Q&A – The Implications of Repealing Property Taxes in Florida Part 2

In Palm Beach County, property tax collections have increased by 222% over the prior nine years.

Episode Transcript

Speaker 1 (00:04):
Your questions, Brian's answers. It's time for today's J and
A of today. This is the Brian Mud Show.

Speaker 2 (00:12):
Yeah, Today's Q and A the implications of repealing property
taxes in Florida. This is the second part of my
two part Q in A and I hope that this
morning's off to a nice start for you. One of
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(00:34):
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You'd say I love you like we got a couple
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I think you are just I think you're pandering now.
I think you just have to let it come to you,
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(01:03):
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(01:58):
Q and A. Today's note is a continuation of yesterday's
which is addressing the concerns of a retired listener with
a homesteaded property who was wondering if the repealing up
property taxes in Florida would lead to him having higher
costs of living and how that might shake out. So
the topic of property taxes and the potential repealing of

(02:20):
them continues to be an especially hot topic across our state.
And yesterday's Q and A I broke down what's in
the current proposal and discuss a few important points that
should be considered. As homesteaded property owners locally are wondering
if they really would be better off if property taxes
were eliminated. So this is a summation of what I

(02:40):
brought you yesterday. The proposal would eliminate all property taxes,
regardless of property type. A state study, if authorized by
the legislature, would cover all aspects of the elimination of
property taxes, including the potential pros and cons of replacing
property taxes with a consumption tax, and the proper tax

(03:00):
burden has significantly shifted from homesteaded properties to non homestead
of properties, creating an affordability crisis for renters and affordability
challenges for many businesses, leading to increase commercial vacancies. Is
all to pick up there in Palm Beach County property
tax collections. How much do you think they've increased over

(03:22):
the prior nine years? Nine years? How much higher, dude,
that member of mine? Try two hundred and twenty two percent.
See Joel's shaking his head. I mean, it's like mind boggling,
isn't it.

Speaker 1 (03:39):
It's borderline criminal. It's incredible.

Speaker 2 (03:44):
There are a lot of things that probably should be
criminal that involve governments, and because the governments to them,
they are legalized. Yeah, I mean, look, two hundred and
twenty two percent increase in tax collection.

Speaker 1 (03:55):
Now.

Speaker 2 (03:56):
To be clear, some of that is due to the
county's growth and just a larger tax base, more people,
larger tax base, all that, So that is worth mentioning here.
For sure. Some of that is due to people selling
previously homesteaded properties having those property taxes reset under new owners.
Much of it has come from rising assessments. Now, if

(04:21):
you've held a home steaded property in Palm Beach County
over the prior nine years, your maximum property tax increase
assessment has been thirty percent. However, if you've owned non
home steaded property over that same period, it is possible
for your property taxes to have risen by one hundred

(04:42):
and thirty six percent. Less than a decade nine years,
you could have your property taxes rise by one hundred
and thirty six percent. And so that reality has led
to businesses being taxed out of business, renters effectively being
taxed out of their homes through increased rent rates. We
have so many debates and everything else about the affordability

(05:05):
of rent in the state of Florida, South Florida in particular. Yeah,
you get landlords that are not great at times. The
single biggest issue, the most consistent issue, is this rising
property taxes. Do you have property taxes that are more
than doubling in nine years? What's going to happen to
rent rates? I mean, it's not complicated, and yet it's

(05:25):
almost never really talked about other than by landlords or
look like, look as my costs to increase, rent's going
to increase too. So this is a huge part of
the affordability metric that comes into play here as well.
Now importantly, as we're talking about affordability, because this is

(05:47):
all this in total, you might be thinking, Okay, but
I'm a homestead of property owner.

Speaker 1 (05:53):
I'm in a good situation.

Speaker 2 (05:54):
I understand what you're saying about businesses, I understand what
you're saying about landlords that kind of thing.

Speaker 1 (06:00):
But I got mine. I'm in good shape right now.

Speaker 2 (06:02):
But are you really see what happens when you go
buy something, you are paying for the increases and the
cost of goods and services every time you make that purchase.
Palm Beach County, for example, not only is among the
highest for property taxes in Florida, but out of thirty

(06:22):
one hundred and forty three counties across the country, ranks
as the one hundred and sixty sixth most expensive. What
that means is, by way of property taxes, Palm Beach
County is less affordable than ninety five percent.

Speaker 1 (06:34):
Of locations nationwide.

Speaker 2 (06:36):
Now, the cost of living in Palm Beach County, in
large part due to these factors, is fourteen point one
percent higher than the national average, but also three point
four percent higher than just the average other community again Florida.
So the point here is twofold stay wide, but especially
throughout the Palm Beaches. The potential to reduce the net
cost of living exists through the elimination of commercial property taxes.

(06:59):
Prices for goods and services are more expensive because businesses
must account for the higher costs of operating the business
due to extremely high and everizing property tax bills. So
there is a good chance that ending property taxes on
non home stead of properties would actually improve long term
affordability for owners of home steaded properties, given that property
taxes would be replaced with consumption taxes. And that is

(07:22):
all part of what is still somewhat unclear and that
we will need to learn from the study. And speaking
of the study, let's talk about this the next steps.
Since my previous update last week, we have had additional
steps taken. The bill has been referred to the Community Affairs, Finance,
and Tax and Rules committees for consideration. Most recently, the

(07:42):
bill has been introduced, meaning that it is up for consideration.
But just as was the case with Smoky and the Bandit,
this bill has a long way to go, and what else, Jill, in.

Speaker 1 (07:56):
A short time to get there.

Speaker 2 (07:58):
There you go, the bill needs to clear three Senate
committees before the potential for a full vote before the chamber.
And just as importantly, the bill currently lacks a House companion,
which is a necessity. The yet to be introduced companion
would also have to clear all the House committees and
then clear a floor vote.

Speaker 1 (08:18):
And here's the thing.

Speaker 2 (08:19):
We've only got fifty one days left in the state
legislative session, so there is time to get it done. However,
it obviously has not been a priority in the chamber
up to this point.

Speaker 1 (08:28):
Well, let's just say that this study does pass.

Speaker 2 (08:30):
What happens then, while between July first and October first,
this state will conduct the study, and then based on
the results of the study, what would happen? Will the
legislature could a choose not to act on it? B
draft legislation aimed at placing a constitutional amendment on our ballots,
and from there the proposed ballot would have to go
through the legislative process all over again. And only then

(08:52):
if the proposed amendment were to pass the legislature, would
it be on our ballots in November twenty twenty six.
And even then, if that heard, every single Floridian, every
voter would have a say as to whether you want
to repeal property taxes and it would require sixty percent
support at a minimum to pass. And even then, if

(09:15):
it were to pass, the earliest possible date for change
to take place would be in twenty twenty seven. And also,
based on how the amendment could be written, it could
be phased in over time. For example, Florida's minimum wage
amendment passed in twenty twenty but isn't fully phased in
until September twenty twenty seven.

Speaker 1 (09:33):
So this is to say that.

Speaker 2 (09:35):
It's way too early to worry about what the implications
may be to you, other than just gain information. Sixty
seven point three percent of Flordians own their homes in
our homestead. It's safe to say the legislators are not
going to put forth a proposal that would make affordability
worse for over two thirds of the state. It's also

(09:56):
safe to say that over sixty percent of Flordians would
not vote support to support such a proposal either. So
I do think all this in context is key at
this point.