Lawmakers Reach Tentative Agreement on Property Tax Cuts

Legislative leaders in Florida's House and Senate have agreed on a very broad outline for a property tax cut agreement. As described in the Orlando Sentinel, the plan has two parts:
1) Forcing local governments to cut property taxes this year, and limiting property tax growth in future years to the growth rate of personal income.
2) Replacing the much-maligned "Save Our Homes" tax break with a "super-sized" homestead exemption based on a sliding-scale percentage of home values.

On one level, it's hard to call this much of a victory for lawmakers, because it leaves unresolved the thorny question that derailed the regular legislative session: how much the tax cut will cost."This doesn't resolve what is by far the biggest disagreement: How much are we reducing taxes?" said Senate Democratic Leader Steve Geller of Cooper City. "Without knowing the size of the tax cut, you can't write a tax-cut bill."Similarly, until the exact description of the "super-sized" homestead exemption is known, we can't say anything about the fairness of this tax break.

But there are a couple of things we can say immediately:

1) Beware of any plan that imposes strict limits on the growth of local government spending without providing a reliable source of state aid to local governments. Locals haven't been increasing spending because they're interesting in mimicking drunk sailors-- they're doing it because the state has been gradually and systematically starving them of state aid. The Center on Budget and Policy Priorities has this analysis of the dangers of spending caps for Florida.

2) A homestead exemption is a major improvement for tax fairness over the mess that is known as "Save Our Homes." It would be hard to design a homeowner tax break more capricious or obviously unfair than Save Our Homes, and virtually any homestead exemption the legislature dreams up will be a major step forward for tax fairness.

3) Renters won't like this plan. The centerpiece of the reform is a tax break that goes only to owner-occupied homes.

More details will, doubtless, emerge in coming days. Stay tuned...