“Tax swap bills re-emerge” plus 1 more |
| Posted: 01 Mar 2011 10:41 AM PST TALLAHASSEE: Put on the backburner a couple years ago, the idea of swapping a sales tax increase for property tax cuts has emerged again in the Florida Legislature. Bills filed in both chambers last week would boost the state sales tax by 2.5 cents to 8.5 percent, a 42 percent increase, while at the same time axing the state's required property tax levy for education by more than $7 billion a year. Floated originally when property taxes were flying through the roof, the renewed interest in the idea coincides with Gov. Rick Scott's campaign promise to reduce property taxes 25 percent by ratcheting back on the state required local levy for schools. "Everything we do should be about jobs," said Rep. Fred Costello, R-Ormond Beach and co-sponsor of the House version (HB 995). "One of the things we can do to attract business is to lower their fixed costs." Costello is teaming up with fellow freshman Rep. Richard Corcoran, R-New Port Richey, who is in line to become House speaker in 2016, to sponsor the bill in the House. An identical measure (SB 1406) has been filed in the Senate by Sen. Ellyn Bogdanoff, R-Fort Lauderdale, chairwoman of the Senate Finance and Tax Committee. Costello, the mayor of Ormond Beach from 2002 until his election to the House in 2010, said shifting the tax burden to consumers would result in a fairer system in which tourists would help pick up a quarter of the tab. The identical measures call for eliminating the required local effort after allowing the increased sales tax to run for a period of months to build up a reserve. The property tax requirement would be dropped in November 2012. The increased sales tax would start next January under the bill. The formulas currently used for determining required local effort would remain, but future increases or decreases required by such formulas would be generated from the 2.5 cent sales tax increase, rather than from the adjustment of property tax millage. "The structure is already in place to distribute the money," Costello said. "The only change is where the revenue comes from." The idea is not new. In 2007, then-House Speaker Marco Rubio called for an increase in the sales tax to offset an elimination of primary residence property taxes, which were skyrocketing in 2006 as Florida rode the housing bubble up. Bogdanoff, then a House member, was an ardent supporter. The idea was also backed at the time by Grover Norquist, president of Americans for Tax Reform, who said it amounted to a net tax cut for Floridians. Florida TaxWatch gave the proposal mixed reviews at that time. The group said in 2007 that increasing the sale tax would leave residents with less money, and could lead to higher unemployment. But it also said that year that "nearly all individuals living in homesteaded property will benefit from a property tax/sales tax swap. Generally, individuals with high wages, who recently purchased a home, will receive the greatest overall benefit." Another downside, though, TaxWatch pointed out then was that Floridians living in rental property, about 30 percent of the state's total population, would not fare well under the swap. "These citizens will realize little or no benefit from the replacement of property taxes, at least in the short-term, but will be obligated to pay more sales and use taxes," TaxWatch concluded. The idea was mothballed after cities and counties raised concerns over reducing local revenues at a time when property values had begun to fall. In 2008, there was a move to get a slightly different tax swap on the statewide ballot, with a proposal to remove all school district property taxes and then replace the revenue in other ways, with a possible sales tax increase being one of the options. The effort was backed by Realtors, who were worried about sagging home sales. Fearing a loss of dedicated school funding, education interests fought it, and it was eventually knocked off the ballot in the courts. Gov. Rick Scott has proposed doing away with the required local effort but has not advocated for any sales tax replacement. The governor was travelling Tuesday and could not be reached for comment. Neither bill has yet been referred to committees. By MICHAEL PELTIER This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
| State money grab could increase property taxes Posted: 28 Feb 2011 09:08 PM PST HONOLULU - With many Oahu residents already struggling to make ends meet, a property tax increase would only add to an already precarious financial situation. However that's exactly what may happen if state lawmakers pass several bills that would confiscate funds currently controlled by the City and County of Honolulu. "It'll put us in a significant hole," said city Budget and Fiscal Services Director Michael Hansen, during testimony Monday before five members of the City Council. Hansen is particularly concerned about HB-1271 and SB-1186, which would add roughly $28 million to the city's projected budget shortfall of $103 million. HB-1271 takes half of Honolulu's Public Service Company Tax, estimated at $45 million a year, for the next five years. The tax is charged to public utilities such as Hawaiian Electric in lieu of property taxes. SB-1186 meanwhile caps all four counties share of the hotel room tax at $90 million until July of 2015. That would result in a $4.5 to $5 million loss to Honolulu each year. Hansen told members of the Council's Safety, Economic Development and Government Affairs Committee that if the state bills become law, the city may have no choice but to raise property tax rates on homeowners. "What this means as it relates to real property taxes would probably equate to about a 22 or 23 cent increase to the residential property tax rates," said the city's budget director. For the median home price of $570,000 on Oahu, a property tax increase of 22 cents per thousand dollars of value would result in $125 more per year. A 23 cent rise would mean $131 more for the typical homeowner. Council Budget Chairman Ernie Martin believes it would be difficult for him and his colleagues to justify any property tax increase in light of the current economic difficulties faced by many island residents. "For a lot of constituents who are in fixed incomes, who in fact have suffered wage reductions, it's gonna be tough, very tough," said Martin. House Finance Chairman Marcus Oshiro told Khon2 he expects much of the legislation hopes to confiscate county funds to survive for at least another two weeks when bills crossover from one chamber to the other. "There might be some readjustments depending on what (lawmakers) come out with," said Oshiro, "but I think for the most part the normal course is to keep these options open, you know through the cross." Mayor Peter Carlisle's budget due out this Wednesday is already expected to include user fee increases, as the mayor signaled Thursday during his first State of the City address. In addition Khon2 has learned Carlisle's blueprint for city spending may propose raising the county gas tax of 16.5 cents per gallon as much as 7 cents over the next three years. When asked if he expects to see an added tax on fuel in the mayor's budget, Martin responded, "I do. I do expect to see that." OTHER BILLS CONCERN CITY In addition to bills that transfer money from city coffers to the state, administration officials are also concerned about legislation that would place more of a financial burden on city taxpayers. SB-606 creates a pilot project that would transfer maintenance of state highways to an unspecified county until the end of 2017. Jiro Sumada, deputy director of Planning and Permitting, testified the bill would increase costs while also placing city road crews in danger. Unlike state crews that operate in high speed areas city workers maintain roadways where the maximum speed limit is 35 miles per hour. "It's very dangerous because it's just not what they're used to," Sumada said of the state proposal. Meanwhile SB-1426 would take $200 million from the city's rail transit fund and replace it with $300 million in state issued general obligation bonds. The bill would also extend the half percent general excise tax surcharge on Oahu another two years until the end of 2024. Despite giving the city as much as $400 million more than the controversial rail project is budgeted for, city Transportation Services Director Wayne Yoshioka told Council members he objects strongly to the transfer of funds. "I think what's more important to us is that we demonstrate to the FTA that our local funding base is stable," he said. "(The bill) involves tampering with the funding source at a critical juncture where the Federal Transit Administration is looking over and making sure that all our finances are in order." Yoshioka said much of the $500 million currently in the city's transit fund is already encumbered, as the city has issued several contracts related to the design and construction of the elevated rail line. After hearing from various city officials about the impact state bills would have on the county's budget and operations, the Council's Safety, Economic Development and Government Affairs Committee chaired by Tulsi Gabbard Tamayo passed a resolution "urging the legislature to shelve" all of the bills in question. The resolution passed 5 to 0. Have a news tip? Contact Andrew Pereira at 368-7273. Follow Andrew on Twitter at Khon_Reporter This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
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