The Corcoran Report: Legislative Session Wrap-Up

By Michael Corcoran

The 2007 Legislative Session wrapped up on Friday, May 4th. State lawmakers were successful in conducting an efficient session which produced a lean state budget for the coming year, and legislation which moves Florida’s Presidential Preference Primary to the last Tuesday in January of a presidential election year. Also, legislators passed a bill allowing Citizens Insurance to be more competitive with private property and casualty insurers.

Florida’s State Budget
This year’s state budget has been very tight due to a decline in revenue to the state generated by sales tax. Additionally, since the housing market has been in a downturn over the past year, other taxes and fees (which are important components of the state budget) have also declined. As a result, there are very few community budget projects included in the budget. Additionally, in many budget categories, there has been no increase in funding. Some areas are even facing cuts in funding in the coming budget.

Property Taxes
The House and Senate each released property tax reduction plans during the course of this session. This, amidst Governor Charlie Crist’s call for property tax rates to “drop like a rock.” Like the budget, the House and Senate both want property tax reductions although they have offered differing plans on how to accomplish the goal.

The centerpiece of the House’s property tax plan has been an elimination of property taxes replaced by an increase in the state sales tax. This tax rate increase would add 2.5% to the current sales tax rate. This plan seems to spread the taxes more equitably among all Florida residents and also allows Florida to take advantage of additional tourist sales tax dollars. Most homeowners and property owners in Florida would see a significant annual tax savings under this plan. The purported five year tax savings under the House plan is more than $32 billion.

The Senate property tax reduction plan is more modest and features a rollback in tax rates and a cap on local government spending. Additionally, it allows portability of the Save Our Homes program when selling and buying another home in Florida. Additionally, there will be tax benefits offered to second home owners and business property owners under the Senate plan. The purported five year tax savings under the Senate plan is $12 billion.

Although negotiations between the House and Senate continued into the final week of session, lawmakers were unable to come to an agreement about the best way to reduce property taxes. As a result, the Governor, Senate President and Speaker have called a Special Session on Property Taxes which is slated to begin on June 12th and could last until June 22nd. While property taxes will be the centerpiece issue of the Special Session, Governor Crist has also indicated he may expand the call to include addressing the sunset of Florida’s PIP insurance law.

Insurance
Another issue this session has again been property and casualty insurance in Florida. As the effect of the insurance legislation passed during the Special Session in January becomes more apparent, there appears to be less overall premium savings than had been originally thought. The insurance industry has also come before the House and the Senate to insist that the changes made during the Special Session will cause them to reduce their coverage of property in Florida.

The Legislature did not significantly alter what was done in January; however, the issue caused much debate over the last several weeks. Under legislation passed during the session, Citizens Insurance will also become more available to consumers as an insurance choice if private insurance plans are higher in premium cost than a Citizens plan.

Over the coming month, Governor Charlie Crist will take time to review all legislation which has passed and will decide which legislation he supports and which he will veto. Already he has indicated concerns about legislation which allows certain universities to increase tuition and has turned his eye toward some of the projects in the state budget. In the coming weeks, Governor Crist’s approach toward vetoes, both of substantive legislation and of budget items, will become much clearer.

As the Special Session draws closer, we will update you on the negotiations between the House, Senate and Governor about any property or sales tax changes. Any increase to the state sales tax does appear more and more unlikely.

As certain proposals appear to gain momentum, we will update you so you can plan accordingly. One thing appears certain: many Floridians will receive a property tax reduction of some significance within the next several months.

Thank you for the opportunity to continue serving you, the members, in Tallahassee and throughout Florida. As always, should you ever have questions about specific issues, please do not hesitate to contact us; we are always available to serve you.

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