By: The Honorable Matt Caldwell | Lee County Property Appraiser
This past month, Governor DeSantis made a major statement that opened the floodgates of conversation. He stated what has been obvious to property rights lovers everywhere: that at some point, once you pay off all your debts, you are still renting your home from the government due to property taxation. Keeping our edge in affordability is critical to the continued success of Florida, and kudos to him and the legislators who have proposed a series of bills to address the growing property tax burden in our state.
As we consider these ideas, there are a few items that we do want to keep in mind. First, property tax is unique in all the forms of taxation, as it is impervious to evasion. You cannot hide your real estate, and because of that, effectively 100% of taxes levied are collected each year. That is why property taxes are closely associated with local government responsibilities such as police, fire, roads, and parks. They are a predictable source of revenue to fund essential services.
Second, management of the tax roll is assigned to the elected property appraisers in each county. The record that is created—the “cadastre”—is used by more than just the taxing authorities. Contractors, realtors, lawyers, investors, and many more all use property appraiser records as an essential tool in the conduct of their business. If we are to abolish property taxes in their entirety, consideration should be given to the future of this public resource that is deeply embedded in our real estate-heavy economy.
But that is not to say that property tax reform isn’t a good idea. In fact, it is essential. And there are several ways that lawmakers could make an impact. The first is one which requires nothing more than sharpening the budget pen. The single largest line item on most Florida property tax bills is the Required Local Effort (RLE)—the state-mandated tax that each school district levies to support K–12 operational funding. The RLE represents about 46% of current K–12 funding, with a statewide levy of $10.3 billion. When you consider that state funding sources already cover 100% of Pre-K and collegiate operational funding, you start to ask: why are we still using a local property tax to fund our statewide K–12 obligation?
One could envision a phase-out approach, wherein the RLE is reduced by $1 billion each year over ten years until it is eliminated. The total state budget is currently $116.5 billion, so we are talking about finding less than 1% of state revenue each year to make this a reality. Eliminating the RLE alone would result in a 30% reduction in most property tax bills! This is an easy target, ripe for the picking immediately.
The next best target is the homestead exemption. The original exemption was adopted in 1934 and covered $5,000 of property value when the average home price was about $4,500. Today’s $50,000 exemption doesn’t even compare. Just adjusting for pure inflation, that $5,000 should be $120,000 now. There are multiple proposals moving through the Session to increase the homestead base. I support moving the base homestead exemption to at least $125,000 and then authorizing the Legislature to increase that amount by general law in the future to make up for inflation.
But of course, inflation alone hasn’t driven property values up. Supply and demand in a growing state like ours means that the average home price is now well above $400,000 in Florida. And we still have the issue of long-time homeowners paying taxes long after they have cleared all of their debts. Therefore, I would encourage considering an additional benefit that would increase the total exemption for a homeowner for every year that they call Florida home. A long-time Florida resident could build up a large enough exemption that they could realize zero tax obligations in their retirement years.
Lastly, as Florida’s population has exploded since 1930 from 1 million residents to nearly 24 million (and 150 million annual visitors!), the structure of many of our local governments has remained stuck in the past, with truly bizarre forms of elections and representation. The net result is that many of our local governments are simply avoiding being held accountable by the voters. It may seem counter-intuitive, but in our system of representative government, the Legislature could make incredible strides in property tax savings just by bringing local accountability into the 21st century.
There are many more ideas being bandied about, such as tax swaps and specialty exemptions for seniors, the disabled, and veterans. All of these ideas have their merits. But in my experience, the simpler is better. Cut existing taxes that can be cut. Fix the value of the current exemptions. And restructure local government to be more accountable. These are not radical proposals, but they would make enormous strides in helping us all enjoy the benefits of ownership in the Free State of Florida.
ABOUT MATT CALDWELL
Matt Caldwell currently serves as the elected Lee County Property Appraiser and served in the Florida House from 2010–2018.
