Here are a few of the details regarding the upcoming Florida property tax cap provisions, provided by the Florida Associaiton of Realtors.  I will be giving additional information details in subsequent blogs and I look forward to your comments.

For the upcoming 2007-08 fiscal year that begins October 1, all local governments (except school boards) will have to reduce total property tax revenues by a specified percentage (0-9%) based on their 5-year history of levies.  Independent special taxing districts that levy ad valorem taxes are all subject to a 3 percent cut.

For the coming fiscal year, local governments may override the 3, 5, 7, or 9% cut and go up to the 2006 “rolled-back rate” by a 2/3 vote of the governing body.  In order to exceed the 2006 rolled-back rate and maintain the same actual rate that was levied in 2006-07, the vote must be unanimous.  In order to go any higher than the actual 2006 millage rate, there must be voter approval.

EXAMPLE:

• Fantasy County had a 2006 “rolled-back” rate of 5.5 mills.
• Fantasy County levied a millage rate of 6 mills in 2006.
• For 2007, Fantasy County must use the 5.5 millage rate, reduced by the X%.
• With 2/3 vote, Fantasy County Commission can drop the X% cut and levy 5.5 mills.
• With unanimous vote, Fantasy County Commission can levy 6 mills.
• To go any higher than 6 mills, Fantasy County must get voter approval.

Beginning fiscal year 2008-09 and every year thereafter, the bill requires all ad valorem taxing authorities, except school boards, to set millage rates in accordance with the rolled-back rate, plus the annual growth of Florida personal income (typically 4% a year).  Local governments may break this cap in several different ways:

For exceeding the cap in 2008-09 (this would be after the new super homestead exemption plan potentially kicks in as well)

• In order to exceed the required rate cap to recover up to 2/3 of the revenue lost due to new super-homestead exemption and tangible personal property exemption, the governing body must approve by at least 2/3.  This was likely made as a concession to smaller counties who will have much of their homestead property exempt from taxes either through the larger minimum homestead exemption and low overall values.

• In order to adopt an even higher rate, it must be unanimous, unless the board exceeds 9 members in which case a ¾ vote is required.

In 2009 and beyond, local governments will be allowed slightly more room to bust the revenue cap.  In order to adopt a tax rate that levies up to 10% more revenue than is allowed under the rolled-back rate plus personal income, there must be a 2/3 vote of the body.  For more than 10% increase in revenue, there must be a unanimous vote or voter approval by referendum, unless the board exceeds 9 members in which case a ¾ vote is required.

The penalties for not complying with the above votes will mean that the local government will not share in the ½ cent sales tax revenue for the fiscal year, which is significant.  For example, if the Palm Beach County Commission were to ignore the mandates of HB 1B, their budget would suffer by over $74 million for the next fiscal year.  This is also bondable money that would put their ability to raise new money into question.