In their continuing war on the property tax, Florida’s Republican lawmakers added Amendment 5 to the November ballot to index the homestead exemption to inflation.
A yes vote means that every year, the second of two $25,000 exemptions will increase according to the previous year’s inflation rate. If inflation rose 3.5 percent this year (roughly where it is now), your homestead exemption would increase by $875. Cities and counties would lose over $100 million a year by 2028, more after that. School taxes are not affected because the second homestead exemption doesn’t apply to them.
Intuitively, an increase makes sense: why not adjust for inflation? One wishes lawmakers thought the same way about the gas tax or unemployment benefits, neither of which have been increased in three decades. But the homestead exemption doesn’t need another fattening. It needs reforming. It’s unfair and punishing in its current form. It isn’t a tax cut. It’s another tax shift. The inflation scheme will deepen disparities at the expense of local governments, businesses, renters and agricultural properties, all of whom will have to make up for lost revenue.
The homestead already has a built-in hedge against inflation. It’s known as the Save Our Homes amendment. Voters approved it in a 1992 referendum. It limits annual increases in a home’s taxable value to 3 percent or to the previous year’s inflation rate, whichever is lower. The longer you live in a homesteaded property, the less you pay when inflation is calculated. Someone who just moved in across the street may be paying double or triple what you pay, for a smaller house. We have absurd situations like that all over Palm Coast.
Take my street. I bought my 3,000-square-foot house in 2008 for the ridiculous price of $175,000. In 2011, it had a taxable value of $103,000. Its market value has since doubled. But my taxable value is only $11,000 more–$114,000. In constant 2011 dollars, my taxable value has fallen 18 percent, to $84,000. If my taxable value had kept up with inflation, it should have been $147,000, netting local governments their fair share of additional revenue.
Last year we paid $2,156 in overall taxes, less than in 2011, when we paid $2,200. (An earlier version of this piece had the wrong figure.) In constant, 2011 dollars, we paid $1,580. In other words, we paid 27 percent less in taxes, when adjusted for inflation. That’s the purchasing power local governments lost from my taxes over those years: 27 percent. And you wonder why our governments sound like beggars and their services go wanting all the time.
My neighbors across the yard moved into their new, 2,300 square foot home last year. Smaller home, nearly three times the taxable value of mine: $280,000. They’re going to have a shock when they get their tax bill later this year: $5,200, or 140 percent more than mine. That’s the amount they’ll be paying from now on, since our system pretty much freezes our tax bills from the day we start paying them.
They’re homesteaded. Businesses and renters don’t get that exemption. Their taxes keep going up–yes, renters pay taxes, and in fact proportionately pay more taxes than the homesteaded–with only a 10 percent annual cap on taxable value. Commercial properties and renters are subsidizing everyone else’s artificially low taxes.
Homestead exemptions were designed to encourage home-ownership in difficult economies (the jury is no longer unanimous as far as whether owning is a good idea, let alone a possible idea for the young). Florida enacted its first homestead exemption for up to $5,000 in 1934, to counter the effects of the Depression. It was increased to $25,000 in 1980. The state increased the sales tax from 4 to 5 percent two years later, with half the revenue from the additional penny pledged to cities and counties to make up for revenue lost from the larger exemption.
In 2008, voters approved a doubling of the exemption, to $50,000. The lost revenue was not made up, compounding what revenue was lost after 1992 when Save Our Homes passed. Numerous additional and unnecessary exemptions have increased the benefit since–for the elderly, for the disabled, for an arbitrary set of “essential” workers, as if, say, bank tellers and teachers were lesser taxpayers than veterans.
As tax schemes often do, those homestead exemptions have turned into gifts to those who need them least. They’re adding to disparities. They’re discouraging mobility for those who are homesteaded (who wants to lose hundreds of thousands of dollars in accumulated “tax-protected” value?) and preventing young homebuyers from ownership. It all reduces economic vitality and exacerbates inequality. The exemptions have metastasized into tumorous subsidies that choke economic activity and government revenue while disproportionately burdening the non-homesteaded.
And now Amendment 5. Flagler County Property Appraiser Jay Gardner calls it “unnecessary.” It’s an understatement. It’s another pander that will cheat local governments of yet more resources while indulging homeowners who’ll turn up at the next council meeting to bitch and moan about broken roads and crappy services. That’s precisely what a Yes vote on Amendment 5 will get you more of.
Pierre Tristam is the editor of FlaglerLive. A version of this piece airs on WNZF.
Laurel says
Uh no.
With the current gentrification going on around here now, locals, who bought their homes years ago, should not lose their 3% cap just to satisfy the newbies, who are buying houses at a much higher rate than the previous locals did. Size doesn’t matter here, the price the market is willing to pay, does. If the newcomers are “shocked” at their tax bill, then they did not do their due diligence. We looked at a house, on the water, in Jacksonville, and when we figured that the annual tax would surpass $10K, we turned down the sale. You move where you can afford, and do not screw the locals who purchased homes that they could afford at the time.
The first time home buyers can do what we did, and that was buy a small, two bedroom, one bath home, probably without a garage or car port. Get a roommate. Work their way up, don’t start with the same type home their parents have now. Buy where they can afford!
Now, let me tell you how government budgets work. I was a government worker for over 20 years. Your department gets $10K for the year (just to keep it simple, I know it’s much more than that). If your department spends $7K for that year, then your department loses $3K in next year’s budget. So, you had better spend the whole $10K, on whatever junk it takes to keep it, or it will be expected that your department can do with less. No one wants that, so they make sure they spend the full amount. You want us long established homesteaders to make up for other’s shortcomings?
Uh, no.
Palm Coast Citizen says
There are no homes without garages in Palm Coast, and home prices have skyrocketed in the past few years, across the nation. From 1985 to 2002 or so, home prices were about twice the median income. Now, the median home price is close to seven times the median income.
It’s worth pointing out that saving, having roommates, and doing what you did is simply no longer going to result in homeownership any time soon. It’s not possible. If home prices continued along the curve they were at from 1985, they’d be around $180,000. Unfortunately, they’re closer to $400,000.
You can buy an older mobile home in the country for the affordable price of $270,000, which means you have to be above the area median income to afford that. You can buy a small two bedroom just outside Palm Coast for about $300,000. “Just.” We say, “Just do what I did,” but people cannot do that.
Laurel says
Palm Coast Citizen: I don’t disagree with you, and I hate the gentrification that is happening in our area, but at the same time, it is the growth and investment companies that are infiltrating Florida. The young people have to go where they can afford to live and work.
I knew the day I moved out of Boca Raton, I would not be able to afford to move back in, so I move to the less expensive town of Lake Worth (with no carport or garage). Actually, it was a pretty cool town! Much more to do than in Boca, but I digress. I thought my 8.375% rate was great, but keep in mind my house cost under $60K. Nearly 20 years later, I sold it for $160K. The young lady who bought it (well, her folks did) added another bedroom and bath, and a dozen years later sold it for $364K (Geez! Shouda, woulda, coulda), but that’s how it goes. The housing interest rates are what they are now to try to slow down the skyrocketing housing price.
Whose responsible? Everyone. Business overrides residents. The growth here is catering to those who can purchase, what developers like to call “luxury” homes (actually, matchstick boxes on smaller lots than average). The development and real estate industry advertises up north, sending hordes of people down to our areas, causing our prices to increase dramatically.
What about jobs? People cannot move to areas that don’t have the jobs, and then complain there are no jobs. You must go where the jobs are, or being willing to commute.
The new communities are not planned sustainably. Palm Coast could be stuck with an abundance of overstock, but only time will tell. Right now, the developers get what they want at nearly every turn. We, and our youth, cannot complete with insurance lobbyists. They get what they want, or leave altogether.
Out of state investors have bought up properties, en mass, for vacation rental investments, making the available sales and rentals market smaller and more costly. Actually, a new trend is for investment companies to rapidly buy up large apartment buildings and evicting the current tenants. What is the state doing to reign this in? Who are our legislators listening to, us or lobbyists? They only care about big businesses, and can give a damn about residents.
There may come a time of a sort of bust, but that cannot be counted on. Meanwhile, young people have to move to areas they can afford. Maybe it’s a mobile home, or a small home further inland. As long as the business of tourism and development looms, the will be a lack of affordability and people must start where they can. People are not fighting back the right way. They have been tutored to believe in big business at the cost of their own diminishing lifestyle.
JimboXYZ says
The Homestead exemption needs to grow with inflation to pace the property theft for fixed incomers that had careers where they didn’t earn the big paydays that are being forced upon the masses. You can vote against tying the homestead exemption to inflation, but everything else that you buy is going to be inflated just the same. You’re voting against yourself. Does it hurt local governments, the growth that continues to be approved has hurt you. Instead of right sized, we have new needs to grow & maintain infrastructure that is a lower quality of life. Don’t buy into the vision of 2050 as anything new & improved, because it isn’t. New residential construction for rental duplexes. Everyday is a new adventure to see which renter leaves a front yard, individual sized pile of landfill debris at the curb. That new property a couple of lots over is a temporary landfill every few months. Bedding, other furnitures, appliances & garbage that it would take a bulldozer to level at a landfill. The garbage pickup has to handle those random loads. I have photos of that and it’s real, the eyesores that they are. So yes, I want my homestead exemption to be tied to inflation. If one can be priced in & out of anything that improves the quality of life, getting a break from every wolf, including a Biden-Harris government is necessary.
At the end of the day, the government is all of us. If tying the homestead exemption to inflation is hurting the government, it’s a double hurt as each of us are also individuals that are getting hurt by inflation. Anyone voting against that must be making way too much money at another’s expense, that’s where the inequity originates from, not the tax gouge. I think the homestead exemption also needs to be tied to the property appraisal that seems to be tied to inflation. Some county government expert is going to tell you every year in your tax bill that your taxable base is now a higher valuation.
Jim says
JimboXYZ, You state “…they didn’t earn the big paydays that are being forced upon the masses.” Big paydays are being forced on people? Really? I wish I was still working so I could get a big payday forced on me!
I’m not a big fan of duplexes and rentals either but I have to say if I were you (and I thank God I’m not), I’d move if you have piles of trash in front of rentals daily in your neighborhood! I see an occasional pile in front of rentals but for some strange reason, I see piles of trash in front of “regular” homes just as often so I can’t rant about that…
And, finally, to quote you: “If one can be priced in & out of anything that improves the quality of life, getting a break from every wolf, including a Biden-Harris government is necessary.” How you can tie the homestead exemption to Biden is beyond me. You just don’t accept that your Republican buddies run this state and local governments and that’s where all this building is coming from! Rant on Biden all you want but send DeSantis and Paul Renner some of your money to finance their next campaign for elected office. Of course, you can do that if you can still afford home insurance or if you just don’t have it any more!
JimboXYZ says
Who raised the interest rates, that would be Biden-Harris. They tried to do it once under Trump and they saw how that went. an immediate reversal, because the inflation wasn’t there to pay for that.
As for fabulous salaries, every government position we’ve had over the past 3+years has cost taxpayers $ 15K salary more at a minimum for every replacement at that level. Not to mention the search to find the new city manager(s), County School Superintendent or budget expert (just to name a few positions) ?
Those piles of debris at the curb, those are evictions for financial hardship or move outs at the end of a lease term & the debris is that clutter that was left behind. Sorry you can’t figure that much out ? Had renters that were evicted and just left a curbside basketball goal behind. As they were moving the U-Haul was parked in the yard & loaded in the middle of the night. I ended up picking up the fast food garbage/trash that was left in the yard from that move. Only because the wind blows that litter around & onto other’s properties to pick up. Even had to pick up a soiled diaper on that property. As a homeowner, I felt filthy & violated, felt like I lived in a compound of an apartment complex with the same types of bad neighbors. That’s what we’re gettig for Biden-Harris diversity, those renters move in next to us, not in Martha’s Vineyard or Biden’s neighborhood. I’m glad that I’m not you just the same for that. What’s going on in this residential is a renter’s version of playing musical chairs/houses every couple of duplex lots from each other. Sad part of that is, they did it once, & are still here to pull that again 2 houses further away, but at least it’s 2 houses further away than it was.
I just don’t empower the “mind your own business” line, it becomes my/our business every time it happens next door & to me/us as a homeowner. As Laurel said it so well in her post, buy/relocate where they can afford. The gist of her post is, we all came thru at different portals & stages of life to arrive here in Palm Coast/Flagler County. Those of us that bought in another era earned far less than what is the new $ 15/hour minimum wage economy. I don’t see anyone coming back to me paying the difference when minimum wage was $ 3/hour. No reparations for that, I’m not taking the hit for every Biden inflationary move that has us where we are. At a certain age (age somewhere around 50’s & 60’s), society will age discriminate for skill set & income. That doesn’t seem to apply to folks like 80+ year old Biden that jumped from $ 250K/year as a VPOTUS pension to a $ 400+K/year salary to fall down & babble on the job as POTUS. Know that score, the playing field has never been level 7 it never will be.
Skibum says
A very interesting read. Upon finishing this article, I’m left with the unavoidable thought that maybe, just maybe the higher rate of property taxes on new residential construction is why we are seeing such an emphasis on doling out permits to developers who are building practically everywhere you look. And no wonder Mayor Alfin wants to complete the westward expansion across U.S. 1 sooner rather than later… with local governments increasingly struggling to find new revenue sources, all of the new homes that will be built and added to the city’s tax base will raise sorely needed tax $$$ for the city and county alike.
Pierre Tristam says
The “maybe” may be too kind an analysis. And doesn’t the city’s approach portend a revenue crash the moment new developments stop? We saw that a decade and a half ago.
Jim says
Well, why would any local officials worry about a decade from now? Most of them will be gone by then (maybe on to higher office) and we taxpayers will be left with the mess they created. I feel the saying (paraphrased) “know your history or you are doomed to repeat it” applies here!
Don miller says
The shameful truth is that Florida grew first because it attracted retirees and still does . Retirees are usually on some sort of fixed income. Government was jacking up the taxes to pay their oversized and over paid gov employees a fat retirement pension . That caused the fixed income people either to starve, go back to work or lose the home at a tax foreclosure auction . HE Saved our homes. All new comers start out a fixed base just the older ones and are paid a higher fixed persion because of everyone makes more and stuff costs more over time so they can afford a higher pro rata starting tax for he same square footage. They get the same 3% cap. It is economics and all Dems should be happy it helps the least among us.
Laurel says
Don Miller: Since I used to work for a local government, and have a pension I paid into for nearly 20 years, I am always amused how people perceive this. It’s always the same. Government tends to pay less than the private sector, and any advancement takes eons. So, private sector workers, who have more chance for advancement and pay increases, tend to look down on government workers U-N-T-I-L things go down in the private sector. Then, us government workers get big paychecks and big, fat pensions…according to private sector workers, that is. Huh! Never fails.
Kinda like a tortoise and hare syndrome.
Don miller says
Btw. The HE save our homes should be 100% portable per square foot . If I am in a 3000sq fit now and move to another 3000 sq ft but newer I should pay same taxes. After all, I have paid more taxes to Florida in 40 years than the one who just moved here. Lotyalty pay back!!!
Pogo says
@Now the other foot needs to fall — a state income tax
Florida is a tax shelter for the fortunate. Nobody else counts. It is that way, and will stay that way, in large part, because too many of the victims vote for it too. Many of those victims, i.e., working poor, retired poor (especially widows – the actual state bird), et al., need assistance to file a one-page short form return, don’t understand tax terminology, e g., standard deduction, tax bracket, etc. Many of them, ironically(?) are the same Fox, OAN, Newsmax, Tea Party parrots who generate so much heat and dust with little or no accompanying illumination.
Ray W. says
Hello Pogo.
Florida revamped its constitution in 1968. It revamped it again in 1972. All of my adult life, Florida has not had a state income tax. Census records dating from 1970 show that an average of 3 million more people live in Florida each 10 years, decade after decade after decade.
I don’t know how long California, New York and Massachusetts have had their respective state income taxes, but something tells me that people from those three states have been retiring to Florida or to other states without an income tax for the last 55 years. The political opportunists out there among us claim that the migration started because of their policies, and that people are moving to Florida because it is finally a Free State. The gullible among us believe that type of short-term view. I believe the long-term view.
People move to Florida when they believe it to be in their financial best interest, not their political best interest. I would, too, were I a New Yorker. Clearly our governor has a valid argument, but a valid argument must give way to a better argument. The better argument is that when Floridians voted to adopt new constitutions so very many years ago, they voted their best financial interests and rejected a state income tax. It wasn’t a Republican thing. It wasn’t a Democratic thing. It was a financial thing.
Add a state income tax to all Floridians and the migrating northerners and westerners just might stop in Georgia.
Skibum says
Good point, although I’m sure there are many others just like myself who moved to FL not for any financial consideration. It was my spouse’s long time wish to live closer to his parents, who retired here… yes, from NY! But we were way out in WA State. I never thought I would live anywhere on the east coast, certainly NOT in Anita Bryant’s Florida for God’s sake! But, that is just the way it worked out. Now that my career moves are all in the past, I can attest to the fact that by pure coincidence each of my moves have been to my financial benefit. First, growing up in CA where I began my law enforcement career, then moving up to Seattle, WA saved me lots of money. After a job transfer from the Seattle area to the more rural eastern WA saved me even more money in cost of living expenses, and then moving here in retirement was another financial boon without even looking at the numbers or thinking about what the move might mean in terms of living expenses. Sometimes it just works out like it was meant to be, although, financial considerations aside, this state’s politics suck big time!
Rufkutdiamnd says
They are stopping in Georgia. All the Florida expats that can’t afford homeowners insurance or lost their homes in Ian, the NY retirees that can’t afford Florida. Btw we only get a 4k homestead exemption but our houses are not priced 3 times what they’re worth. I left Florida and gave up the huge exemption I was getting because I was sick of worrying if my home would be gone in the next storm.
exasperated says
Florida once had an intangible tax and the sales tax was 3%. The intangible tax was repealed and over time the sale tax increased.
Jane Gentile Youd says
OMG! NO! And I was the advocate in 2007 lobbying with the Florida Realtors ( then FAR) for ‘Portability’. Governor Crist thanked me on the capital steps together with the PR then person for FAR, John Sebree for convincing FAR how necessary and fair ‘portability’ is to those who move their homestead to a new location. But THIS Proposal is MADNESS, Jay Gardner is absolutely correct, What we should do in my opinion is to begin to tax vacant land at a rate high enough to at least cover the cost of mowing the grass on the county swales that many of these vacant parcels – ( one such near Plantation Bay – 19 acres – zoned Timberland pays a total of $87 tax – $51.00 to Flagler County with 655 front feet abutting Old Dixie Highway.
We already have the best homestead and property tax protection of just about any state in the country.
Let’s not look a gift horse in the mouth and shoot ourselves in our feet! No to Amendment 5 and yes to increasing mileage rate on vacant agricultural zoned land abutting any county road swales we maintain.
Enough of irresponsible , idiotic, thoughtless, moronic stupidity in the legislature. (P.S. I am a Registered Republican but I am supporting Adam Morley to replace Paul Renner’ expiring seat with all my heart – his brain is in his head and he cares about us and would never support such a financially destructive law.)
IKnowAllAboutIt says
Please understand that a vote for new exemptions equals a vote for higher millage rates. There is no real savings as the taxing authorities are going to pass their budgets and get the tax dollars they feel they ‘need’.
If you don’t pay for it in a higher millage rate then new special assessment or non- ad valorem (not tied to value) charges will be levied. Bottom line, you will NOT save any money but ultimately pay more through a new means. Vote No.
Been in the govt property assessment & tax collection field since 1986 and have seen it all. Many states have very creative ways to get those $$$. Don’t invite it. Vote No.
John Stove says
It will be a resounding “YES” for me…..let the City of Palm Coast figure out how to be more cost efficient in how to prioritize our needs. Our property taxes have doubled since 2016 and on top of that they had bombarded us with “fees” like the stormwater fee that has gone up 111% (a fee is a tax workaround)….
c says
@John Stove ..
Thank you, you pretty much posted about what my feelings are – I want to see some action on the side of the governmental bodies before I vote to allow more taxes – something to try to *reduce* budgets, not just figure out where to gouge out the next revenue stream. I’m not against a tax increase IF NEEDED – but 1st prove that you have tried to reduce expenses, etc. before you try to increase revenue.
Palm Coast Citizen says
Do you think this might encourage local governments to incentivize new development to capture new revenue sources?
jake says
Agreeing to paying “more taxes”, leads to “more taxes”. Never, ever, going to happen.
Celia Pugliese says
I totally agree with Jay Gardner our county tax appraiser. Lest leave the homestead as is now and vote NO. Because otherwise we will open the door to higher taxes without control in our cities and counties given budgets shortfalls because the added exemption. Lets do not give them one more reason to increase our municipal and county taxes!
If ain’t broke don’t fix it please!
Jack Pallas says
Amendments are cheats on laws. Say NO to all amendments!. You want a law, pass it in real government. DO NOT LET the dumbed down public decide these things.
Laurela says
Jack Pallas: Wow! How kind of you to say so! Hangin’ with DeSantis, are you?
Steve says
“… renters pay taxes, and in fact proportionately pay more taxes than the homesteaded–with only a 10 percent annual cap on taxable value.”
Er, need to fact-check and retype. 10% cap. applies to non-homesteaded OWNERS of properties while renters are in the free-market arena.