TAX NEWS - June 2010

Florida Tax:  McCollum Proposes 2-Year Property Tax Rate Freeze

SARASOTA | Republican gubernatorial candidate Bill McCollum on Thursday said that if elected, he will seek to impose a two-year freeze on property tax rates for local governments across Florida.

Such a freeze, when combined with plunging property values, would likely lead to billions of dollars in cuts across the state, possibly affecting police, parks, libraries and other services. McCollum would not say whether schools would be included in his plan, adding that he would reveal full details of the tax freeze today.

The proposal, which comes as McCollum suddenly finds himself trailing Naples businessman Rick Scott in the Republican race, would represent a strong hand of state fiscal control over usually independent local governments such as cities and counties.

Floridians need "a time out" on any tax increases, McCollum said. "Hold on right now. Let's wait � We need belt-tightening everywhere, the state and local level."

"Grossly speaking, though, we have a problem with overtaxation in our state and in some communities," McCollum said.

McCollum's plan was the boldest initiative offered by three of the state's major candidates for governor, who spoke at the Florida Press Association/Florida Society of Newspaper Editors annual convention, at the Ritz-Carlton Hotel. Democrat Alex Sink and independent Bud Chiles also answered questions. Rick Scott, McCollum's chief challenger for the GOP nomination, did not attend.

But any efforts to freeze tax rates across the board would anger local governments that are still slashing staffs and services, said Cragin Mosteller, communications director for the Florida Association of Counties.

"Where are these cuts going to be made?" Mosteller said. "We're not talking libraries anymore."

Just three days ago, Manatee County Sheriff Brad Steube, who has worked with McCollum on prosecutions of gang members, asked county commissioners for a property tax hike. Steube, who cut his budget by nearly $5 million for the current year, said he needs more dollars to make salaries competitive and to tackle an increase in robberies and burglaries.

McCollum said he is not trying to "micromanage" local officials such as Steube.

If real estate values continue to fall, a freeze on tax rates would translate into a massive cut in tax revenue for local governments. Because property is worth less, the only way to keep revenue the same is by raising tax rates.

Statewide, local governments levied $28 billion in property taxes last year.

State economists are projecting that the taxable value of all property in the state this year will drop below $1.4 trillion, a 10 percent decline. If governments do not raise their rates, Floridians can expect a combined tax cut of $2.8 billion in their November property tax bills.

Sink said she will devise "a business plan" for Florida. As a participant in Florida Tax Watch's Government Savings Task Force, she is considering $3.25 billion in suggested cuts that are not supposed to affect core services such as courts and schools.

She, too, said she wants to get more private insurers in Florida but stressed that she would not favor deregulation.

Chiles emphasized that, unlike McCollum and Sink, as an independent he is not obligated to a party "trying to pay off political contributors."

Chiles said Florida is shortchanging education, wellness and other programs that can make its next generation healthy, productive citizens. Instead the state winds up making "investments in failure," such as prisons and emergency medical care.