A Vote for Lower Taxes May Be a Vote for Higher Taxes

When Florida voters approved Amendment 1 to the state constitution with the perceived promise that everyone would pay less in property taxes, most of them failed to consider the economic concept of tradeoffs and the reality that government services must be adequately funded. Amendment 1 essentially allows more of the assessed value of all property to be excluded from taxation. For example, a home valued at $150,000 previously would be liable for taxes on $125,000. With the new provision, only $100,000 is subject to the property tax. Yet, another provision of the amendment allowed the wealthy to exclude as much as $400,000 from taxation when they sold a house and moved. So the benefits of the amendment went overwhelmingly to the rich.

But with more property excluded from taxation, revenues to fund local government services have declined significantly. Marginal tax rates may increase over time in an effort to recoup the lost revenues. In the meantime, however, other taxes and fees are being raised to generate funding for the government services citizens expect. An early response to the amendment from the city council in Jacksonville was the implementation of a new household tax to fund garbage collection. As the article below explains, city leaders want to increase that tax. Property tax savings for people of moderate means have been more than offset by increases in other taxes and fees. The overall tax burden for residents of Florida is being increasingly shifted from the wealthy to everyone else.

So some of the people who voted for amendment 1 in the expectation of paying less in overall taxes are now paying more. Their vote for lower property taxes has increased their overall tax burden.

In the April 24, 2010 Florida Times-Union article "Proposal to double Jacksonville's garbage fee up for vote Tuesday," Matt Galnor reports on the higher garbage fees:

When the City Council first passed a new garbage fee three years ago, it outlined gradual increases to try to cover the actual costs by 2014.

On Tuesday the council is expected to vote on a bill that would blow through that schedule and more than double the fee come Oct. 1.

The fee proposal is part of Mayor John Peyton's plan to bring city fees closer in line with how much the city spends providing the service.

If all of the new fees are approved Tuesday, it will bring in about $25 million to city coffers - and more than $20 million of the new dollars come from raising the garbage fee.

The annual garbage fee would go from $72 to more than $150 - contrary to the 2007 bill that would bring the fees up no more than $12 each year.

"We're catching hell paying this, how we going to pay more?" Southside resident Robert Blackshear said, sitting with friends in a lot off Old St. Augustine Road. "But they don't see it that way downtown."

Council Vice President Jack Webb helped lead the charge for a closer look at all city fees - some of which hadn't been changed in 25 years.

The analysis looked at everything from building permits and facility rentals to zoning change applications and the cost to rename a street.

The increases are tough, especially the garbage fee, Webb said, but added to the reality is the city has to try to capture its costs.

"It's bitter medicine, but we've got to do something to get our financial house in order," Webb said.

Councilman John Crescimbeni said Friday he's preparing an amendment that would change some of the fees.

For example, the fee to apply for a Planned Unit Development is now $1,500, but it costs the city more than $3,500 to process. The proposed fee is $2,000.

"The premise that this thing is being sold on - recovering costs - should be for everybody or nobody," Crescimbeni said.

The garbage fee would cover the cost of collecting residential waste, but there's another $28 a year per household in disposal costs that won't be covered by the new fees, Peyton spokeswoman Misty Skipper said.

The proposal passed two council committees last week - including a narrow 5-4 vote in the Finance Committee.

Crescimbeni was among those voting against it, as were Don Redman and Bill Bishop. Both Redman and Bishop said they were against it because of the original 2007 plan to increase the monthly fee by $1 every year.

"It's going back on our word," Redman said.

Peyton is proposing a $58 million shortfall for the budget that will begin Oct. 1. The mayor says the primary cause is rising employee costs and the city has so far been unsuccessful in getting unions to agree to a 3 percent pay cut and a less lucrative pension for new hires.

matt.galnor@jacksonville.com, (904) 359-4550

Links:
[1] http://jacksonville.com/sites/default/files/JacksonvilleNews1_9.jpg