Florida Constitutional Amendment 1 Makes History

Today Florida voters overwhelmingly endorsed Amendment 1 to upgrade the Homestead Exemption and continue the push for property tax reform. This constitutional Amendment grants several benefits:

• Increases the Homestead Exemption from $25,000 to $50,000
• Grants homestead owners a portability right to take their Save Our Homes (SOH) benefits to a new homesteaded property when they move; this permits residents to transfer up to $500,000 in value exempt from taxation (owners can transfer up to $500,000 in property value sheltered by their old house and apply it to their new tax bill)
• Grants businesses and mobile home owners a $25,000 tangible personal property reduction, and
• Limits increases for non-homesteaded properties to no more than 10 percent annually (beginning in 2009)

The annual 3 percent per year valuation cap for homesteaded properties continues to apply.

Governor Charlie Crist has spearheaded and personally advocated Amendment 1. In an around the state promotional tour just before the vote, Crist argued that the property tax amendment will give homeowners more financial freedom and limit unnecessary government spending. Crist believes that the many years of large tax increases paid by the people are often not being wisely spent by local government leaders and lowering the peoples' tax burden can be matched by local governments by implementing greater accountability, more judicious spending and a greater emphasis toward efficiencies.

The four-part constitutional amendment, which required and received a 60 percent approval vote for passage, cuts about $9.2 billion in property taxes over five years. County, city and special district governments would take a $7.7 billion hit while public school budgets would lose $1.5 billion. Supporters claim the amendment will help ignite a sluggish real estate market and provide much needed tax cuts to all of Florida's residents. Labor unions, firefighters and some schools and local governments have opposed the amendment.

Amendment 1 Presumed Advantages:

• Save-Our-Homes portability enables many homeowners to upsize or downsize without losing their tax exemptions. Estimates show that the average homeowner will be able to take approximately $83,000 in Save our Homes tax benefit with them when they move, saving about $1,500 a year on property taxes.
• Amendment 1 provides a definitive tax relief to homesteads, landlords, and businesses.
• The Amendment places caps on assessment increases for landlords and commercial property owners over the next 10 years.

Amendment 1 Presumed Disadvantages:

• This legislative act cuts revenues to all levels of government except the school districts. 
• It arguably promotes tax liability inequities by rewarding long-time residents and long-term property investors with lower taxes while charging increased taxes to short-time residents, investors newer buyers. 
• The political groups against this amendment claim it would cause apocalyptic type service cuts and layoffs in police, fire, rescue, parks, and similar services. (School districts are exempt from almost all of the tax cuts and caps.) These claims seem to be an alarmist call for gloom and doom without much basis. While taxes would be reduced, the prior 7 years of tax revenues have grown dramatically (nearly doubling in many jurisdictions) and the proposed tax cuts are relatively minor in comparison to the increases.

The Florida legislature has also eased the implementation process. Homestead owners don't need to apply for the increased exemption as the new $50,000 homestead amount will automatically be applied beginning this year. Any homestead owner who moves within the state after January 1, 2008 can apply for the SOH portability benefits and the transfer will be implemented in their 2009 tax effect.

Amendment 1 must still clear some judicial challenges. A legal argument largely based around the portability element is currently being crafted. Lawyers warn that the Save Our Homes portability component may violate the U.S. Constitution's equal protection clause by increasing the disparity between the tax liabilities of Floridian residents and people who just moved to Florida from out of state. The groups Florida TaxWatch and Florida Ballot Initiative are leading the charge to get a judge to void the voters mandate.

Posted: January 29, 2008
Keywords: Amdendment1 , Homestead Exemption, Save our Homes (SOH)
Categories: Florida Legislation
Trackback: http://www.myfloridarepresentatives.com/amendment1.htm