Proposal falls short, but is it a good start?
Floridians will have the opportunity Tuesday to give themselves a tax break. Amendment 1 increases the amount of the homestead exemption and initiates portability. A few other goodies were thrown into the proposal as well that will cause us to pay less in taxes. On the surface, it seems like a no-brainer, but anytime government is giving, versus taking, a "Proceed With Caution" sign should pop up in our brain.
I have scanned the editorial pages and the Mailbag of the local paper, as well as the online forums, so I have a basic idea of what certain groups think about Amendment 1. Ironically, there are more opinions than the number of dollars the average homeowner will receive in tax savings. That's surprising; because it's not often we get to vote to put money back in our pockets. One would think everyone would be in favor of that.
Based on what I have read, opinions seem to fall into one of four categories. They are: 1) yes, 2) yes ... but, 3) no and 4) no... but. Sounds like the vote could be split 50/50, doesn't it? But it won't be split. Let me tell you why.
Most of the "yes" voters are in favor of this proposal for two reasons. The first is that it returns dollars to the property owner, and the second is that this reduction in taxes will stimulate our sluggish real estate economy. This group is half right.
Property owners will save money, and that is a good thing. However, you couldn't buy enough Die Hard batteries with the tax savings to jumpstart a neighborhood, let alone the entire real estate market. That does not mean that a small savings isn't a step in the right direction.
The fact that Florida is taking a proactive step to lower the cost of ownership is great news, which is something in short supply these days. In fact, if good news is water, then we are in the middle of the Sierra Desert. A thimble full of water may not quench our thirst, but as parched as we are, would we be foolish to turn down anything to drink?
The "no" voters fall into two groups. The first seem to be associated with unions that represent firefighters, police, education and other public service entities. Their mantra is that they won't have the money to provide adequate services as our area expands. They may not have to worry, because if we don't rein in the cost of ownership and government spending, we won't have to worry about urban sprawl. If you used to think growth was a problem, wait until you see the problems a lack of growth causes.
The second "no" group believes that any proposal that does not abolish Save Our Homes (SOH) will get an automatic no vote from them. They believe that longtime residents are not paying their share of the tax burden; therefore newcomers and part-time owners have to pay more than their share of taxes. They want to even out the tax burden by raising taxes on homestead property and lowering it on non-homestead property. I bet most of these folks live somewhere else most of the year.
The reason their idea will never pass is that someone will come out and call this proposal what it really is. It should be called "Adopt a Snowbird Program." The way this program would work is that SOH would be intact, but each SOH beneficiary would agree to pay part of the tax bill of a non-homestead owner. If I have to pay part of a snowbird's tax bill then I get dibs on one that owns a lot in Lehigh Acres.
The "yes...but" and the "no...but" voters are not as opposite as you would think. Both groups recognize that Amendment 1 falls short of being the miracle cure for all that ails us. The "yes-buters" are optimists. They will take what they can get now, hoping our legislators will give us something better next year. This group also believes the Miami Dolphins will be in the Super Bowl next year.
The "no-buters" aren't as optimistic. They keenly understand the need for tax reform, however they don't subscribe to the theory of a little now and more later. They believe a thimble full of water now will do little good, or worse yet, do more harm than good. For them, it's a Big Gulp to drink or nothing. The no-buters will be the deciding factor in this election. If this Amendment fails, it will be because the proponents failed to reach this group.
What message will we send to the world Wednesday morning? Will our headlines read "Florida Votes To Cut Taxes" or "Florida Defeats Tax Cut"? Neither will change our market dramatically, but I wonder which headline has a better chance of inching our market forward?
Keep the faith.
- Denny Grimes is President of Denny Grimes & Co. and specializes in residential real estate. He can be reached at 239-689-7600. Michael Polly Vice President 239-689-7691
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