Florida’s property tax system is based on a “millage rate.” Currently the maximum millage rate allowed by law is 15 mills. In other words, a Florida property assessed at $100,000 with no tax exemptions can be taxed at $1500.00 per year. This plan will reduce Florida millage rates to a maximum of 10 mills (or $1000 instead of $1500). Here is how it works:
The millage rate is reduced by 1 mill for five years, so that in five years the maximum rate is 10 mills. That is a cut of one-third, or virtually a 33.3% cut on the maximum allowable tax rate.
To be fair, many counties are already holding millage rates below the 15 mills allowed by law. Because they have been practicing fiscal responsibility, these counties will have a much easier task because they will not have to make the full 5 mills cut over five years. The counties which have not restrained spending will have to learn how to restrain spending like they have never done.
There are many reasons for cutting property tax millage rates. The first, and maybe most important is to restore the viability of Florida’s real estate market. If investors and prospective home-owners see some resolve to keep tax rates at a reasonable level, Florida property may again be viewed as a very good investment. As things are now, many people do not want town property because it is too expensive to maintain, and property taxes are one of the largest annual expenses for most Florida properties.
Now, we know how politicians act when property tax reform is forced upon them: They first look for ways around the reform. This happened to some extent in recent years after Florida voters voted to increase the standard homestead exemption. The exemption was only applied to about half of our property tax bills. This measure will be an across-the-board cut by one-third; that is the only fair way to reform Florida property taxes.
So, how will schools be funded, many will protest. The answer is simpler than you may expect: Either cuts will be made by local school boards, or other, more fair taxes will be expanded to replace the reduced property taxes. Either way, the taxpayer is afforded much more input into the process that is currently afforded in the present unfair system which relies on a tax structure filled will exemptions, and affected annually by wild fluctuations in unpredictable market trends.
One good way of cutting costs may be to pay students’ families 50% of the current tuition if they decide to attend a private school of their choice. Not only does the state save 50% of the current amount spent, but the public school system will not have to supply transportation for those students, thereby lowering the busing costs for the county. This is just one of many measures that can be considered to reign in runaway costs of government.
Some revenues may be replaced, if necessary by “franchise fees” on electric services. One way to replace some of the reduced revenue and, at the same time, hold government accountable in spending may be to allow counties to impose franchise fees at a rate of 50 cents for every dollar that property tax reductions are accomplished. Many counties already use these fees and often the funds are not appropriated usefully. Since these are a sort of “hidden tax,” not many citizens hold their politicians feet to the fire with these funds. Rather than creating overflowing “recreation funds” and etcetera, this revenue could be reassigned to fill a more important need: education. This is a much fairer way to fund schools anyway, as it is a broad-based direct tax, rather than the current property tax system which is filled with inequities.
And there are several more ideas that could be employed to render a more fair, less wasteful way of funding and operating our schools. Another consideration may be to make all total homestead exemptions subject to means testing. Presently, some people can move to Florida and purchase a home worth millions and never have to pay a dollar of property taxes. While military disabled veterans certainly should be rewarded for their service, at the same time, millionaire residents should be required to pay taxes at some level. Perhaps all homes valued over $300,000 should pay taxes. Admitedly, this will affect a small minority of Florida homeowners and likely raise a relatively low amount of revenue considering Florida’s $66 billion dollar budget, but it would be a step toward instilling fairness in the system.
Some fear that the greatest threat to the effort of reforming and reducing Florida’s tax structure is the threat of our state’s politicians enacting a state income tax. This concern seems baseless in light of the constitutional amendment prohibiting a Florida income tax. According to the cato institute, Florida’s income tax aversion dates to 1924, when voters banned it through an amendment to the state constitution. The state remains a tax haven more than 70 years later, possibly accounting for Florida’s historically good economic environment. Politicians saw the ban as a way to attract wealthy people and encourage them to invest in Florida at a time when other states just were beginning to tax incomes. (Source cited below)
Spending cuts could also be accomplished by “BADRAC” (Budget And Department Realignment And Closure) commissions in each county and at the state level. There is no telling how many useless departments are currently funded in counties and statewide. Upon that, there is no telling, without increased monitoring, how many services and departments could be combined to cut costs, without adversely affecting our quality of life.
It must be noted that lowering taxes paid by Floridians will indeed increase their enjoyment of life, effectively relieving stress and burden and allowing more family and discretionary time rather than “work time” in order to comply with government tax burdens. Floridians will be more content with their government and thereby be more appreciative and supportive of elected officials.
This thread is intended to be a work-in-progress aimed at solving one aspect of Florida’s fiscal problems: unfair and wasteful tax and funding structures. More will be added. Your constructive input and questions are requested.