Crist signs first part of historic property tax-cut legislation

TALLAHASSEE, Fla. (AP) -- The first half of what is billed as the biggest tax cut in Florida's history became law Thursday with Gov. Charlie Crist's signature, but some taxpayers are disappointed the average homeowner will save less than $200 a year.

Crist repeated a catch phrase he has used for months by saying local property taxes will "drop like a rock" under the bipartisan law that means cuts of $15.6 billion overall in the first five years. Bills have risen by thousands of dollars for many taxpayers as real estate values have soared over the past four years.

"This is the people's tax cut," Crist said. "The second step -- to have it drop like a boulder -- is up to the people."

Voters can take that step by passing a Republican-sponsored state constitutional amendment. It could double the overall savings and give homeowners, who would get nearly all of the benefits, cuts of $1,000 or more annually.

The measure will be on Florida's Jan. 29 presidential primary ballot, but it has drawn opposition from Democrats, local officials, labor unions and even some tax protesters.

The new law will spread the permanent tax cuts across-the-board to all kinds of property, but that will dilute its effect. Cities, counties and special districts also will have the power to override the law's cuts or ask voters to overturn them.

The estimated average cut for the owner of a primary home, known as a homestead, is $174, or 7 percent, in the first year, assuming no overrides. It would be roughly the same in following years. Second homes and other residential properties are estimated at $199, also 7 percent, and commercial-industrial at $941, or 6 percent.

"An average of $175 a year is a joke," said Tampa businessman Rene Otero, who has a home in Odessa. "Break it down, that's $14 a month, and $14 a month is practically unnoticeable."

Wayne Forehand, though, said he's grateful for any savings and is looking forward to a much bigger cut from the amendment.

"It helps pay for the increase in insurance," said the Pasco County retiree. "My homeowners insurance didn't get rolled back. We're stuck with that."

Forehand said he's expecting his property insurance to go up by $500 although the Legislature in January passed new laws designed to hold down rates.

The combination of the two tax-cutting measures, if voters approve the amendment, could cut Michael Mathura and his wife Sarojini Mohan's tax bill from $4,750 to $1,300 -- an annual savings of $3,100 a year on their $253,000 home in Miami.

Crist held ceremonial signings at the couple's house and the homes of other taxpayers. In Tallahassee, the governor said the new law would save $150 for Malai-Jaye Lewis, a state Department of Revenue lawyer, on her $2,250 tax bill.

"Now, maybe we can take the kids to Disney World," Lewis said.

Most homeowners have been protected by the Save Our Homes Amendment voters adopted in 1992. It limits increases on the taxable value of homesteads to 3 percent annually.

But lawmakers passed the two most recent measures during a three-day special session last week to appease angry taxpayers -- mostly recent home buyers and owners of second homes, rental properties and businesses who get little or no benefit from Save Our Homes.

The proposed amendment is designed to reduce those inequities by phasing out Save Our Homes. It's impossible to get a true estimate of its overall effect because homesteaders will have the choice of keeping their current protection or taking a new "super exemption:" 75 percent off the first $200,000 of a home's value and 15 percent off the next $300,000.

If half of homesteaders take the option it could increase the combined five-year savings from the two-part plan to about $24 billion, again assuming no overrides. If 73 percent -- all those who could benefit -- took the new exemption, the maximum could jump to $31.6 billion.

The numbers are based on hard-to-predict real estate market conditions so state officials have made no attempt to estimate beyond five years.

The super exemption might save in the short run but it could cause steeper tax increases in the future without the 3 percent Save Our Homes cap.

While most critics say the amendment would cut too deeply into the budgets of cities, counties and school boards, many tax protesters say it won't go far enough.

Opponents of both stripes, though, say the amendment is flawed because most savings would go to homesteads rather than taxpayers hardest hit by the run-up in values including Northern and Canadian "snowbirds" who have winter homes in Florida.

Crist and Republican legislative leaders say they are confident the amendment will get the necessary 60 percent because it is so generous to homesteaders. They also say they will find other dollars to replace lost school taxes -- potentially more than $1 billion a year -- but there's nothing in the amendment requiring that.

"Relying on a 'trust us' from the Florida Legislature is simply not an option upon which Floridians can depend," House Democratic Leader Dan Gelber of Miami Beach said in a statement.

By contrast, only one legislator voted against the non-constitutional part of the tax plan, and many local officials have accepted it. The Florida Association of Counties, though, urged Crist to veto the measure.

Unlike the amendment, school districts are exempt from the new law's requirement for cities, counties and independent special districts to roll back and cap their taxes.

Taxes for the next local fiscal year, which begins Oct. 1, would remain at current levels and then, except for a few financially troubled cities and counties, they would be cut an additional 3 percent, 5 percent, 7 percent or 9 percent.

Those with the largest tax increases in the past five years would have to take the biggest cuts. The cap, though, would allow increases to compensate for new construction and increases in average personal income.

(Copyright 2007 by The Associated Press. All Rights Reserved.)