Friday, July 31, 2009

Fla. Tax Collections Take Hit, But it Could be Worse


TALLAHASSEE, Fla. – July 31, 2009 – Florida’s school districts could have a half-billion dollars less to spend in 2010 under gloomy new forecasts approved by state economists on Thursday.

While there are glimmers of hope in the national economy, the meltdown in the real estate market continues to drag down property values in Florida. Economists forecast that Florida’s total property values in 2010 will decline to $1.88 trillion compared to $2.52 trillion in 2007 when the market peaked.

The one piece of good news: In March, economists had predicted a much steeper decline this year and in 2010, saying property values subject to school taxes would decline by 12 percent this year and 6.6 percent next year. Instead, this year’s decline is now projected at 10.7 percent, and the decline next year will be roughly 5.5 percent.

“We’re slightly less pessimistic than we were,” says Amy Baker, coordinator of the Office of Economic and Demographic Research.

But economists warned that foreclosures and other problems in the real estate market could take a while to work themselves out before it results in an upswing in property values. The new estimates forecast that taxable values for schools won’t fully rebound until 2013.

“We’re still trying to figure out a very dynamic market,” said Bob McKee, staff director of the Senate Finance and Tax committee.

It also takes time for changes in the economy to be fully accounted for because annual tax rolls adopted in July are based on property values as of Jan. 1. The estimates adopted on Thursday could require budget cuts for school districts in 2010 unless tax rates are raised or state lawmakers pour in more state aid.

The drop in real estate values is also having another effect: A dramatic decline in the difference between what homes are worth and how much is counted toward property taxes.

Homeowners in Florida get a break on their property taxes because voters can shield some of the value of their home from taxes due to the Save Our Homes constitutional amendment passed in 1992. Annual assessment increases are capped at 3 percent or the increase in the consumer price index, whichever is lower.

Out-of-state residents and business owners in the past have complained that Save Our Homes has created an unfair taxing system that penalizes those who don’t have a homestead here.

But the gap between what homes were worth and how much is counted for tax purposes was $427 billion in 2007. Now it is just $168 billion and that gap is expected to drop to $115 billion in 2010. The gap is expected to creep back up once the economy begins to recover.

Source: News Service of Florida, Gary Fineout

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