A proposal in the Florida House to eliminate property taxes died in committee, but is still generating discussion at policy forums. It also continues to send shivers down the spine of local officials anxious about ramifications for local tax collections.
Rep. Ryan Chamberlin, a Belleview Republican, proposed the radical tax overhaul as a response to rising property insurance rates. He did not return a call from Florida Politics on the subject. But during a House Ways and Means Committee hearing in January, he described property taxes as intrinsically unfair.
"Of all the taxes, I would call the property tax the worst," he said, lamenting the ability for the government to seize property over unpaid taxes and valuing a levy against perceived value instead of realized gains.
"This is not a tax; it is slavery," he said.
Chamberlin filed a bill (HB 1371) calling for the Office of Program Policy Analysis and Government Accountability (OPPAGA) to evaluate the consequences of eliminating all ad valorem property taxes in Florida and filling in lost revenue with a "consumption tax."
An emphatic pitch helped the bill clear that committee stop on a largely partisan vote, but the proposal died without a hearing at the House State Affairs Committee.
But what would the effects be? In local government offices across the state, the proposal prompted a mix of guffaw and contempt.
"Honestly, I think it would be devastating to a county as small as mine," said Rhonda Millender Skipper, the Franklin County Property Appraiser and a Democrat.
Deep impact
Importantly, the Florida Constitution prohibits the state government from levying taxes on real estate. That's a power enjoyed only by local governments, who rely heavily on that source of money for enacting services.
According to the Department of Revenue's Florida Tax Handbook for 2023, property taxes raised almost $50.5 billion across the state. That includes almost $19.7 billion for Florida's 67 counties, about $20.2 billion for school districts and $7.4 billion for cities. The remainder went to a variety of special districts authorized by Florida law to tax properties.
While local governments can tax property, there's a cap on rates already in place, at 10 mills for counties (a mill equates to a $1 assessment for every thousand dollars of taxable value). This makes up a significant proportion of tax revenue collected at the local level, with a rate set by local officials instead of state lawmakers, perhaps explaining some of the enthusiasm coming from members of the Legislature.
But the tremendous amount of funding at stake has local officials, including many Republicans, skeptical about the severity and complexity that would come with eliminating property taxes altogether.
"Any time you are going to monkey with multiple billions of tax revenue, that's a heavy lift to change anything," said George Albright, the Marion County Tax Collector and a former Republican lawmaker.
Albright as Tax Collector serves the entirety of House District 24, Chamberlin's district. He notably supported an opponent of Chamberlin's in a Special Election to fill that seat last year, but speaks well of the lawmaker now. But he suggested the tax study sought a solution for something that isn't a problem.
"I don't see it going anywhere," he said. "We don't have a state income tax, and we're not going to have one. And our local governments are written and paid for half with property taxes and half with sales, excise and gas taxes and revenue sent back from the state. I would have to state, me personally, as a Floridian and a 20-year Tax Collector, I like the present system."
Marion County collected $607 million in tax revenue for the 2023 fiscal year, Albright said, money that will need to be replenished elsewhere if implemented in a neutral fashion. But smaller counties may have no means to make back what's lost, certainly not through the sale of goods.
Skipper suggested the plan would be especially devastating to smaller counties. Already, she noted that some 88% of property in Franklin County could not be taxed because it is publicly owned. In the entire county, there is about $3.2 billion worth of taxable property. But much of that is for low-value properties covered largely, if not completely, by Florida's homestead exemption.
"My tax base is already very small," she said.
But besides the blow to government revenues that would come from eliminating property taxes, she said any attempt to neutralize the blow would surely devastate the lowest income individuals in her community. Any consumption tax would likely be regressive in nature, she said, shifting a tax burden onto the poor.
Service tax anew?
When Chamberlin presented his legislation this year for its singular public hearing, it contained no explanation what that form it would take. The lawmaker also offered few hints in his own answers to colleagues.
"This study will reveal what needs to be replaced, and then we'll get together and start at that time and begin to talk about how we would replace it," Chamberlin said.
While the lawmaker said he believed an elimination of property taxes would likely lower the overall taxes paid by most Floridians, he acknowledged it would require establishing some type of tax that would vary depending how much people consumed. Rep. Anna Eskamani, the ranking Democrat on House Ways and Means, asked if that would include a service tax. "Yes, potentially," Chamberlin said.
Florida has a long history with service taxes, and one signaling political peril to those who support it. In the 1980s, Florida briefly instituted such a tax, but quickly repealed it. A contemporaneous study by Florida State University noted the reasons for its introduction and rapid sunset.
The report noted Florida in July 1987 became the first large state to introduce a sales and use tax. "The state's immediate need for additional revenue was the major impetus for the legislation, but there were underlying reasons Florida's policymakers chose to tax services, reasons that have to do with the long-term fiscal health of the state," the study stated.
It noted that Florida, unlike most states, has no income tax, and implementing one would run counter to the Florida Constitution. With property tax rates left as a county power, that leaves only sales tax as a major source of revenue for the state.
Lawmakers in 1986 voted to end an exemption on sales taxes for professional services and formed a commission to study the issue. Notably, Republican Gov. Bob Martinez won election shortly after and called for restructuring of Florida's tax system. The Legislature, then controlled by Democrats, passed the service tax that year, but by December, both chambers of the Legislature in Special Session had voted to repeal it.
Ron Book, a longtime Tallahassee lobbyist who worked in the Legislature at the time, suggested the tax was put together in haste, then given no time to breathe.
"As with almost any major tax change, you are going to need to have meaningful debate," he said. "There wasn't any."
Unsurprisingly, implementation thus proved sloppy, with the state establishing guidelines for taxes that resulted in a layering of unexpected levies on taxpayers. Albright, who at the time worked as a lawyer on real estate, recalled closing documents turning into tomes, with disclosures of all taxes required for any contractor service engaged in a deal.
"It was a bad idea that just didn't work," he said. "It ground commerce in Florida to a halt, and for minutia. You do all this work to collect maybe $50."
Book, for his part, believes part of the problem was that politicians so quickly retreated from the policy instead of trying to address the problems.
"They ate the pain, and took a public beating for all that was bad with it, and instead of getting through any clarifications they then repealed it," he said. "That tax had real growth to it. Whether it was good, progressive, regressive, I don't want to get into that debate either way because it's irrelevant."
But he saw the severe political consequence. Then-Speaker-designate Sam Bell, a since-deceased Tampa Democrat who led the budget process in the Legislature, was savaged on tax policy on the campaign trail and lost re-election in 1988 before he could take over leadership of the House. Notably, Albright in 1988 won election in a different district to the House as a Republican, two years after losing to a Democratic incumbent.
In less than a decade, Republicans won a House majority for the first time in state history and haven't lost control since. Yet, the renewed interest in the return of a service tax appears to be coming now from House Republicans.
In committee, many greeted Chamberlin's proposal with enthusiasm. Rep. Rick Roth, a West Palm Beach Republican, suggested a study evaluate the costs of even having Property Appraisers and Tax Collectors figure out what to assess through property taxes.
"If we can change the way we collect taxes in the state of Florida and not tax property, I think we'll have more people being able to own property," he said.
Some fiscal watchdogs in The Process say since Chamberlin just wants the idea explored, there's no reason to shut down debate.
"As the eyes and ears of Florida taxpayers, Florida TaxWatch works hard every day to evaluate our state's complex tax structure to ensure our hard-earned tax dollars are not only appropriately allocated, but also returned to taxpayers when appropriate," said Florida TaxWatch Executive Vice President Jeff Kottkamp, a former Republican Lieutenant Governor.
"While Florida TaxWatch has not specifically weighed in on this proposed OPPAGA study, we support any analysis that is undertaken in an attempt to improve our tax system."
The Florida Association of Counties registered to lobby on a proposal this year, but when Chamberlin's bill sought only a study of the topic, the group never formally opposed it. Officials there declined comment for this story.
But from lobbyists to local officials, many pointed out on record or on background that property taxes provide Florida's largest, most reliable and predictable sources of revenue, one that grew nearly 14% just last year.
Chamberlin in committee called property taxes the "most hated" tax in America, but lobbyists warn lawmakers will have to run not simply on eliminating one tax, but on swapping it with another. And to date, no one has offered details on what that new tax would be or who would pay it.
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