Tax cuts could finally fall on snowbirds

Todays Herald Tribune

By DOUG SWORD

Property taxes will drop by more than $300 million this year in Southwest Florida, but much of that will go to snowbirds as the recession flips Florida's property tax system and its goal of providing tax relief to residents.

Meanwhile, taxes will go up slightly for full-time residents even if cash-strapped local governments resist raising tax rates. And if an expected state-mandated increase in tax rates to pay for schools occurs, as it has in past years, taxes on locals might go up substantially.

Southwest Florida continues to see the biggest decline in real estate values, according to a new estimate by state economists. Manatee, Sarasota and Charlotte counties will shed a total of $22 billion in property value from their tax bases this year, a 21 percent decline. That is double what the same state economists were predicting just three months ago.

Of the seven counties with the biggest percentage declines in property values this year, state economists say, five of them -- Manatee, Sarasota, Charlotte, Lee and Collier -- are in Southwest Florida.

After two years of cutting, it will be difficult for some local governments to resist raising tax rates, despite the political fallout, said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida.

"There's two ways to close a budget gap: There's cutting spending or raising revenues," he said. "And a lot of cutting has already taken place." Some governments have "clearly cut to the bone," Snaith said.

Raising tax rates in a recession, even under dire conditions, is dangerous. Two Charlotte County commissioners were voted out of office after voting to raise tax rates last year by 25 percent.

But based on the new estimates, Charlotte County will be the hardest hit among Florida's 67 counties. Since 2007, declining real estate prices have cut the county's tax base by 37 percent. Sarasota County ranks fourth.

Although the new estimate would put a $39 million hole in its budget next year, Sarasota County is not considering raising tax rates, said County Administrator Jim Ley.

Last year the county began balancing its budget by dipping into reserves set aside during the boom. It has also cut 220 jobs and is set to lay off 20 or so more.

"Our general approach is you don't raise property taxes in these tough times," Ley said.

Raising other revenues is another matter, said Ley, noting that he planned to reintroduce the possibilities of taxing electric service and instituting paid beach parking. Both ideas have been nixed by commissioners before, although Ley said he would "face the firing squad" again and propose them because of the size of the county's shortfall.

There is a coming clash between politics and the real estate market.

Southwest Florida politicians are generally more conservative and more reluctant to raise taxes than those elsewhere in the state, Ley said.

"Last year you saw a trend toward some local governments moving toward millage increases, and I think you'll see more this year," Ley said.

In the unlikely scenario that there are no tax increases, even for schools, the tax cuts for a home owned by a part-time resident would be impressive.

In Bradenton, the owner of a home worth $150,000 last year and reappraised at 20 percent less would get a $565 tax cut. Twenty percent is the average decline for Manatee County, according to the state estimate.

In unincorporated areas the cuts would be $454 in Manatee, $521 in Charlotte and $369 in Sarasota County.

But residents with the Save Our Homes exemption would actually see an increase. So long as a home's value is under the market value, Save Our Homes limits the annual increase in a property's taxable value to 3 percent or the inflation rate, whichever is lower. Inflation virtually disappeared last year.

If tax rates remain flat, full-time residents in the three counties who owned homes taxed at $150,000 last year would see increases of $2 to $3.

The economists' new prediction drew criticism in Manatee County, where officials believe the estimate that the tax base will drop 20 percent is way off.

"We're not even going to be down 20 percent in market values," said Dale Friedley, an analyst in the Manatee County Property Appraiser's office, who thinks the county will probably lose about 12 percent of its tax base.

Half the county's property value is in the hands of full-time residents and 14 percent is businesses, which will see only modest declines, Friedley said.

If tax rates do not change, that would mean most of the estimated $100 million in tax cuts in Manatee County would go to a group that has long gotten the short end of the property tax stick.

Snowbirds.