The Senate Appropriations committee passed a property tax package this week that included a number of measures with the potential to positively affect the administration and stability of local property tax revenues. The measure, SB 7130, removes an affordable housing loophole annually which had the potential to cost local governments more than $100 million.  Additionally, the legislation provides “glitch” language to fix unintended consequences from the passage of Amendment 11 in the fall of 2012 dealing with additional homestead exemptions for low income seniors.  The bill is now primed for a vote of the full senate. 

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Finance and Tax

Affordable Housing – (Property Tax Loophole)
SB 740 (S. Simpson)/HB 921 (R. Renuart)

  • Summary
  • Stand-alone bills to close affordable housing tax exemption loophole.
    • Status:
    • HB 921 passed the Toursim and Economic Development Committee in week two, Finance and Tax in week three and the House Economic Affairs committee in week four. It is now headed to the House floor. SB 740 passed Community Affairs week two. Note that, in addition to the stand alone bills, both House and Senate Finance & Tax committees have draft language that fixes the loophole. 

Comprehensive Property Tax Bill (SB 7130)

  • Summary
  • Comprehensive property tax legislation that provides for the following:
    • accommodates the use of commercial mail delivery service by taxpayers,
    • authorizes the use of electronic mail by property appraisers and value adjustment boards,
    • requires notices related to tax roll certification to be provided on websites,
    • provides long-term lessees the ability to retain homestead limitations in certain instances,
    • conforms appeal and penalty provisions,
    • provides for an automatic renewal for “granny flat” assessment reductions,
    • deletes a statutory requirement related to homestead that has been ruled unconstitutional by the Florida Supreme Court,
    • clarifies the ability of local governments to provide property tax exemptions for persons 65 and older,
    • repeals the ability for limited liability partnerships to qualify for the affordable housing property tax exemption, and
    • amends the calculation of payments required by Martin County to St. Lucie County for the county boundary line change passed in 2012.
  • Status
  • The Senate Finance and Tax Sub-Committee passed the legislation without opposition.  The bill is now SB 7130 and was passed by the Senate Appropriations committee this week and should now be headed to the full Senate body for a floor vote.
  • The House Finance and Tax Subcommittee reviewed the proposal, but no vote was taken.  The legislation is neutral to positive for county governments.  It addresses an administrative glitch created by implementing language for amendment 11 (2012), which was passed during the legislative session.  It also includes language to address the affordable housing loophole that counties have been advocating for on behalf of potential property tax revenue loses.

Communications Services Tax (CST)
House Finance and Tax Subcommittee (conceptual)

  • Summary:
  • Concept of reforming the CST to consolidate the taxation of communications services into a single unified statewide rate, regardless of the delivery medium or location of the services user.
  • Consolidation is intended to be revenue neutral from both the state’s and any individual unit of local government’s perspective.
  • To achieve that overarching reform objective, the concept language replaces local government communications taxation authority with a state revenue sharing arrangement, modernizes the definition of “prepaid calling arrangements” and applies the single unified rate to sales of such arrangements, removes an exemption on residential land line service, and reduces the collection allowance granted to dealers of communication services.
  • The concept language also eliminates the authority of local governments to levy permit fees on dealers of communications services but will grandfather in any local governments currently levying such fees to maintain revenue neutrality.
    • Status
    • The conceptual language is still under evaluation by the revenue estimating conference. There is no senate companion of the house conceptual language and no date for a bill hearing.  

Local Business Taxes
House Finance and Tax Subcommittee (HB 7109)

  • Summary: The draft language embodies concepts with an overarching purpose to replace the current local business tax structure in ch. 205, F.S., with a simplified version of the tax that is more consistent across various business types and among taxing jurisdictions. This is accomplished by:
    • Establishing a uniform classification system.
    • Establishing a flexible rate structure.
    • Grandfathering certain local taxing jurisdictions to allow taxation under the current structure to continue under specified circumstances.
    • Eliminating “overlap” of city and county taxes.
    • Retaining current local administration of the tax.
    • New structure would become effective October 1, 2014, with a transition process from the current structure to the new structure, and allowing taxing jurisdictions to replace revenues raised under the prior system.
  • Status
  • The House Finance and Tax committee bill introduced and passed HB 7109.  HB 7109 has been referenced to the Local and Federal Affairs and Economic Affairs committees.  The bill has yet to be scheduled on an agenda as of yet. Based on the inability to secure necessary revisions to the existing language, FAC and its members are now “opposed” to this legislation.   There is still no draft version of this language in the Senate

E-911 Fees
HB 807 (R. Steube)/SB 1070 (S. Hays)

  • Summary:
  • Currently, prepaid communications are not included in the base of services subject to the application of E-911 fees which fund E-911 operations in Florida Counties. The bills include prepaid communications in the base of E-911 fee assessments.
    • Status:
    • Three referrals in House and Senate; Scheduled for review by the Revenue Impact Conference on Friday, March 8, 2013.
    • HB 807 was passed unanimously by the House Energy and Utilities subcommittee on 3-12-13 and passed with no opposition in the House Finance and Tax subcommittee on 3-22-13.  FAC staff provided supporting testimony during the referenced bill hearings.
    • The Senate bill is currently scheduled to be heard on Monday, April 1, 2013 in the Communications, Energy and Utilities committee but it is anticipated that the bill will be amended significantly.

Internet Sales Tax

  • Summary:
  • HB 7097 Relating to Tax on Sales, Use, and Other Transactions
  • HB 505 (R. Rehwinkel-Vasilinda) relating to Streamlined Sales and Use Tax Agreement
  • SB 88 (S. Margolis) relating to Mail Order Sales
  • SB 316 (S. Detert) relating to Taxes
  • HB 497 (R. Moskowitz) relating to Small Business Fairness Act
  • A common goal is to address the taxation (Florida sales tax) of sales by out-of-state retailers conducted over the Internet.  Although this concept is expected to produce a positive fiscal impact, some of the bills also employ reductions in other taxes to create a revenue neutral scenario.
    • Status
    • SB 316 has passed its first committee of reference and has three additional committee hearings scheduled; REC returned an indeterminate fiscal impact on 3-1-2013.
    • Other bills have not been heard by their respective first committees of reference. 
    • PCB FTSC 13-02: House Finance and Tax Committee introduced PCB FTSC 13-02 – Relating to Sales and Use Tax on 3-14-13 during their scheduled committee meeting. 
      • PCB amends s. 212.0596, F.S., to provide that a “mail order sale” includes the sale of tangible personal property over the internet.  The bill creates s. 212.0802, establishing a recurring sales tax holiday on clothing and school supplies. The length of the holiday will be determined each year by the REC to reduce total sales tax collections by at least the amount of new collections received pursuant to the changes to the mail order sales statute in the bill.
      • Once the House PCB has been introduced, it will then receive committee references and be submitted to the REC for further fiscal analysis.
      • PCB FTSC 13-02 is now referred to as HB 7097 (3/22/13) and is referenced to be heard in House Appropriations at a date yet to be determined.

Commercial Rentals
HB 629 (R. O’Toole)/SB 656 (S. Hukill)

  • Summary:
  • Currently, commercial rentals are taxed at 6% at the state level, plus the local discretionary surtax. Bills would phase out the sales and use tax on commercial rentals by reducing the tax rate by 1% per year and completely repealing both state and local sales and use taxes in the year 2019.
    • Status:
    • Three referrals in House and Senate; workshopped in H. F&T. Not yet on committee agenda.