PROPERTY TAX REFORM UPDATE March 27, 2007. Property Tax Reform January 30, 2007 BCC Meeting Tax...

PROPERTY TAX REFORMUPDATE

March 27, 2007

Property Tax Reform

• January 30, 2007 BCC Meeting

• Tax Reform Proposals

• Fishkind & Associates

• Orange County Budget

• County Staff Efforts

• Summary

January 30, 2007 BCC Meeting

• Presented Reform Proposals– “Save Our Homes” Portability– Double Homestead Exemption– Revenue/Expenditure Caps

• Possible 5-yr Fiscal Impacts of those Proposals: approx - $776 Million

Property Tax Reform






• Summary

Tax Reform Proposals

Governor’s Plan


• Governor’s Proposals

– Make “Save Our Homes” Benefit Portable

– Double Homestead Exemption & Index to Inflation

– Cap Assessed Value Increases to 3% Annually for ALL Properties

– Exempt First $25,000 of Tangible Property from Taxation



– “Save Our Homes” Portability

• Grant the Ability to Transfer an Existing “Save Our Homes” Benefit to a New Property

• Tax Rolls Would Grow at a Progressively Slower Rate

• Orange County Would Lose approximately $79 Million in Tax Revenues Over the Next 5 Years



– Double the Homestead Exemption to $50,000 & Index to Inflation

• Would Reduce Orange County’s Budget by approximately $40 Million

• Over 5 Years the Impact is approximately $200 Million



– 3% Assessed Value Cap for ALL Properties

• Aims to Provide Tax Breaks to All Property Owners Including Large Corporations

• Impact of approximately $892 Million to Orange County Over Next 5 Years



– 5 Year Impact of Governor’s Proposals

• Small Business Exemption $ 5 Million • Full Portability $ 79 Million• Double Homestead Exemption $200 Million• 3% Assessed Value Cap $892 Million

• Total Approximately $1.2 Billion


House Plan


• House Proposal

– Phase I

• Roll Back Millage Rates to 2004 Plus CPI and New Construction

• Cap Future Annual Property Tax Growth to CPI and New Construction

- Requires unanimous vote to change- Revenue Sharing Implications

• Provide a $25,000 Exemption on Tangible Personal Property Taxes for Businesses


• House Proposal

– Phase II – Two Components

1) Replace State Imposed School Property Taxes (Required Local Effort) on Homesteaded Property with 1 Cent Sales Tax Increase

2) By 2010, Countywide Referendum Must be Held to Give Residents the Choice to Replace All Remaining Homestead Property Taxes with up to an Additional 1.5 Cent Sales Tax Increase

• 0.5 Cent for School Taxes• 1 Cent for County, Municipalities, & Special Districts


• House Proposal

– Fiscal Impact – Phase I » Approximately $130 Million

– Fiscal Impact – Phase II» No Impact First Year


• Historical Growth: Property Tax Revenue Compared to Sales Tax Revenue (Adjusted for Article V)

-5

0

5

10

15

20

2002 2003 2004 2005 2006

(Gro

wth

Rate

%)

Property Taxes Sales Tax


• House Proposal

– “If local governments don’t embrace it [the house proposal], they could face much harsher changes.”

– House Speaker Marco Rubio Orlando Sentinel - March 15, 2007


Senate Plan

• ?


• Senate Proposal

– A Plan is Expected in the Coming Weeks

– “There is no support in the Senate for increasing the state’s sales tax, effectively declaring the measure dead in that chamber”

– Orlando Sentinel – March 21, 2007

Property Tax Reform






• Summary

Fishkind & Associates

• Counties have Experienced Major Cost Increases for:

•Fuel•Health Insurance•Property Insurance•Pensions•Constitutional Officers (Courts,

Sheriff, etc)


• A Majority of Additional Ad Valorem Revenue in Counties has been Spent on Public Safety

• Spending Growth in Other Areas Attributed to Inflation & Population Growth


• No Evidence of Large Increases in Staff

• No Evidence of Extravagant Spending


• Cost of Government: Budget per Capita

$2,896 $2,969 $2,914$3,086

$1,351 $1,440$1,327$1,334$1,208

$3,181

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2003 2004 2005 2006 2007

Operating Expenses Total Budget


• County Employees per 1,000 Population

7.4 7.3 7.4 7.2 7.1

2

4

6

8

10

12

2003 2004 2005 2006 2007

# o

f Em

plo

yees

BCC

Property Tax Reform






• Summary

Orange County Budget

• Preparation of Two-Year Budget is Continuing

– Departments are Preparing for Budget Cuts

– Letters Sent to Constitutional Officers and Outside Agencies Regarding Possible Funding Cuts

– Final Decision on Budget Adjustments is Pending

Property Tax Reform






• Summary

County Staff Efforts

• Taking a Proactive Approach:

– Analyzing Proposals• Determining the Impact of Tax Reform

Proposals as they are Received

– Discussions with Stakeholders• Florida Association of Counties• Florida League of Cities• Orange County Council of Mayors• Standing Meeting with Orange County Cities

County Staff Efforts

• Taking a Proactive Approach Contd:

– Delivering Informative Presentations• West Orange Chamber of Commerce• Central Florida Hotel & Lodging Association• Police Benevolent Association• Orange County Sheriff’s Office• Various Orange County Departments

Property Tax Reform






• Summary

Summary

• Current Proposals will have a Significant Impact on Orange County– Budget must be Balanced– Level of Service will be Reduced in Certain

Areas

• Staff will Continue to Monitor All New Developments

IMPACTS OF

PROPERTY TAX REFORM

March 27, 2007

PROPERTY TAX REFORM UPDATE March 27, 2007. Property Tax Reform January 30, 2007 BCC Meeting Tax...

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