Rising property values to fund roads and services

ORLANDO, Fla. – Nov. 15, 2006 – New roads, new buildings, acres of environmentally sensitive land and a fresh group of deputies.

Counties across Central Florida are cashing in on what might turn out to be record growth in property tax revenue to help buy things they have long wanted but couldn’t afford.

The extra $270 million rolling in this year because of soaring property values on homes, businesses and vacant land is enough to run a small country. And that amount doesn’t include tens of millions of dollars the region will bring in through taxes on new buildings.

The extra cash is allowing county leaders across the region to pay for overdue renovations at the Seminole County Jail and a contribution of up to $46 million toward an incentive package to lure the Burnham Institute for Medical Research to Orlando.

County leaders argue they need to take advantage of a chance to bring in the kind of money they might not see again next year, when property values might not grow as much. Also, government leaders statewide are looking at ways to reform Florida’s tax system, which could lead to less revenue, too.

Critics complain the new money comes on the backs of business owners, investors and people who just moved.

Florida TaxWatch – a nonpartisan, business-backed oversight group – is frustrated to see county governments boast they have gotten the money while maintaining tax rates or dropping them slightly. By state law, a county is raising taxes if it brings in more money than in the previous year.

Volusia is thought to be one of, at most, a few Florida counties that adopted a tax rate expected to generate the same amount of money as last year, referred to as the roll-back rate. It did so after hundreds of residents protested at budget hearings.

As a result, Volusia will forgo about $49 million in property taxes that it initially had hoped to help cover the rising costs of such things as employee health insurance and utilities. Not all of the property taxes levied by the county went to rollback, so Volusia will still see a small increase in revenue from rising property values.

Other counties will get tens of millions of bonus bucks. Officials mostly held off on cutting tax rates – or cutting much – because they say the money is needed to keep up with rising costs, and they fear the revenue boom might not last. Home sales could slump, and the state’s property tax system might change as leaders across Florida bounce around ideas for reform.

In Orange County, authorities had predicted property-tax proceeds would increase about 5 percent. They were thrilled to learn the taxes will actually bring in several times as much.

“We’re talking about the largest percentage increase in tax revenue for as far back as we’ve been tracking it,” said Randy Singh, manager of Orange County’s Office of Management and Budget. “We’ve never seen this type of increase before, ever.”

In nearby Seminole, county commissioners decided to wait to drop their tax rate. Seminole could lose more than $12.5 million if the homestead exemption is doubled, one of the ideas being batted around in Tallahassee.

Across Florida, property values are projected to rise an average of 25 percent this year, according to the Legislature’s Office of Economic & Demographic Research. It’s hard to say how high revenues will climb, though, officials said. But TaxWatch senior analyst Kurt Wenner said it looks to be a record year.

Wenner called the additional income “excessive.”

“The thing we find most troubling about this is the attitude about it,” he said. “Most governments are viewing it as a windfall, or money they are entitled to.”

Tom Long, president of the Osceola County Landlords Association, said he’s losing money because he won’t pass along his tax-bill increases to the families who rent from him.

Bob McKee, fiscal policy director for the Florida Association of Counties, argued the extra revenue is sorely needed because counties need to replenish reserves depleted by recent hurricanes. Building costs, particularly for roads, have risen, too.

“You have to look at both sides of the ledger to see what has happened – on the cost side as well as what has happened at the revenue side,” McKee said.

Source: The Orlando Sentinel