Miami Beach To Get Big Tax Budget Hit

Miami Beach June 2007 - On reviewing the Miami Beach 2006/7 budget, (posted on the City web site) it read that the budget increased over 14% over 2005/6. It also said that some 22 police officers would be hired in the next two years.

What it did not say was that retiring officers would need replacement. Therefore, to those reading the budget, one might think that 22 additional officers would be hired.

However, that said let me get back to the story issue. TAX!

The State legislature was struggling with how to roll back taxes, due to the 1992 3% homestead law. What folks thought was that over spending would result when municipalities (like Miami Beach) would collect less tax income. Yet the 1992 law is now proving to be a major mistake.

The reason is that when people sell their home, the new buyer would not maintain the old owner’s tax but the tax charged would be adjusted to the purchase price.

Around the State, more and more house inventory is sitting waiting for buyers. Let me give you an example:

I purchased a home a year and a half ago. The previous owner’s tax was $1,600 a year. After I closed, in the fall my tax bill arrived charging me $4,500. Yet my surrounding neighborhood still were all paying the protected homestead assessment of under $2,000.

A year an a half ago only one house was offered for sale in my 500+ home area. Today, middle of June 07, over 20 homes have for sale signs on front lawns. Back 1½ years ago, I was the winning bidder with five other families trying to buy my home. My home has decreased in value since, not increased.

With home values jumping higher over the past few years, insurance premiums doubling and taxes doubling tripling or even quadrupling, prospective buyers are finding that taxes and insurance are almost equal to the monthly mortgage and interest payments. These rising costs have not only stalled the resale market but are now forcing prices, in this over inventory market, to drop. Those older folks, now retired, saw that this trend would not get better and more dollars on fixed incomes would diminish their rainy day savings. More of these people are selling and leaving Florida.

The State legislature was getting reports telling them that more and more households were leaving Florida for other states like Tennessee, North Carolina, Georgia, etc. where income tax (imposed on everyone) not just property tax (imposed on just owners) funding their budgets. States like Georgia even reward those over 65 by exempting them from the school tax.

Our present legislative were elected to try to fix the debacle caused by the 1992 law plus the lack of a state income tax. With the States solution, Miami Beach would need to roll back the 2007/8 proposed budget to the 2006/7 amount AND further reduce the budget by 9%.

Over the years, the Miami Beach administration and the City Commission have increased City staff hiring. They did not endorse the idea of smaller government but to the contrary, have greatly increased City employment. As well, they have been more then generous providing outrageous retirement benefits.

Let me pick on the police department for a minute. Officers can retire after 24 ½ years and receive 80% of their working pay as their retirement. An officer age 21 could retire at age 45 ½ and go on to work for some other city and start an additional pension. By age, 65 would earn more retired then when actively working.

With the State tax roll back, something is going to have to go for Miami Beach to come up with a balanced city budget. Mayor Dermer has only antagonized the budget by providing tax rebates. Heck anyone can increase the budget by 14% then give back a small portion of the tax collected.

Perhaps the out of control spending in Miami Beach will finally come to a stop this year. No more buying things like the deteriorated Byron/Carlyle Theater for example. Forget the idea about spending $45,000,000 on buying property to house the lower income artists around Lincoln Road. (In addition, the estimated $50+ million to fix up these property purchases). Moreover, remember if the City owned these properties, they would go off the tax rolls.

One of the big 'beefs' I always have had with the budget presentation, was that most folks were provided the WORKING BUDGET fall presentation but the amount stated never included the outstanding annual bond debt payments. With both the working budget costs plus the bond debt, Miami Beach would be closing in on a 2007/8 budget debt of a half "BILLION" dollars. Certainly, any State tax roll back is going to send the City Manager to his office for long days and nights working with a sharp pencil.

Now I do not know how much your income increased from 2005/6 to 2006/7, but I would bet it did not increase over 14% (like the Beach City budget). Municipalities like Miami Beach are going to get some big financial hits. Yet they really do not have a leg to stand on when 14% increases are adopted.

LEGISLATURE PASSES PROPERTY TAX REFORM IN FLORIDA USA

The Florida Association of Realtors (R) just reported that the Legislature has adjourned Sine Die at 6:28 pm today bringing the 2007 Special Session on Property Tax Reform to a close. Both the House and Senate passed all three bills making up the property tax reform package. The package includes a statutory rollback and cap of property tax rates, a proposed constitutional amendment creating a "super homestead exemption" and a bill designating the upcoming January 29, 2008 presidential preference primary as the date for Floridians to vote on the "super homestead exemption" amendment.

Below is some additional detail on what is included in the final deal. They will continue to work on reforms that we consider the top priorities such as "highest and best use."

The agreement consists of a two-tiered approach to achieve immediate relief and long-term reform. The combined elements of the plan offer $31.6 billion in tax relief over the next five years. This is touted by House and Senate leaders as by far the largest tax cut in the history of Florida. 1. The Statutory Component - Immediate Tax Relief

Cities and counties must lower their tax rates a certain percentage based on their past taxing conduct. This component of the plan offers $15.6 billion of tax relief over five years, with savings beginning this year. The statutory component affects all properties in a positive way (homestead, non-homestead, commercial).

First, all cities and counties must adopt the rolled-back rate for the coming fiscal year. In other words, tax levies for FY 2007-08 must be equal to tax levies for FY 2006-07, excluding taxes levied from new construction.

After adopting the rolled-back rate, the bill requires each city and county to further reduce taxes based on their recent taxing history (from 2001 to 2006, the period in which property values rapidly increased). To delve into this further, there will be five tiers. Between 2001 and 2006, if a County had an average annual tax levy increase of a certain percentage then they would have to roll back a certain percentage more. Therefore, if their tax increase was below 5%, the cut is 0; over 5 to 7% tax increase the cut is additional 3%; over 7 to 9% tax increase the cut is 5%; over 9% to 11% the cut is 7%; and over 11% tax increase the cut is an additional 9%. The City cuts are similar. The bottom line is that those counties and cities that increased taxes at a faster rate than the statewide average must offer larger tax cuts. Those that modestly increased tax levies will in turn sustain smaller tax cuts.

Beginning in 2008-2009 and every year thereafter, the bill requires all local ad valorem taxing authorities except school districts to set millage rates in accordance with the rolled-back rate, adjusted by the annual growth of Florida personal income. A local governing authority may override this cap requirement by guidelines set forth in statute.

2. The Constitutional Component - Long-term Reform

The constitutional amendment cures the inequities in the property tax system by transforming Save Our Homes through a new "super" homestead exemption. The new exemption covers 75% of the first $200,000 of homestead value and 15% of the next $300,000, with all homesteads receiving at least a $50,000 exemption. Current homestead owners will be given a choice as to whether to keep their benefits and assessment cap under Save Our Homes or to use the new super exemption. The bill also authorizes a $25,000 Tangible Personal Property exemption and allows targeted relief for affordable housing, low-income seniors, and working waterfronts. This component offers $16 billion of tax relief.

3. The Special Election

This bill authorizes a special election for #2 above. Voters will have the opportunity to adopt the proposed constitutional amendment during the presidential preference primary on January 29, 2008. If voters approve the amendment, it will lower property tax bills in 2008. If the vote on the constitutional amendment is delayed until the general election in 2008, the reforms will not take effect until tax bills are calculated in 2009.

Source : www.citydebate.com