TALLAHASSEE, Florida (Reuters) - Florida voters on Tuesday approved a property tax reform plan that may cut local taxes by $9.3 billion over the next five years, a proposal heavily promoted by Republican Gov. Charlie Crist.
With 76 percent of the precincts counted, the state constitutional amendment to increase exemptions on primary residences and expand a popular tax cap had 64 percent approval, according to the Florida Division of Elections, surpassing the 60 percent threshold needed.
“The people wanted a property tax cut and that is what they got,” Crist told Reuters on Tuesday night.
Local governments, education officials and unions had called the savings estimates overblown and said the proposal would jeopardize public school funding and essential local services financed through local property taxes.
“The counties will do their very best to listen to the voice of their constituents and respect their decision,” said Cragin Mosteller, spokeswoman for the Florida Association of Counties.
The group did not take a stand on the measure but many of its members opposed it.
“It’s going to be quite a challenge for them to look at their budgets because it is going to be a very tight year,” Mosteller said.
Backers of the proposal, a coalition of business groups and Realtors, said it was only a first step in more systemic reform.
Lawmakers crafted the proposed amendment after local governments made billions of dollars in tax revenue as property values skyrocketed during an unprecedented real estate boom. Many taxpayers criticized their municipalities for spending the windfall on local projects even as property values fell with the current real estate slump.
The proposal increases the state’s homestead exemption to $50,000 from $25,000. The increased exemption, for homeowners who use their property as their permanent residence, would not apply to school taxes, however.
School taxes account for about 40 percent of most local property tax bills in Florida.
The most controversial provision of the property tax reform enhances a previously approved amendment that caps increases in annual tax assessments on homesteaded property at 3 percent.
Since 1994, a popular “Save Our Homes” program has led to increasing disparities in the taxes residents pay for similar homes.
State economists estimate Save our Homes reduced homesteaded assessments by $433 billion in 2007 alone.
Currently the assessment resets to full market value when the home is sold and many residents - especially seniors - said they were trapped in their homes because they could not afford higher taxes that would kick in for the new property if they moved. The proposal approved on Tuesday allows homesteaders to keep up to $500,000 in tax protections with them when they move.
Commercial property owners and owners of second homes receive little benefit from the plan, though increases in their property tax assessments will be capped at 10 percent a year.
Small businesses also benefit because the amendment provides a $25,000 exemption for tangible personal property, a provision that saves businesses about $450 a year and takes about 1 million small business owners off the rolls completely.
Editing by Jane Sutton and Carol Bishopric