Insurancebreaking news
Florida property-tax cut could strip billions from local governments and fire protection
The amendment is projected to drain local budgets that fund fire departments and building offices, and insurers use those services when they price homes.
This article is general information, not financial, investment or insurance advice. Check the details with a qualified adviser before you decide.
A projected loss of billions
Florida's property-tax cut is projected to strip billions of dollars from local governments, and homeowners who insure property in the state have reason to watch where the cuts land. [1] Florida TaxWatch says the amendment will cost counties, cities and special districts tens of billions of dollars in lost revenue over its first five years. [1]
The revenue loss could squeeze fire departments, building safety offices and other services that help protect homes and reduce losses. [1] Pinellas County Sheriff Bob Gualtieri has warned that the amendment could jeopardize public safety. [2]
Why fire service budgets matter to insurers
Many insurers rely on ISO ratings, which are produced by the Insurance Services Office, a private insurance-data company owned by Verisk Analytics Inc. [1] ISO evaluates local fire protection, including firefighter staffing, training, equipment, water supply and emergency communications. It then assigns communities a rating insurers can use in underwriting. [1]
Mark Friedlander of the Insurance Information Institute said a reduction in fire protection services can lead to a lower ISO rating. A downgraded rating could cause premiums to increase. [1]
The city of Dunedin, in Pinellas County, is doing contingency planning for having fewer firefighters working per shift. [1]
Who gets the cut
Businesses, landlords and second-home owners do not get the expanded homestead exemption. They benefit from a provision capping annual assessed-value increases at 5%, down from 10%. [1]
The measure applies only to people who were Florida residents before the end of the year. Transplants must wait five years to qualify for the cuts. [2]
Backers, opponents and the cost shift
Florida Realtors spent heavily to support the measure, promoting it as a way to ease housing costs. [1] The Florida Association of Counties opposed it. [1]
Former Republican state senator Jeff Brandes, who opposed the initiative, said the governor and Legislature are responsible for managing the fallout. [1]
Officials will likely raise millage rates and fees, including permit fees, to make up for the shortfall, diminishing the touted savings. [2]
The starting point: costly homes, middling tax rates
Homes in Florida are already among the most costly to insure in the US because of exposure to hurricanes, floods and other natural hazards. [1] Florida's mean effective property-tax rate on owner-occupied homes ranks 27th among states. [1]
Jesse Keenan of Tulane University said Florida homeowners will pay for living in a high-risk area either as taxpayers or as ratepayers. [1]
What it means for you
If you own a Florida home, the savings may be smaller than advertised, because officials will likely raise millage rates and fees, including permit fees, to make up for the shortfall. [2] Keenan said homeowners will pay for living in a high-risk area either as taxpayers or as ratepayers. [1]
If your local fire department cuts staffing, your community's ISO rating is one thing to watch, since insurers can use it in underwriting. [1] A reduction in fire protection services can lead to a lower rating, and a downgrade could cause premiums to increase. [1]
If you own a business, rent out property or hold a second home, you do not get the expanded homestead exemption. You benefit from the cap on annual assessed-value increases at 5%, down from 10%. [1] If you moved to Florida recently, you must wait five years to qualify for the cuts. [2]
Sources
- New Florida Property Tax Cut Could Impact Insurance Rates - Carrier Management — Carrier Management
- Florida’s Property Tax Cut Proposal Could Boomerang on Commercial Owners — Commercial Observer
Written from the sources above and checked twice before publishing. How we work · Report an error
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