Florida Gov. Ron DeSantis and Republican leaders in the state are calling for the elimination of property taxes in the name of housing affordability.
How effective would that plan be?
That was the topic up for debate at an event earlier this month at the University of South Florida.
In the latest installment of USF’s Debate-A-Bull speaker series, state leaders and policy experts discussed whether nixing property taxes would improve the cost-of-living for Floridians.
Not all property taxes are created equal
In Florida, property taxes are collected by local governments.
The process includes calculating the taxable value — the assessed value minus any exemptions — for real property, like homes.
Existing exemptions, like the Homestead Exemption and Save Our Homes Benefit, reduce the taxable value of owner-occupied homes and cap the annual increase in assessed value at 3 percent.
While this system was created to keep homeownership affordable in communities where property values are increasing, there’s been criticism that it’s not working for first-time homebuyers.
ALSO READ: Florida House committee approves a slew of property tax reduction plans
“If you bought your home in the last five years, you’re not getting that benefit … there’s inequity built into it,” said Esteban Santis, Florida Policy Institute director of research, during the Nov. 12 debate.
Panelist Jeff Brandes, a former state senator and president of the Florida Policy Project, agreed.
“The people who are angry about property taxes are not the people who … have been living in their homes for 20 years,” Brandes said. “But if you bought during the pandemic and now you’re paying the full fare … those are the people who are up in arms, and I understand that.”
Florida law requires appraisers to remove exemptions and reassess property value when homes change ownership. Those tax bills don’t come due until the first of the year after the sale, which catches some people off guard.
That was the case for Jordi Zapata, 27, who attended the debate to learn about the prospect of eliminating property taxes. He recently bought a home with his wife in Tampa’s Lowry Park neighborhood.
“The next two years after that, we were hit with high property taxes that we didn’t budget for, as well as escrow shortages from when we were doing our closing costs, because of high property values elsewhere throughout the county,” he said.
Zapata said that eliminating property taxes would save him money, but he wants to know how the government would make up the lost revenue.
He said he cares about the local services his property taxes pay for, like schools, roads, parks and public safety.
Making up lost tax revenue
An analysis by the Florida Policy Institute found that real property taxes, which include all real estate, account for 18 percent of county revenue, 17 percent of municipal revenue, and 50 to 60 percent of school district revenue.
The report estimates that for local governments to maintain the current level of public service, policymakers would need to raise $43 billion.
Florida Chief Financial Officer Blaise Ingoglia pushed back on the idea that lost property tax revenues need to be replaced, arguing that local governments already spend too much.
“They are all deriving their numbers on the assumption that government needs all of the revenue that they’re taking in right now, and I’m telling you, they’re taking in more — way more money — than … they’re expected to,” Ingoglia said.
The CFO’s office has been conducting audits of local government budgets in Florida, claiming to have found billions in wasteful spending.
ALSO READ: Florida DOGE audit claims Hillsborough overspent nearly $279 million
Brandi Gunder, the vice president for research at public policy think tank Florida TaxWatch, said there’s a lot to consider before property taxes should be eliminated outright.
“Tax levies are growing at an unsustainable pace," Gunder said. "We need to help new homeowners. We need to help families get in homes. But I think — with a little bit of what everybody said — it has to be a partnership between local, state — everybody on board to know how critical government services will be funded.”
During the debate, Brandes criticized the unwillingness of DeSantis to commission a study on the impacts of eliminating property taxes — and potential alternatives to make up revenue losses.
“So what we end up with is renters pay more in property taxes, and then they go out and pay more in sales tax, yet the homeowners now would pay nothing for their properties. How is this fair?”Jeff Brandes, former state senator and president of the Florida Policy Project
“The challenge that we have right now is we’re left defending this concept — which really isn’t a plan, right? We’re left defending a bumper sticker and not a policy, and that’s not the way that we should debate tax policy,” Brandes said.
The most likely alternatives to make up lost property tax revenues would be local governments increasing sales taxes or absorbing budget cuts.
“Local governments are going to react violently if we end up with a property tax proposal that rips, that removes, all of the homesteaded properties,” Brandes said.
Tax cut, or a tax shift?
An analysis by the Florida Policy Institute shows that Florida would have to double its sales tax to 12 percent, which would be the highest rate in the nation, to replace lost property tax revenue.
Santis, with the research group, said this would disproportionately hurt low- to moderate-income families.
“If we do full elimination, that would essentially just be a gift to Floridians who are already doing well. They’re wealthy. It’s going to be a tax shift for everyone else,” Santis said.
Brandes agreed, arguing it could leave renters more cost-burdened.
“So what we end up with is renters pay more in property taxes, and then they go out and pay more in sales tax, yet the homeowners now would pay nothing for their properties. How is this fair?” Brandes asked.
Not to mention, he added, eliminating state property taxes could create a “gold rush of people from around the country that want to move to Florida to shield taxes.”
“So, I would argue that government itself is inflationary, and they are driving a lot of the issues that we have with affordability.”Blaise Ingoglia, Florida Chief Financial Officer
Without adding specifics, CFO Blaise Ingoglia argued that eliminating property taxes will give first-time homebuyers a leg up in the market over private equity firms.
“So if you fix the issue with property taxes and get property tax reform, you actually help alleviate the problem with Wall Street banks buying up our communities,” Ingoglia said.
Right-sizing the problem
For Zapata, a first-time homeowner in Tampa, climbing property taxes aren’t his main concern.
“All of our costs are getting more expensive — not just property taxes — but food, groceries, fuel and then the cost of doing business here,” he said.
Zapata said he would rather see lawmakers address issues like the rising cost of property insurance and child care, which don’t see the same return on investment that his property taxes do.
“Eliminating those property taxes seems to be like a solution in search of a problem, whereas a lot of folks who are dealing with these back-to-back and monthly recurring expenses are probably yelling the loudest,” Zapata said.
Panelists agreed that property tax reform is needed in the state; their views split on whether it's the primary concern for affordability in the state.
In closing remarks during the debate, Ingoglia said governments are central to high inflation.
“So, I would argue that government itself is inflationary, and they are driving a lot of the issues that we have with affordability,” Ingoglia said.
Santis, with the Florida Policy Institute, said a more tailored approach to property tax relief is needed if the goal is truly achieving greater affordability in the state.
“[If] we do the property tax reform, we should carve out individuals who are struggling the most,” he said.
Gabriella Paul covers the stories of people living paycheck to paycheck in the greater Tampa Bay region for WUSF. Here’s how you can share your story with her.
