By ALICIA LEONARD
Lines are being drawn between realtors, school boards and small businesses across Florida over the proposed tax cuts slated to come before voters on the November 4 ballot.
Amendment Five was placed on the ballot by the Florida Taxation and Budget Reform Committee and is supported by The Florida Association of Realtors, who plan to sink $1 million in the “Give Me 5 for Florida’s Future” campaign, supporting the proposed amendment.
The Amendment, if passed, would eliminate the school portion of local property tax and apply a five-percent cap on property tax increases on non-homesteaded property. This would, according to some estimates, save property owners in Florida an estimated $9.3 billion in taxes by 2011.
The problem many are finding with the proposed amendment is that it doesn’t address how those funds would be replaced in schools already facing funding cuts from deceased revenues connected to lower property values. The Coalition to Protect Florida’s Economy has started to call the amendment the “Tax Swap Bill.”
The proposed amendment calls for Florida lawmakers to find a way to recoup the losses through four possible means. A one-cent state sales tax bump, use new or other revenue, cut spending, or eliminate state sales tax exemptions on a variety of services.
Proponents say this will still not be enough to make up for the losses and is a way for realtors to make up for losses in a declining real-estate market at the cost of education and small business owners.
Florida TaxWatch has released a report and prepared statements negating any improvements will actually come from the proposed amendment. TaxWatch Chief Executive Officer Dominic M. Calabro stated, “We have long noted that the required local effort (RLE) portion of the property tax is not transparent, it diffuses and confuses who is accountable, and it has been a major contributor to the significant increases in the property tax burden in Florida in recent years. Unfortunately, however, Amendment 5′s proposed constitutional solution is worse than the problem.”
The Florida Taxation and Budget Reform Committee have publicly stated that the passage of the amendment is critical to Florida’s housing market and overall economy.
On July 3, a group of educational representatives and businesses affected by the amendment filed suit to remove it from the November 4 ballot on the basis that it is unconstitutional. The group is called the Coalition to Protect Florida’s Economy. Coalition members include the Florida School Boards Association, the Florida Association of District School Superintendents, The Florida Association of School Administrators and The National Federation of Independent Business.
Walton County School Superintendent Carlene Anderson thinks the public needs to be informed on the possible repercussions if the amendment passes. “I’m afraid that all information concerning Amendment 5 is not getting to the voters,” she said. “Yes, it is supposed to take the place of property tax but all indications and predictions clearly point out that it will not bring in the same revenue. Funding will have to come from somewhere and that is the part that no one is talking about. Could it be that if sales tax revenues don’t fund the expenditures, then sales tax will be increased or exemptions will be disallowed?” asked Anderson.
Anderson also expressed concern over how schools are supposed to cut budgets even more in the next few years. “We all understand about “belt-tightening.” We can certainly do that. But someone needs to tell us how to meet class-size reduction when the funding won’t be available!”
Where will that funding come from? “The funding must come from somewhere, don’t be fooled. If we don’t pay with one funding source, we will pay with another,” said Anderson. “If the other source is not sufficient, they will have to determine how to make up the difference by altering the sales tax formula.”
There may also be some issues with the amendment and the Florida Constitution, explained Anderson. “The Florida Constitution specifically spells out that the state must fund public education. Here we have two issues in the constitution that may become contradictory,” she said. “One states that the state will fund education while requiring us to meet a class-size reduction amendment and possibly another that allows only funding from sales tax, which will not fund education to meet the constitutional requirements under the current tax structure?”
Walton County Property Appraiser Patrick Pilcher said, “It won’t effect our office so much as we have already installed the software for Amendment 1. That amendment capped the raises on property taxes at 10 percent and Amendment 5 would also reduce that cap to five percent, so we would just have to input the new values in our software. It will reduce the current property tax bill by up to half if you take out the required local effort, which is a part of it. We don’t have any type of information sessions planned at this time but we might try and put something together as it draws closer to the elections.”