SOURCE ALERT: Miami Law Property Expert Q&A on Proposed Amendments 3 and 5

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The Florida Legislature is asking voters to approve two Amendments this November that would provide property tax relief to disabled first responders and the elderly poor. Miami Law’s Stephen Schnably explains what is so troubling about such laudable causes.

Schnably is a professor of law at the University of Miami School of Law. He teaches courses in property and constitutional law, and served as co-counsel for homeless people in the landmark Pottinger v. City of Miami case.

Schnably

Stephen Schnably

On November 8, Florida will see two property tax amendments on the ballot. What are they?
Amendment 3 would allow the Florida Legislature to give first responders who become permanently and totally disabled in the line of duty a complete property tax exemption on their homestead property (their permanent residence – a house or condo). 

Amendment 5 would change an existing property tax exemption for certain elderly, low-income, longtime homeowners. A 2012 amendment to the Florida constitution allows local jurisdictions to grant a complete property tax exemption for homestead property to any person 65 or older with a household income under $28,448 (the figure is adjusted annually) – but only if the market value of the home is under $250,000 (and the homeowner has lived there at least 25 years). If the home value rises above $250,000, the complete exemption is lost. If Amendment 5 is approved, the tax break will still apply even if the home value later rises above $250,000. The Amendment would also give retroactive relief for homeowners who were granted the exemption after 2012 and then lost it when the value of their home later rose above $250,000.

So a “yes” vote means property tax relief for disabled first responders and low-income elderly?
Probably. Even if the voters approve Amendment 3, it would only authorize the Legislature to enact property tax relief for disabled first-responders. In theory, the Legislature might do nothing. On the other hand, the Legislature was unanimous in deciding to put Amendment 3 on the ballot, so expect action if the Amendment passes. 

The Legislature has already enacted implementing legislation for Amendment 5, which will take effect if the voters approve the Amendment. But keep in mind that the section of the Florida Constitution that Amendment 5 modifies merely authorizes counties and cities to put the basic exemption in place through local legislation. According to an analysis by the Florida Legislature, only 25 out of 67 counties offer the exemption (though there are also 13 counties in which at least one city offers it).

Who could possibly be against either Amendment?
No one. Neither Amendment is likely to have any significant impact on local governments’ property tax revenues overall. And who’s going to run attack ads against disabled first responders or poor, elderly homeowners? 

So kudos to the Florida Legislature for proposing such great Amendments?
No. Amendments 3 and 5 represent the latest tweaks to a broken system. 

How so?
First, keep in mind that property tax exemptions, by definition, help homeowners and no one else. You’re a firefighter and you were totally and permanently disabled when a burning ceiling caved in on you? No relief for you – if you’re a renter. Yes, you can buy a house and get the tax break, but we don’t make Social Security, Medicaid and Medicare, or private pensions turn on whether you own a home. 

Second, with every new amendment, the system becomes ever more complicated. You’re 77 years old, getting by on $25,000 a year in the $240,000 house you’ve owned for 22 years? The tax break that Amendment 5 modifies won’t help you until you’ve lived in your house for 25 years. But by then if the value of the house has risen to $255,000 (about 2% annually), you won’t qualify. But don’t worry. No matter what, you’ll still get the same $50,000 break from the market value that everyone gets, not to mention the benefit of the “Save Our Homes” limitation on property tax increases. If you’re a widow or widower, you’ll get an extra $500 knocked off the taxable value of your homestead. And you’ll get a complete exemption if your late spouse was a member of the Armed Services who died of service-related causes while on active duty (just don’t remarry, because there goes the exemption).

Suppose voters, Brexit-like, say no to Amendment 3. So there’s no property tax relief for disabled first-responders? Far from it. There are already exemptions for disability, total or partial. Some are available to anyone (including first responders) and others only to veterans. There are even certain exemptions for surviving spouses of first responders. But it’s a complicated system. You want a complete exemption for total disability? Fine – if you’re quadriplegic. If you’re not, but you’re paraplegic or paralyzed on one side, you get a tax exemption for total disability – if you’re blind or use a wheelchair and your income is below $27,765 in 2016 (the figure is adjusted annually). If you’re totally disabled but don’t meet those criteria, you get a $500 exemption. The full text of Amendment 3 makes no mention of wheelchairs, sight-impairment, or an income limitation, so Amendment 3 will apparently free those first responders who are rendered totally disabled (but not quadriplegic) in the line of duty from those limits. (Try to guess that from the ballot summary!) But Amendment 3 also states that a chronic condition or disease won’t qualify as a total and permanent disability unless an injury in the line of work was the sole cause of the condition or disease. Obamacare may have eliminated the pre-existing condition in health insurance; the Florida legislature is asking the voters to enshrine it in the state constitution for (some) totally disabled first responders.

Third, what the Legislature is doing is fundamentally pernicious. How generous of the Legislature to help disabled first responders and the elderly … except that it’s funding the relief out of property taxes, which are local revenues. I’m not being generous if I use your money to contribute to my cause. Amendments 3 and 5 don’t cost much, but the total loss of local revenue from all the property tax exemptions is significant.

Even worse, as a political reality, property tax exemptions are a substitute for genuine assistance. Yes, they’re better than nothing for those who receive them. And they don’t, logically, exclude the possibility of adequately funded state programs to help the disabled and the elderly. But let’s not fool ourselves: we’re misers. Florida ranks 43rd in the states on services for the elderly and disabled, according to a comprehensive survey by the AARP, The Commonwealth Fund, and the SCAN Foundation.
 
We’ll all feel good when we vote this November to approve Potemkin relief for the elderly poor and for disabled first responders. If the Florida Legislature has its way, we may even forget this basic truth: Low taxes mean low services. 

CONTACT: Catharine Skipp at 305-773-5801 or cskipp@law.miami.edu