Rubio Running Out Of Time For Taxreform Plan
Written by Ted Carter on April 12, 2007
By Ted Carter
Crucial days are ahead for Florida House Speaker Marco Rubio’s campaign to roll back local government spending and let Florida voters decide whether to replace property taxes with sales taxes.
The sweeping reform proposal faces key tests as the current session heads into its final weeks and lawmakers begin looking at the Senate’s plan for addressing skyrocketing property-tax bills.
Under Rep. Rubio’s legislation, local governments statewide would have to decrease spending an average 18%. For Miami-Dade County and its municipalities, the rollback would be about 35%, which Rep. Rubio said reflects the county’s enormous rise recently in property-tax levies. "Miami-Dade will have problems," he said. "The explosive growth in property taxes" has outpaced consumer spending."
Rep. Rubio conceded that the reform he wants would cost Miami-Dade and its municipalities about $600 million annually. But he said it would put $7.2 billion back into the pockets of Floridians, including business owners who would see their property taxes rolled back to 2003-04 levels and their tangible property tax exemption increased by $25,000. "Putting this back into the economy would generate economic growth not seen in this state ever," he said.
As a measure of the savings, he said, a Florida consumer would have to buy $40,000 worth of goods for the added sales tax, proposed at 2.5 cents, to equal the amount the owner of an average-priced home pays in property taxes annually.
Senate leaders are scheduled to roll out their plan today (4/12), ending weeks of secrecy on how they plan to relieve a worsening property tax burden. The Senate proposal grew out of 18 hearings held around the state this year, said Kathy Mears, spokeswoman for Senate President Ken Pruitt.
Although Ms. Mears would not detail the Senate plan, she said the upper chamber’s Democratic leaders had a hand in crafting it. That could mean the legislation would double the state’s $25,000 homestead exemption to $50,000, a move advocated by Senate Democrats and Gov. Charlie Crist.
"We’re working on a consensus product," Ms. Mears said, declining to say what elements the measure shared with plans presented by Rep. Rubio and Gov. Crist.
With the session headed for the homestretch and the Senate proposal coming up for consideration, Rep. Rubio is working to ensure that Floridians understand the current version of his plan and its implications. To that end, he held a teleconference Monday with media representatives from around the state.
Rep. Rubio said he’s trying to shift the focus from the needs of government to the needs of people. "A lot of people are paying more than they can afford, and businesses are struggling," he said.
The plan is threefold. It starts with the statutory measure to roll back revenue collections of local governments and is followed by a statewide constitutional referendum next year calling for abolishment of residential property taxes for schools and replacing them with a one-cent sales tax. By 2010, voters in each county would decide whether to replace all homestead property taxes with an additional sales tax of up to 1.5 cents.
The statutory measure, House Bill 7001, can become law by a vote of the Legislature and the signature of the governor. It mandates that all local government revenue return to 2001 levels, though revenue levels would be adjusted forward to take into account inflation and population increases. Governing bodies such as the Miami-Dade County Commission and Miami City Commission could exceed the rollback levels through a two-thirds vote of their memberships.
However, after a county’s voters decided to replace property taxes with a sales tax, governing bodies would have to vote unanimously to exceed rollback levels. House leaders inserted that measure, Rep. Rubio said, to ensure that local elected officials don’t increase commercial property taxes as a way to offset losses from the elimination of property taxes.
Rep. Rubio acknowledged the concern that renters could end up on the short end of the relief plan. House leaders are open to suggestions for assisting them, though he said he thinks his plan would make homes more affordable. Now, he said, "renters can’t get in [to buy] because the people living there can’t get out."
He said he does not buy into theories that Florida’s tourism industry will suffer.
"There’s no indication that tourists make decisions on where they go based on a sales tax," Mr. Rubio said. If that were the case, he said, high-sales-tax localities such as Las Vegas, Los Angeles and New York would see diminished tourism numbers.
There is concern, however, that localities such as Miami that rely on convention business could be hurt by increased sales taxes. Unlike tourists, conventioneers "do look at this," he said, but he theorized that lower commercial taxes would allow hotels and restaurants that cater to them to lower their prices.