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Date of Issue: March 08, 2007

Tax relief plan worries HB mayor

Holmes Beach Mayor Rich Bohnenberger has instituted a hiring freeze, citing concerns with a state proposal that would drastically reduce the city's revenue base.

"I think this is the most important thing facing us," Bohnenberger told city commissioners during a meeting Feb. 27.

In mid-February, Florida House Speaker Marco Rubio, Chairman Ray Sansom and other House GOP leaders announced a proposal to provide property tax relief. The plan, said Rubio, is intended to cut Floridians' tax bills by nearly 20 percent this year.

The plan also calls for caps on the rate of revenue growth for state and local governments and for asking voters to approve a constitutional amendment abolishing property taxes on homestead properties and increasing the sales tax 2.5 cents on the dollar.

"When we traveled the state last year listening to Floridians' ideas, we heard a common refrain," Rubio said. "Property taxes have grown so burdensome that homeowners and business owners fear being forced out of the homes and businesses that they have worked so hard to build. Floridians were adamant: Timid tweaks to the status quo will not do."

The Florida House leadership's proposed property tax relief plan states that:

  • Effective July 1, property taxes for Floridians would be reduced by nearly 20 percent.
  • With an adjustment forward for a "reasonable" increase in the size and cost of government, local government millage would be reduced to a rate generating the same tax revenue as was generated in the previous year.
  • The rate of growth for government would be determined by population growth plus inflation set off a base year of 2000-01.
  • Local governments would choose to raise revenues above the capped rate through a two-thirds or a majority-plus-one vote, whichever is greater, of their governing body. These limits would not apply to taxes levied for school districts, for bond repayments or for a two-year period when authorized by a vote of electors.
  • School district revenues would not be rolled back.

The plan also proposes a 2007 special election for voters to say "yes" or "no" to a constitutional amendment eliminating property taxes on homestead property.

The amendment would limit state revenue growth to a formula that accounts for population growth and inflation. The amendment would also limit what the House leadership called "the continued rapid expansion of local government by containing millage to a rate that produces the same tax revenue as was generated in the previous year plus population growth and inflation, excluding new construction and annexation. The revenue cap may be exceeded through a unanimous vote of the governing body."

If voters abolish property taxes on homestead properties, lawmakers would increase the state sales tax by 2.5 cents to offset revenue losses to local governments, schools and other entities that used property tax revenues, according to Rubio.

The savings to the average taxpayer would be $433 for a homestead property owner, $767 for a non-homestead residential property owner and $3,353 for a commercial property owner.

Bohnenberger agreed that property owners need tax relief but he called the House plan a "train wreck" that could derail local government.

"I've already put a hiring freeze on," the mayor said.

The mayor shared with the commissioners revenue projections for Holmes Beach if state lawmakers and voters go with the House plan. He said the projected loss in property tax revenue would be $1,339,391.

Commissioner David Zaccagnino, during the meeting, said perhaps the Island cities should revisit the consolidation concept to save money, specifically on personnel costs.

Bohnenberger said the state's proposal spells danger for municipalities large and small.