Over the last several years, escalating property taxes have far outpaced Floridian' ability to pay. Between Fiscal Year 2000- 2001 and 2006-2007, total property tax levies increased by 99 percent. By comparison, personal income has increased by 44 percent and population plus inflation has grown 31 percent.

Certain elements of the property tax system like "Save Our Homes" and the "Homestead Exemption" - while created for valid purposes and to offer meaningful protections - have fostered inequities among taxpayers. It is common to find two similar properties in the same neighborhood with very different tax bills. Also, local taxing authorities have increased the burden on non-homestead properties to compensate for savings enjoyed by homestead properties.

Property taxes have become an obstacle to home ownership and an impediment to job creation. Florida faces increasing competition for human and economic capital from neighboring states that offer taxpayer-friendly policies.

This Special Edition of the Murzin Report presents the House proposal for immediate relief and long-term reform. This is just a starting point, however, and may have many changes made along the way.

House Property Tax Plan

The House plan will save the average homestead property owner $2,283 in property taxes. Commercial and non-homestead owners will save significantly from our plan as well. The House Property Tax Plan promises the three things Floridians want most: an immediate tax cut, a revenue cap to control future spending to a level they can afford and a vote on the future of Florida's tax system.

There are two main components to the House Property Tax Plan:

Statutory Relief: requires local governments to immediately and meaningfully reduce property tax rates and caps future growth in property tax revenues.

Constitutional Reform: replaces homestead property taxes with sales tax and establishes revenue caps for both state and local government.

Property Tax Reform Constitutional Amendment

1. In a 2007 special election, voters would have the option of eliminating all property taxes on homestead property.

2. In addition to eliminating property taxes on homestead property, starting in Fiscal Year 2008-09, state revenue growth would be limited to a reasonable amount that would be allowed under a prescribed formula that accounts for population growth and inflation since 2001-2002.

3. For the first time, Medicaid revenues would be placed within the revenue growth limitation. Currently these revenues are excluded from the state's revenue limitation.

4. The state revenue limit may be exceeded in any year by a 2/3 vote of each legislative chamber.

5. The constitutional amendment would also limit the continued rapid expansion of local government by containing millage to a rate that produces the same tax revenue as was generated in the previous year plus population growth and inflation, excluding new construction and annexation. The revenue cap may be exceeded through a unanimous vote of the governing body.

6. School districts would not see their budgets reduced under the House's plan. The future growth of school district budgets from property tax revenues would be limited by the amendment, but state government could choose to put more state revenue into schools.

Abolishing Property Taxes on Homestead Property

1. If the elimination of taxes on homestead property is passed by the voters, the state sales tax will be increased by 2.5 cents on all transactions subject to sales tax to offset revenue losses to local governments, schools and other entities that used property tax revenues.

2. This additional sales tax will be used to replace revenues lost due to the Constitutional Amendment.

3. This replacement revenue will only be implemented if voters approve the Constitutional Amendment that exempts homestead property from property tax.

For more information, contact me at dave.murzin@myfloridahouse. gov.