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Thursday, Jul 27, 2017

Kill Amendment 3; say no thanks to 4

Two amendments on the November ballot have superficial appeal because they promise to limit tax revenue. Amendment 3 caps state revenue, and Amendment 4 sets limits on commercial property taxes and creates two other targeted breaks. Amendment 3 would damage the state's economic prospects. We strongly urge voters to make an unmistakably clear black mark on the "no" circle. Don't skip it. Amendment 4 is complex and unfair, but it has redeeming features. We don't support it but understand why real estate interests, business owners, new homebuyers and snowbirds would. Let's handle the worst one first. Amendment 3 would replace the existing cap on state revenue collections. The old limit keeps revenue in line with the growth of personal income, a reasonable measure.
If the amendment passes, the limiting formula becomes population growth plus inflation. It would freeze many state programs at today's recessionary levels of funding. Republican Hillsborough Commissioner Mark Sharpe nails the amendment's shortcomings: "It would autopilot our state into the ground. It's the wrong way to govern." The financial impact would grow each year. Today's lawmakers who put this on the ballot will be term-limited before having to deal with the consequences of a state in financial handcuffs. Colorado tried a similar cap in 1992. Fees went up. Roads fell into disrepair. Bond ratings fell. School funding dropped. The state backed away from the cap and is still trying to undo the damage. Future population is a poor indicator of future demands. And the urban inflation rate is an inappropriate gauge for government, which is building roads and other things whose cost may increase faster than consumer items. Amendment 3 would give rival states a big edge in recruiting top-tier employers, a big reason no other state has duplicated Colorado's mistake. To anyone wanting to stand against the growth of the welfare state, be aware that Amendment 3 applies only to "state revenue," defined off the ballot as excluding "revenues that are used to provide matching funds for the federal Medicaid program." The deceptive cap also excludes school taxes. The biggest flaw in the amendment is its arrogant assumption that future voters can't be trusted to elect fiscally responsible lawmakers. On Amendment 3, please vote no. Amendment 4 holds the promise of creating jobs and growth, while saving money for taxpayers. It could also shift costs to other taxpayers in unpredictable ways. Ron Weaver, a leading Tampa lawyer and expert on real estate and taxes, tells us he is against Amendment 3. But he supports Amendment 4 because it would help owners of commercial property and first-time homebuyers, as well as protect homeowners from tax increases when property values fall. Amendment 4 would make three major — and we think imperfect — changes. It would cap the maximum rate of increase on the taxable value of properties that are not homesteads from the current 10 percent a year to 5 percent. These properties include stores, apartment buildings, vacation homes and industries. This has the potential to shift more of the tax load to Florida residents who own their homes and whose assessments have long been capped at 3 percent a year. It would diminish the relative advantage of the Save Our Homes cap. A predictable drawback of any cap is the potential to tax similar properties at different rates. Already, property taxes can be sharply different for identical homes. A 5 percent cap for all other property would cause less dramatic imbalances, but the potential remains, should property values increase quickly, for the new cap to become a tax penalty on new businesses. Fixing that problem would require more amendments. A second feature of Amendment 4 would authorize a law to stop any increase in the assessed value of a homestead in any year that the market value of the home falls. Now, the taxable value of your house, if it's lower than the market value, can increase with inflation, up to 3 percent, even when the market value goes down. Eliminating that so-called recapture seems reasonable, but it would lock in today's recession values and eliminate a way to gradually equalize taxes between those with big caps and those without. Finally, the amendment allows the Legislature to create a special tax exemption for everyone who sets up a homestead for the first time in three years. The idea is to spark home buying by lowering the initial costs to this favored group of buyers. The extra tax break is 50 percent of the property's market value, but it may not be more than the median value of all homes in your county. In Hillsborough County, that mean value is just over $100,000. The exemption does not apply to school taxes. The added tax break phases out over five years, so it's like a teaser rate. You lose one fifth of the original amount each year until it's gone. In the early years when the break can be worth more than $1,000, it would irk someone who has paid the mortgage and taxes on a home purchased during the boom to see a new neighbor get a big tax break for buying a similar house at a bargain price. We don't like the inequities and complications of Amendment 4 and do not support it. But it does have economic advantages worth considering. We are strongly opposed to Amendment 3 and urge voters to resoundingly reject it.
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