TALLAHASSEE, Fla. (AP) – June 13, 2008 – Local governments in the midst of writing annual budgets face lower property tax revenues because of a new state constitutional amendment and falling real estate values.

Amendment 1, which voters approved in January, was expected to cut local property taxes by $9.3 billion during the first five years, though it may be a bit less because of the housing market decline, said Chris Holley, executive director of the Florida Association of Counties.

Holley, speaking Thursday at a news conference about how local governments are cutting expenses, said the full effect of the real estate slump hasn’t yet been calculated. But one thing is certain.

“The impacts of the housing market thud are much more severe to local government than Amendment 1,” he said.

Holley estimated property values will drop about 8 percent on average, but he said it could be worse for high-growth coastal counties. And it may be worse next year, he said.

The housing slide that began last year follows several years of soaring property values. That boom resulted in dramatic tax increases for many taxpayers and prompted the Legislature to order a tax rollback in 2007 and put Amendment 1 on the ballot.

Primary homeowners are expected to get an average $240 annual reduction because of a higher homestead exemption in Amendment 1. Homesteaders were sheltered from the worst of the tax increases during the boom by the 1992 Save Our Homes Amendment, which limited annual assessment increases to 3 percent.

They were unable, though, to transfer accumulated Save Our Homes benefits when they moved, but Amendment 1 also has a “portability” provision to fix that. It lets homeowners take those benefits with them for up to $500,000 in property value.

The depressed market means fewer people are moving, so the portability provision won’t be as costly as initially thought, Holley said. The estimate was $2.7 billion of the five-year total.

He said most cities and counties are cutting what are considered nonessential services such as libraries, parks, health care and transportation to avoid reducing core services such as fire and police protection. The vast majority are also trying to avoid tax increases.

“What I’m hearing from my members: ‘The people have spoken, we’re going to try to implement Amendment 1,’“ Holley said.

He joined Florida TaxWatch at the news conference to announce a report by the private budget watchdog group that contains 150 ways cities, counties and school districts have cut costs in recent years.

It’s an effort to share those ideas with other local officials now looking for ways to trim costs.

They include a limit on annual spending increases in Hillsborough County that’s based on the inflation rate and population growth; Palm Bay’s use of plastic instead of wooden to form concrete sidewalks; and a Miami-Dade County program that lets people exchange conventional shower heads for high-efficiency models.

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