Property Tax Collections Still Look Gloomy
Florida’s school districts could have a half-billion dollars less to spend in 2010 under gloomy new forecasts approved by state economists on Thursday.
Even as there is some talk about glimmers of hope in the national economy, the meltdown in the real estate market continues to drag down property values in Florida. Economists forecast that Florida’s total property values in 2010 will decline to $1.88 trillion – compared to $2.52 trillion in 2007 when the market was at its peak.
The one piece of good news is that economists in March had predicted a much steeper decline for this year and next. Economists had projected that property values subject to school taxes would decline by 12 percent this year and 6.6 percent next year. Instead this year’s decline was 10.7 percent and economists say the decline next year will be roughly 5.5 percent.
“We’re slightly less pessimistic than we were,’’ said Amy Baker, coordinator of the Office of Economic and Demographic Research.
But economists warned that foreclosures and other problems in the real estate market could take a while to work themselves out before it results in an upswing in property values. The new estimates forecast that taxable values for schools won’t fully rebound until 2013.
“We’re still trying to figure out a very dynamic market,’’ said Bob McKee, staff director of the Senate Finance and Tax committee.
It also takes time for changes in the economy to be fully accounted for because annual tax rolls adopted in July are based on property values as of Jan. 1.
But the estimates adopted on Thursday could require budget cuts for school districts in 2010 unless tax rates are raised or unless state lawmakers pour in more state aid. The latest estimates project that school districts will have roughly $500 million less for day to day operations next year due to 5.5 percent drop in taxable value.
Schools have already had to cut overall funding by $1.3 billion since 2007. This year school funding was relatively flat, but that was primarily due to an infusion of $900 million from the federal stimulus package.
The drop in real estate values is also having another effect: A dramatic decline in the difference between what homes are worth and how much is counted toward property taxes.
Homeowners in Florida get a break on their property taxes because some of the value of their home can be shielded from taxes due to the Save Our Homes constitutional amendment passed by voters in 1992. Annual assessment increases are capped at 3 percent or the increase in the consumer price index, whichever is lower.
Out-of-state residents and business owners in the past have complained that Save Our Homes has created an unfair taxing system that penalizes those who don’t have a homestead here.
But the gap between what homes were worth and how much is counted for tax purposes was $427 billion in 2007. Now it is just $168 billion and that gap is expected to drop to $115 billion in 2010. The gap is expected to creep back up once the economy begins to recover.