Wednesday, August 6, 2008

Busted

A lot of people — including yours truly — know all too well that the real estate market here in Florida sucks, and in Miami-Dade it sucks out loud with cheese on it.

The bursting of the Florida real-estate bubble now has a price tag: $153 billion.

That’s the loss in market value of all Florida properties, from houses to businesses, between 2007 and 2008.

As a result, state economists say, the total value of the state’s properties will decrease an unprecedented 6 percent. That’s double what they had estimated in November, when they noted the fast-booming state had never experienced such a decline in recent times.

That means that with property taxes going down, so will the tax revenues, which means less money for the things that we all need and use, like schools, roads, police and fire departments (one county is mulling over the idea of charging out-of-county accident victims for the time emergency services spend taking care of them), and all of the other things that are paid for through taxes.

And what is Gov. Charlie Crist’s great idea? Cut property taxes even more while raising the sales tax. The logic, such as it is, is that while property taxes are too high and don’t hit everyone directly, everyone pays sales taxes. The problem with that is that sales taxes hit poorer people harder; someone who makes $17,000 a year spends a lot more of their income on the necessities of life such as food, clothing, and fuel than people who make $170,000, and there’s no difference at the gas pump: a gallon of gas still costs $4 if you’re pumping it into a 1988 Toyota or a 2008 Mercedes-Benz SL 600.

Florida is the only state I’ve lived in — and I’ve lived in a lot — that doesn’t have a state income tax. The state constitution was amended back in the early part of the 20th century to prohibit it in order to encourage tourists, who at some point would become retirees and move here; the idea being that sales tax revenue through tourism and property taxes would more than make up for the lost revenue. Well, that was over 70 years ago, and times have changed; hurricanes and rising gas prices have taught us that tourism is not as reliable a source of income as George Merrick and other boom-builders thought it would be forever. Retirees are finding other places to go such as Arizona, New Mexico or, like some people I know, just staying put. Unlike Blanche Dubois, Florida can no longer depend upon the kindness of strangers… or their money.

One of my friends at work who knows about such things did a projection a couple of years ago that showed that a 3% state income tax based on the same formula a lot of other states use would not only give the state enough revenue to cut property taxes down to a reasonable level, they would be able to fund public education at the level it deserves and possibly even give us a budget surplus in a few years. But unless you can convince a super majority of the state’s voters to accept the idea of repealing the income tax amendment and voting for yet another tax, even if it meant saving property owners and businesses money, we’ll still be figuring how to squeeze the air out of a busted balloon.