Tallahassee Democrat: A big thumbs down, Amendment 5 makes bad situation worse

Monday, June 30, 2008

This November, Florida voters will see nine constitutional amendments on the ballot, and this newspaper and countless organizations and citizens will be examining the pros and cons of each in the coming months.

But one amendment, No. 5, is so great a threat to the long-term fiscal stability of our counties, schools and state—such an award-winning example of political folly—that we urge voters to reject it soundly.

Amendment 5 is the “tax-swap” amendment that repeals property taxes paid to counties specifically for use by their school districts. The swap would mean an average 25-percent property-tax cut for homeowners but in exchange for an increase and possible expansion of the state sales tax at a minimum.

The key word is “possible,” because this amendment, which came out of the Taxation and Budget Reform Commission and was sent to the ballot with little public discussion and relies on the Legislature to replace the money our public schools would lose—yet there is absolutely no mandate or guarantee that it would or could do so.

Our schools would see their budgets cut by fully 25 percent, a devastating assault on top of cuts they’ve already suffered due to decreased state revenues and Amendment 1’s extension of the Save Our Homes tax cap for homesteaders.

It’s hard to imagine the near-anarchy that could arise with school funding a part of the budget battle every session—with regions of the state arguing over which deserved what, and school districts themselves unable to rely upon anything. Now they can at least depend upon 25 percent of county property-tax revenue—its required local effort—a fairly stable number.

Amendment 5 is smoke and mirrors, because to make it even begin to work for education, lawmakers would have to raise the state sales tax from a minimum of 6 percent to 7 percent—a jump that would add only $4 billion in revenue, while the loss of property taxes would take away between $9.5 billion and $11 billion.

Sen. Mike Haridopolos, R-Melbourne, and likely the next Senate president, calls the amendment “bait and switch” because, with or without a hike in the sales tax, there aren’t a lot of other replacement sources of revenue that are fair or likely to win support.

Raising the sales tax would fall heavily on low-income residents. The property-tax cut would primarily help homeowners, putting proportionately more of a burden on businesses and renters. Reducing state spending in non-education areas, creating new taxes or closing enough sales-tax exemptions to significantly fill the void would ignite career-killing political battles on multiple fronts.

The chief proponents of the amendment argue it’s needed to revive the sagging real-estate economy. They contend that people who are paying lower property taxes will buy more goods, hence pay more sales taxes. But the real-estate market, according to countless economic estimates, is on a self-correcting phase and will thrive again.

Florida Retail Federation Executive Randy Miller put it well when he warned that the amendment would wreck the economy: “Switching from a stable tax source for the school system, to place it at the whim of a consumption tax, is foolhardy,” he said.

The unknowns and uncertainties of the amendment are great and it makes Florida’s already unfair tax system less fair. It deserves a resounding “no” vote this fall.