Falling In Love With Tax Cuts Could Make State Hate Growth

Published: May 29, 2007

Ask anyone you know if they want a tax cut and they'll almost certainly say yes, and make it big.

Legislators heading into a special session on how to cut local taxes understand the public mood. What they don't seem to understand is the flip side of the issue, where passions also run high.

If taxes are cut, services must be cut too. Counties experiencing rapid growth are far behind in providing needed services such as new roads and transit, a drought-proof water supply, smaller classrooms, adequate jails and enough deputies.

Major budget cuts will put them farther behind, and sharply lower taxes on new homes will remind everyone that newcomers won't soon pay enough for all the services they demand today.

The public has already begun to associate new subdivisions with noticeably lower levels of service, but the sky-high taxes paid by the new houses have been a big consolation.

That's about to change. Some of the plans lawmakers are considering would so sharply lower everyone's taxes that counties and cities would have no choice but to lay off some employees, perhaps close entire departments.

The fact is, for longtime homeowners protected by the Save Our Homes constitutional cap of 3 percent on annual increases in appraised value, property taxes are not unreasonably high. It's businesses, renters, part-time residents and new home buyers who are suffering an unfair hit.

But the Legislature isn't talking about fixing inequities. Lawmakers are talking about giving everyone a huge tax break.

There are many competing ideas, none of which has undergone rigorous examination. The best thing for lawmakers to do next month is to freeze taxes at last year's level to provide some temporary relief and give themselves more time to figure out the complicated constitutional issues that require voter approval.

Big tax cuts would give homeowners more money to spend and invest, which would help the economy, but that's as far as state lawmakers have taken the analysis. They're going to let local elected leaders worry about who buys the new school, new jail, new road and new library.

Cities and counties are not innocent bystanders in the approaching train wreck. By one estimate, local government spending will exceed increases in personal income by $4.8 billion next year. Tampa's revenue from property taxes increased 20 percent last year, yet only reluctantly did Tampa City Council cut a little.

As higher property values made local budgets soar, local officials gave generous raises to police, firefighters and everyone on the public payroll. These raises tended to be far higher than in the private sector, and many increases are part of union contracts that are impossible to reduce.

So if forced to cut, local governments will cut where they can, in social services, maintenance, temporary workers and capital expenditures. The public is going to get very angry about these cuts and they're going to focus their anger on growth. If they manage to slow down the construction of houses and apartments, they will slow the state's economy far more than it will be stimulated by tax cuts.

Lawmakers should think about how commuters on jammed roads will feel when told that overdue road widenings must be postponed indefinitely. The only way to vent frustration will be when another housing project, even a well-planned one, comes up for approval.

Much is at stake. Hillsborough Commissioner Jim Norman, a longtime advocate of low taxes, calls the potential cuts to county government a "financial Katrina."

The Legislature should slow down and listen before it's too late. The state needs a hard rain, not a government-crippling hurricane.