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Now browsing: Hometown News > Business Columns > Morgan B. Gilreath, Jr

Morgan B. Gilreath, Jr
This Week | Archive

Portability: what does it really mean?
Rating: 2.87 / 5 (194 votes)  
Posted: 2008 Jan 18 - 02:56

"Portability is going to cost local governments a lot of money."

"Portability is going to shift a lot of taxes from homesteaded property to non-homesteaded property (business, etc.)."

How can portability cost governments anything?

Unless you cut spending, you haven't lost any funding or cost anyone a dime. So portability can't cost local governments money because it doesn't take anything away from them. Portability allows people to keep what they've rightfully accrued through Save Our Homes without losing it if they decide to move.

What may well cost local governments money is the new law (passed last spring, FS200.065) restricting the rate of spending increases by local governments from year to year.

Florida's new law dictates that increases in property tax spending will be limited to the per capita income levels of it's citizens each year (plus new construction). What may well cost taxpayers money is the way funding may be shifted from property taxes to other "non-ad valorem" funding sources. That's not happening because of the January amendment, it's happening because local governments are trying to preserve additional funding sources.

The January amendment is designed to save people money by allowing them to keep Save Our Homes through portability. Portability saves taxpayers money and doesn't take away anything government currently has.

Does portability cause a dramatic shift of taxes from homeowners to non-homeowners (business, etc.)? Portability doesn't create a decrease in anyone's value that would need to be made up by a tax increase on anyone else. It does allow homeowners to keep what they already have. It encourages people to move into new homes without penalty. There is a tremendous amount of economic activity in Florida directly tied to the real estate market. Do opponents want to see people continue to be bound in their homes, faced with no possibility of buying again in Florida?

At the present time, we have virtually no new residential construction because the real estate market is frozen due to the lack of portability. Having portability will enable people to move and more new homes will be built as the market returns to normal. New homes created through people having portability will create additional taxable value and additional taxes.

Portability will have a positive impact on tax rolls, not a negative one. Any new value on the tax roll means more money for local governments, not less.

The only time a real shift in existing taxes paid will occur is when a Floridian who had homestead in another county moves into a home in Volusia County where the new taxable value is less than that of the preceding Volusia occupant.

So what's the bottom line?

Portability may well create additional taxes, not fewer taxes as new homes are constructed and occupied. Taxable values on existing homesteaded properties will not go down, they will continue to rise at 3 percent or the consumer price index, whichever is less. The real estate market will be released from the stranglehold of property taxes keeping people from moving within the state of Florida. Additional taxes will be generated from the new homes sold to those people now free to move without property tax penalty.

With the already enacted spending cap in place and the amendment's value cap for non-homesteaded properties, local governments will not be able to receive additional revenues through millage magic (keeping the rate the same and claiming to have no additional revenues).

Portability, simply put, allows Floridians to be able to move to new homes. It has potential for kick-starting a severely depressed real estate market and enabling all Floridians to safely remain homeowners in existing or new homes. It is a positive move in negative times.

Morgan B. Gilreath, Jr. is the Volusia County property appraiser. His third installment on tax reform will appear in next week's paper.

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