differential in the tax bill in neighboring properties, and the tax liability for new purchasers is perceived to be a drag on the Florida real estate industry.
So, in discussing the rationale for reform, which is expected to even out the differentials and reduce net revenue to municipalities, comes this quote:
“It’s as much a spending problem as it is a property-tax problem,” said Dominic Calabro, president of Florida TaxWatch, a nonpartisan watchdog group in Tallahassee. “The idea is to put local governments on a healthy diet, so they can grow,but grow along with the economy.”
Amen!
P.S. — In the comments of a post I made last week, I expressed a desire for towns to have the ability to cap tax bill changes. A commenter raised the issue of differential in tax bills between neighboring, presumably similar properties as a downside to that.
I should clarify that my desire is not for legislatively prescribed hard caps to individual tax bills — for the state to say that my tax bill shall go up no more than x% per year. Instead, I’d like towns to have the option to include a cap in property taxes.
In other words, I’d like to see towns empowered to issue tax proposals in the form of “increase the mill rate by 3%, with individual property tax bill increases capped at 8%” if local needs dictate.
Of course, I might be a bit biased because my neighborhood was hit with 20-30% tax bill increases in the last revaluation when other parts of town and commercial/industrial properties were barely impacted due to differences in how property values changed. Several retirees’ homes went on the market as a result.
However, either that phenomenon, or the situation in Florida where protecting against tax hike shock has been taken to the extreme, could serve as a prime example of the issues of relying too heavily on property taxes for municipal funding. Diversification of revenue sources would be a good idea.