The budget cycle never ends. As we begin another one, we would like to prepare our taxpayers for some surprises. In 1992, Florida voters passed the Save Our Homes Amendment in an attempt to protect “homesteaded” residential properties from rapid and continuing tax increases. As Constitutional Amendments are likely to do, this one is now in the second year of demonstrating its unanticipated consequences approximately 18 years after its passage. The Class Size amendment is another one whose negative effect on your tax bill has occurred much more rapidly than Save Our Homes. And the proposed Amendment 4, another and potentially much more dangerous example of unanticipated consequences, could easily be misunderstood by voters and, if passed, have much more dramatic and expensive consequences for all taxpayers.

But for now, let’s focus on the Save Our Homes Amendment. This Amendment, another with a nice sounding name, is structured in such a way that it can increase the tax bill on your homesteaded property even as its value declines; a great example of an unforeseen, unanticipated consequence. The Amendment did, however, provide for portability, a concept permitting you to transfer your taxable basis from one homesteaded property to another. A “homesteaded” property is the primary residence of a full time Florida citizen, defined as a citizen who resides in the state for more than 180 days per year.

The taxable value of your homesteaded property can vary widely from its appraised value depending on when the home was purchased and the sales price. The benchmark taxable value is based on purchase price and the process caps the annual increase at 3% or the annual cost of living increase, which ever is less, as long as it doesn’t exceed “fair value”. That’s why citizens living in identical homes, even next door to one another, pay different tax amounts. So even while values rose at rates above 10% per year, “homesteaded” properties only saw the taxable values rise 3%.

Homes without the homestead exemption and all taxable, non-residential properties do not have this protection. For them, the taxable value is the same as the appraised value. So these property owners saw their taxes rise as values rose, even with a reduction in the millage rate. (The millage rate is the amount of tax collected per thousand dollars of taxable value.)

Beginning about 2007, Florida property values began to decline as the recession took jobs away and the demand for housing declined. The surprise to many “homesteaded” property owners is that their tax bills can increase at the same time their appraised values fall, even without an increase in the tax rate. In boom times these homeowners saw their taxes decrease because local governments were able to reduce millage rates and reduce taxes. We certainly don’t expect local governments to raise millage rates in this recession, nor do we expect many to cut their rates. So even as property values continue their decline, the taxable value of “homesteaded” properties can rise, and so can the taxes on them. Non “homesteaded” residential and non-residential taxable properties should see a tax decrease because of their falling taxable values.

Martin County is unusual in that most of our property tax revenue is collected from residential property owners. Most jurisdictions collect more from non-residential properties. Our tax burden is squarely on the shoulders of homeowners. This will only change if Martin County diversifies its economy and thereby, its tax base. Sustainable jobs always add value to residential properties. Increasing tax revenues from non-residential sources is the win we’re all looking