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October 3, 2008 Should Florida’s Constitution be Amended? You’ll Decide on November 4
On November 4 we’ll elect a President, decide who represents us in Congress, choose state officials and entrust our local governments to our favorite candidates. But Floridians will make some other decisions that could have a more lasting impact on our lives than who holds a particular political office for two or four years. This year voters will determine whether Florida’s state constitution will be amended to:
Some of these issues are charged with controversy and have and will draw spirited debate from proponents and opponents. Others have occasioned far less public attention. Three proposed amendments--dealing with school taxes, public support for parochial schools, and defining the percentage of a school district’s budget that must be spent on classroom instruction--were all removed from the ballot by the Florida Supreme Court You’ll decide the fate of the remaining six amendments. Our office has received a number of inquiries about the amendments, how they’re worded, and the arguments for and against adoption. There are multiple sources of information, primarily interest groups which have been formed to urge passage or defeat of certain of the proposals. As a service to Northwest Floridians, we’re sharing an explanation of the amendments, as developed by the James Madison Institute (JMI) and with their permission. The James Madison Institute is a non-partisan public policy organization headquartered in Tallahassee. They do not endorse political candidates and are not affiliated with any political party or candidate. JMI was founded decades ago by Florida State University President Stanley Marshall. Dr. Marshall is still a member of the JMI board. By way of disclosure, prior to my election to the Senate in 2006, I served for a time on JMI’s board of directors. I had no role in developing JMI’s explanation of the proposed constitutional amendments. My purpose in sharing their information is not to persuade but to offer the perspectives of a group of highly-regarded scholars and public policy analysts and, hopefully, encourage you to dig into other sources, pro and con, so that your vote can be an informed one. If you have questions about JMI’s discussion of a particular amendment or wish to contact the Institute please go to http://jamesmadison.org/.
Proposed Constitutional Amendments As explained by the James Madison Institute
AMENDMENT ONE Relating to Property Rights/Ineligible Aliens Reference: Article I, Section 2 Ballot Summary: Proposing an amendment to the State Constitution to delete provisions authorizing the Legislature to regulate or prohibit ownership, inheritance, disposition, and possession of real property by aliens ineligible for citizenship. Sponsor: The Florida Legislature Background In the early 1900s, alien land laws were enacted by many states to restrict or regulate the purchase of land by, specifically, Japanese and other Asian immigrants “extended only to free white persons and persons of African nativity or descent.” The constitutionality of these provisions has, in fact, faded over time. In the 1920s, the U.S. Supreme Court found that alien land laws were constitutional, whereas, in 1948, they found them to be on the fringe of constitutionality. Just a decade later, several states began finding their alien land laws were unconstitutional, citing racial discrimination prohibited by the Fourteenth Amendment. Florida’s current equal protection clause requires the state to treat everyone equally with an exception that permits the Legislature to oversee the ownership of property by “aliens ineligible for citizenship.” Article I, Section 2 of the Florida Constitution states: Basic rights -- All natural persons, female and male alike, are equal before the law and have inalienable rights, among which are the right to enjoy and defend life and liberty, to pursue happiness, to be rewarded for industry, and to acquire, possess and protect property; except that the ownership, inheritance, disposition and possession of real property by aliens ineligible for citizenship may be regulated or prohibited by law. No person shall be deprived of any right because of race, religion, national origin, or physical disability. If approved by 60 percent of the voters, Amendment One would remove the section “except that the ownership, inheritance, disposition and possession of real property by aliens ineligible for citizenship may be regulated or prohibited by law.” This would therefore remove the only exception to Florida’s equal protection clause. This proposed constitutional change made its way to the ballot after passing the Legislature during the 2007 regular session. Senate Joint Resolution 0166, sponsored by Sen. Steve Geller (D-Hallandale Beach) and co-sponsored by Sen. Larcenia Bullard (D-Miami) and Sen. Victor Crist (R-Tampa), cleared the Senate unanimously and the House by an 83-31 margin. Pro Many believe that Florida’s alien land law exception doesn’t belong in the equal protection clause of the Constitution and is blatant discrimination against specific ethnic and racial groups. They also claim the language to be obsolete after almost a century of existence. It is also important to note that the Florida Legislature has never exercised its constitutional authority to regulate or prohibit property ownership by aliens ineligible for citizenship so there have been no examples of its necessity. Con Although there are no official records indicating opponents of this proposal, the argument could be made that removing this language would hinder the Legislature’s ability to act swiftly when dealing with a homeland security threat involving a non-citizen residing in the state. Others may also believe that this provision acts as a deterrent to illegal immigration and that removing it would encourage illegal immigration.
AMENDMENT TWO Florida Marriage Protection Amendment Reference: Article I Ballot Summary: This amendment protects marriage as the legal union of only one man and one woman as husband and wife and provides that no other legal union that is treated as marriage or the substantial equivalent thereof shall be valid or recognized. Sponsor: FloridaMarriage.org Pro Despite the federal “Defense of Marriage Act” and a state statute prohibiting “same sex marriage,” it is not beyond the realm of possibility that a Florida court at some time in the future will rule that the U.S. Constitution’s “full faith and credit clause” (Article IV, Section 1) and the state Constitution’s anti-discrimination provisions could be construed to mean that Florida must recognize the married status of same-sex couples who wed in other states. Amendment Two’s proponents say that inserting the traditional definition of marriage in the state Constitution could prevent this. They also argue that traditional marriage strengthens the nuclear family, the building block of a stable social order, and therefore traditional marriage should enjoy legal protection. Con Amendment Two’s opponents cite three main concerns. First, they argue that an amendment isn’t needed because Florida has a statute embracing the traditional definition of marriage. Second, they caution that an unintended consequence of Amendment Two would be to prohibit “domestic partnerships,” a benefit offered by some employers, including Florida universities that are attempting to recruit faculty members in a highly competitive national labor market. Finally, opponents argue that some senior citizens who cohabit but have remained unmarried in order to preserve certain pension benefits could be denied certain marital privileges such as hospital visitation rights if Amendment Two were to pass.
AMENDMENT THREE Changes and Improvements Not Affecting the Assessed Value of Residential Real Property Reference: Article VII, Sections 3 and 4; Article XII, New Section Ballot Summary: Authorizes the Legislature, by general law, to prohibit consideration of changes or improvements to residential real property which increase resistance to wind damage and installation of renewable energy source devices as factors in assessing the property’s value for ad valorem taxation purposes. Effective upon adoption, repeals the existing renewable energy source device exemption no longer in effect. Sponsor: Florida Taxation and Budget Reform Commission Background The Constitution already contains a provision to exempt a “renewable energy source device” from ad valorem property taxes. The current provision allows the exemption to be in place for a maximum of 10 years. This amendment would eliminate the 10 year time limit on the exemption, and would further exempt improvements “made for the purpose of improving the property’s resistance to wind damage.” In most cases the impact of the amendment would be minimal, so there is not a strong argument for it, but there is also not a strong argument against it. At any rate, here are the Pro and Con: Pro One way to evaluate this amendment is to consider that taxes are the price we pay for government goods and services. When viewed that way, any improvements that make a property more resistant to wind damage, or allow it to use renewable energy sources, do not create an additional demand for government goods and services, and in some cases may reduce the demand for government goods and services. Therefore, there is no good reason why such improvements should subject a property to additional taxes. This amendment would remove any tax disincentive that might discourage a taxpayer from making these types of improvements. Con The argument against Amendment Three is that improvements adding to the value of a property should be treated no differently for tax purposes than other improvements. To treat them differently merely adds to Florida’s long list of property tax exemptions that arguably shift the tax burden from favored groups of property owners to others. Analysis The use of tax incentives to achieve certain public purposes is well established. The Taxation and Budget Reform Commission’s staff analyzed the potential economic impact of each of the seven amendments the TBRC placed on the ballot. The analysis of this amendment suggested that its advantages outweighed any possible disadvantages.
AMENDMENT FOUR Property Tax Exemption of Perpetually Conserved Land; Classification and Assessment of Land Used for Conservation Reference: Article VII, Sections 3 and 4; Article XII, Section 28 Ballot Summary: Requires the Legislature to provide a property tax exemption for real property encumbered by perpetual conservation easements or other perpetual conservation protections, defined by general law. Requires Legislature to provide for classification and assessment of land used for conservation purposes, and not perpetually encumbered, solely on the basis of character or use. Subjects assessment benefit to conditions, limitations, and reasonable definitions established by general law. Applies to property taxes beginning in 2010. Sponsor: Florida Taxation and Budget Reform Commission Background This amendment has two parts. The first part exempts property “encumbered by perpetual conservation easements or other perpetual conservation protections” from property taxation altogether. The second part would tax land used for conservation purposes solely on the basis of its character and use. Pro Concern about the rapid growth in Florida’s population, which is projected to reach 40 million by the middle of this century, has led state and local officials to seek ways to preserve green space against the inroads of agriculture, industry, and urban sprawl. The result has been ambitious (and costly) programs in which large tracts of private property were purchased by government entities and taken off the tax rolls. Land-acquisition programs such as “Florida Forever” have had broad bipartisan support. They remain immensely popular with Florida voters, especially in densely populated urban counties, several of which have initiated their own land-buying programs. Even so, the state and local funds available for land purchases are finite and thus not sufficient to purchase outright all of the properties that many Floridians would like to see preserved. Amendment Four provides an incentive for the owners of these properties to protect them from development without having to sell them. Granted, some of the property would go off the tax roll, but property used for conservation demands little in the way of government goods and services and should be taxed accordingly. Moreover, even if the government were to lose some property-tax revenue when the land becomes tax-exempt, the government would be spared the up-front cost of acquiring the property. Con Although the second part of Amendment Four —taxing land used for conservation purposes solely on the basis of its character and use— is acceptable and desirable, the problems with the first part outweigh the benefits of the second. Amendment Four exempts property “encumbered by perpetual conservation easements or other perpetual conservation protections” from property taxation altogether. It would not seem unreasonable to tax such property according to its current use, but why should it be treated more favorably than other property used for conservation purposes? The concept of protecting or conserving a property in perpetuity is troubling. Florida has been a state for 163 years. In comparison, perpetuity is a very long time. While conserving a particular piece of property for 100 or 1,000 or 10,000 years might appear desirable now, conditions change, and changed conditions may well result in a need to “un-conserve” a property because of factors that cannot be known today. So basing a total and “perpetual” tax exemption on such transitory factors would appear problematic.1 Opponents also note that the principal beneficiaries of this total tax exemption would be major landowners. One can easily picture a family with a large tract of land kept in its natural state and used for hunting, fishing, or other purposes. That family could keep title to the property in perpetuity and never pay any property taxes by encumbering it by a perpetual conservation easement. This tax break would be available not only to Floridians, but also to out-of-state residents with such encumbered Florida property. Owners could retain their estate tax-free in perpetuity. So potentially a large amount of Florida real estate might be permanently removed from the tax rolls. If the property really were conserved in perpetuity, the amount of exempt property could never fall, and as new owners took advantage of the exemption, this tax break’s value would continue to increase year after year, forever. Analysis Although property owners taking advantage of the conservation easement authorized by Amendment Four commendably would be prevented from turning their land into a subdivision or a shopping mall, there are serious concerns about its long-term impact. As opponents have noted, perpetuity is a long time, and conditions change. Granted, a constitution may be amended, so perpetuity may not really mean forever. If that be the case, and if the “permanent’ easement on much of the property turns out to be more temporary than perpetual, the conserved property would not seem to deserve anything more than being taxed based on its current use, as would be the case for other conserved property. On the other hand, if a large portion of the conserved properties were to remain tax exempt in perpetuity, local governments would lose revenue and would lack the flexibility to deal with changing conditions. For instance, suppose a tract of perpetually conserved land blocked a narrow swath of right-of-way badly needed as a corridor for a public purpose such a highway, pipeline, drainage canal, or electric transmission line? Would an easement for those kinds of uses be permissible or would it be subjected to a legal challenge? It’s not clear. Our scholars who analyzed Amendment Four report that they would not argue strongly against someone who supported this amendment and thought that the tax benefits it would give to major landowners—enabling them to maintain their property mostly tax-free — would be worthwhile in exchange for perpetual conservation. On balance, however, our scholars believe the perpetuity provision could be problematic.
AMENDMENT SIX Assessment of Working Waterfront Property Based Upon Current Use Reference: Article VII, Section 4; Article XII, New Section Ballot Summary: Provides for assessment based upon use of land used predominantly for commercial fishing purposes; land used for vessel launches into waters that are navigable and accessible to the public; marinas and dry stacks that are open to the public; and water-dependent marine manufacturing facilities, commercial fishing facilities, and marine vessel construction and repair facilities and their support activities, subject to conditions, limitations, and reasonable definitions. Sponsor: Florida Taxation and Budget Reform Commission Background Florida requires county property appraisers to determine the taxable value of most real property in accordance with its “highest and best use,” a phrase often construed to mean the use most lucrative for the local government’s treasury. However, there are exceptions. Farm acreage would produce more tax revenue as a subdivision or a shopping mall if taxed at a lower rate given to active agricultural land based on its current use rather than on its speculative value. The operators of waterfront businesses have been less fortunate. Bait shops, marinas, and “mom-and-pop motels” have seen their property taxes skyrocket when pricy condominiums and high-rise hotels sprouted on nearby waterfront properties. Amendment Six would remedy this by allowing these properties to be evaluated based upon their current use rather than on a property appraiser’s speculation about the property’s potential value if under some other “highest and best” use. Pro This amendment is very easy to support, based on the principle that taxes are the price we pay for government goods and services. On that basis, all property should be taxed based on its current use, not on some hypothetical best use of the property. Property should be taxed based on what it is, not on what a tax appraiser thinks it could be. As noted above, this principle is already embodied in the Constitution for agricultural land, land producing high water recharge to Florida’s aquifers, and land used exclusively for noncommercial recreation purposes. This amendment would extend that same protection to working waterfront property. Con This well-intended amendment would create yet another tax break for a special-interest group, further distorting an already distorted property-tax structure rife with exemptions and loopholes. It would also enable speculators to buy and hold property on the cheap by placing a sham business such as a bait shop on land destined for other uses. Each time one group of taxpayers receives a break, other taxpayers wind up paying higher taxes to make up the difference. Analysis This amendment is essential to the survival of businesses on Florida’s working waterfronts. The fact that they would be taxed out of business without this protection is a testament to the recent inordinate increases in property taxes during a real estate boom fueled to a large degree by speculation.
AMENDMENT EIGHT Local Option Community College Funding Reference: Article VII, Section 9 Ballot Summary: Proposing an amendment to the State Constitution to require that the Legislature authorize counties to levy a local option sales tax to supplement community college funding; requiring voter approval to levy the tax; providing that approved taxes will sunset after 5 years and may be reauthorized by the voters. Sponsor: Florida Taxation and Budget Reform Commission Background Florida’s 28 community colleges have been praised as the most cost-effective element in the state’s entire system of public education, which ranges from pre-kindergarten to doctoral programs. Every high school graduate lives within commuting distance of a community college campus, sparing many the boarding costs associated with attending an institution far from home. Together these campuses deliver quality instruction and job training to thousands of students, many of whom go on to pursue advanced degrees or rewarding careers. Moreover, several of Florida’s 28 community colleges are now beginning to fill a void in Florida’s system of higher education by offering baccalaureate degree programs in high-demand career fields such a teaching and nursing. Although Florida’s community colleges can be proud of their progress, their advocates say they face a chronic challenge: They lack the funding sources that are available to many of the community colleges in other states and to the other elements in Florida’s own educational structure. They cannot depend on property taxes, as K-12 public school districts do, and community colleges rarely can count on gleaning large sums from endowments donated by wealthy alumni, as universities often do. Moreover, the students they serve include many from low-income and minority families for whom high tuition rate would be an obstacle to college. This leaves Florida’s community colleges at the mercy of the funding decisions of a Legislature struggling to meet a wide range of important priorities. Amendment Eight offers a solution by allowing voters to approve a temporary, local-option sales tax for community colleges. Pro The ballot summary explains the amendment quite well. The tax is subject to voter approval, a nod to local control. The money would be raised locally and spent locally. The tax is temporary. Local oversight of local funding means closer scrutiny of the way the money is used. Taxpayers who may be comparatively indifferent to how a college spends money the Legislature sends down from Tallahassee may be more interested when it’s their own local funds. This oversight places community colleges on notice to spend the money prudently and efficiently because squandering it would make it difficult to ask local voters to reauthorize an extension of the tax when it expires after five years. Con The Taxation and Budget Reform Commission must have perceived sales taxes as a good source of revenue for all types of expenditures. Amendment Five (above) would require a 43-percent increase in sales taxation (or equivalent increases in other revenues or Draconian spending reductions) to make up for the revenue lost under the amendment’s proposed property tax cut. On top of that the TBRC offers voters the opportunity for even higher sales taxes to help fund community colleges. Especially considering the potential combined impact of this amendment with Amendment Five, this appears to place a heavy burden on Florida’s sales tax base.Analysis One advantage of relying principally on state funding for Florida’s community colleges is that high school graduates are free to choose any community college in the state without fear of being assessed “out of district tuition” analogous to the out-of-state tuition paid by non-residents attending Florida’s public colleges and universities. That freedom of choice is helpful because some highly desirable degree college programs are offered only at certain community colleges and not at others. Still other high school graduates wish to attend a community college in a city such as Gainesville, Tallahassee or Miami, with the ultimate intention to transfer to a public university in the same city. Although there is no current basis for demanding “out-of-district tuition” from students who are not local, skeptics might well wonder how long it would be before local taxpayers begin to ask why they are “subsidizing” non-local students from counties where the community college sales tax is not being collected. Moreover, unless the local-option sales tax is capped so that it does not apply to the full price of big-ticket items such as automobiles and boats, the tax differential between adjoining jurisdictions may provide an incentive for purchaser to buy elsewhere, thereby penalizing retailers in the jurisdiction where the tax is collected. Moreover, if Amendment Five were to pass, the local option tax for community colleges would be piled atop a statewide hike in a sales tax that is already high compared to many other states. Therefore, notwithstanding the great achievements of Florida’s community colleges, our analysts have reluctantly concluded that this is not a good method of funding them. ###
Citizens Insurance Withdraws Plans For New Office HQ
Tallahassee, Florida/ Citizens Property Insurance Corporation won’t be building or leasing a huge new Tallahassee office complex, after all.
Under pressure from at least two members of the Florida Senate, Citizens spokesperson Christine Turner announced late this afternoon that the government-sponsored insurer will not go forward with a planned 100,000 square foot office headquarters.
Senators J.D. Alexander (R-Frostproof) and Don Gaetz (R-Niceville) had objected to “expensive, expansive new offices for Citizens at a time when small businesses and families are suffering from high insurance rates.”
The two senators, both members of the Senate’s Banking and Insurance Committee, had sharply criticized Citizens Board Chairman James Malone for an office design that included a fitness center, restaurant and concierge services.
“The sheer size, scope and expense of such an undertaking is extraordinary, particularly given the economic conditions facing those who pay Citizens premiums and directly and indirectly support Citizens through surcharges on other policies,” Gaetz wrote to Malone. “While I can understand the comfort and convenience which would be available to Citizens executives and employees, I question the wisdom of spending Floridians’ dollars for what would seem to be non-essential luxuries.”
At 5:00 p.m. Central Time today Citizens issued a statement acknowledging that the project “is not fiscally sound” and withdrawing the plans.
“I am grateful to Senator Alexander for his common-sense leadership on this issue,” Gaetz said. “And I appreciate the officials of Citizens Insurance listening to the objections we voiced and reversing course on this non-essential project.”
“If Citizens has extra money for new offices and luxury amenities, then premiums to policyholders and surcharges on other Floridians should be reduced,” Gaetz explained. “This is not a time for government or government-sponsored entities like Citizens to spend a single unnecessary dollar.”
For more information about this or any other issue, please respond to Senator Don Gaetz, by e-mail at gaetz.don.web@flsenate.gov, by letter, 217 Miracle Strip Parkway, SE, Ft. Walton Beach, FL 32548 or call 1-866-450-4DON toll free from anywhere in Florida.
Mr. James Malone, Chairman
Dear Chairman Malone,
From time to time it is customary for organizations to review their space needs and make cost-effective decisions about housing personnel and systems. There’s certainly nothing wrong with that kind of analysis. Here in Northwest Florida, many companies are downsizing, consolidating and otherwise reducing space and infrastructure as a way to control costs and survive during these tough times.
As an involuntary Citizens policyholder and member of the Senate Banking and Insurance Committee, I was surprised to learn that Citizens Property Insurance Corporation is currently planning to lease or have built-to-suit a new 100,000 square foot office facility in Tallahassee. The sheer size, scope and expense of such an undertaking is extraordinary, particularly given the economic conditions facing those who pay Citizens premiums and directly and indirectly support Citizens through surcharges on other policies.
I am further advised that the amenities under consideration for this vast facility include a fitness center, restaurant and concierge services. While I can understand the comfort and convenience which would be available to Citizens executives and employees, I question the wisdom of spending Floridians’ dollars for what would seem to be non-essential luxuries.
Mr. Malone, yesterday I stopped by a local pizza restaurant to pick up some food to take home to my family. The lady who waited on me is someone I’ve known for years. But now she is working two jobs because of the high cost of property ownership, including being, like me, an involuntary customer of Citizens. She told me she is willing to work all day at her regular job and in the evening waiting tables because she loves her modest home. But, she explained, it’s a week to week, month to month struggle.
I daresay my friend who works two jobs is not atypical of Floridians who might be confused or even angered at Citizens’ reported plans for new, expansive, expensive offices. This is not a time for government or government-sponsored entities like Citizens to spend a single unnecessary dollar.
The Florida Legislature has made mistakes and I’m sure my fingerprints are on many of those committed in the last two years. Still, if the reports I have received are at all accurate, I hope you will reconsider what would be a serious error and an indefensible value judgment. If, however, Citizens goes forward with anything resembling the proposed offices and amenities, I hope you will prepare to appear before the Banking and Insurance Committee of the Senate to offer your explanation.
Notwithstanding my concerns as expressed, please accept my thanks for the information and assistance which your team has provided to our team in our Senate office as we have attempted to answer questions for our constituents.
cc: President Pruitt Members of the Senate Banking and Insurance Company
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Senator Don Gaetz Report -
September 16, 2008 Area schools to receive performance bonuses Escambia and Fifty-eight
local schools will decide how to spend additional money coming their
way because they earned high academic rankings from the Florida Department
of Education.
“This money is above and beyond regular legislative appropriations to
districts,” said Senate Education Committee Chairman Don Gaetz (R-Niceville).
“Schools are successful because of effective teaching and because students
respond to high standards with rising performance. These awards
recognize schools that have improved dramatically in academic standing
as well as those which have earned A’s and are at the top in student
achievement.”
Qualified schools in
Despite declining state revenues and the toughest budget year in decades,
Gaetz helped negotiate an agreement between the Senate and
House of Representatives to continue providing cash awards to schools
that substantially improve or far exceed standards. School
grades are determined by student proficiency in reading, writing, science,
and mathematics, as measured by the Florida Comprehensive Assessment
Test. “Under
the law, school advisory councils, comprised of parents and teachers,
decide how to spend ‘A school’ dollars,” Gaetz
explained. “I’m pleased the Governor and my fellow legislators
agreed to recognize and reward those in education who work hard and
achieve much, often despite tough odds. Results equaling rewards
is the right message to send to students and teachers.”
Funds can be used for employee bonuses, tutoring for struggling students,
instructional materials for classrooms and school libraries, stipends
to allow students, themselves, to have books or computers, or other
purposes that will help students succeed scholastically.
Gaetz said he’s pleased that a significant
portion of school performance awards wind up as bonuses paid to teachers
and other school employees.
“This is a time when school districts are facing the first real cut
in per student funding in a generation,” the senator explained.
“School performance awards can put some well-deserved dollars in the
pockets of dedicated, skillful educators.”
In Escambia and Carver-Century K-8 School B
$17,319 Myrtle Grove Elementary
School C
$57,742 Pleasant O.J. Semmes Elementary
School C
$24,330 Allie Yniestra
Elementary School C
$23,967 West Florida High School/Technical
A
$109,179 Jackie Harris Preparatory
Academy B
$16,516 Pace High School A $154,446 Holley-Navarre Intermediate A $60,988
The
information came to me from the Senate Majority Office and I am sharing
it with you.
Court throws out Property Tax and Voucher Amendments
meklas@MiamiHerald.com
The Florida
Supreme Court on Wednesday threw out three controversial amendments
relating to property taxes and school vouchers in unanimous rulings
released less than five hours after the oral hearing arguments. The two rulings, with opinions to follow,
remove from the Nov. 4 ballot Amendments 5, 7 and 9 on the grounds that
they were improperly placed on the ballot and are misleading to voters.
The court wanted to rule on the cases in time for the Friday deadline
for the Secretary of State to certify the official ballot. In an animated one-hour session Wednesday
morning, the justices left no doubt that they had numerous questions
about whether the Taxation and Budget Reform Commission, which meets
every 20 years, exceeded its authority when it voted to place the voucher
amendments, Amendments 7 and 9, before voters. The court then pummeled the attorneys
with questions about whether Amendment 5, which would reduce property
taxes by an average of 25 percent and force lawmakers to replace the
money with sales and other taxes, is misleading. The ruling is a blow to tax reform
advocates and voucher proponents, who hoped to use the commission to
overhaul the state's tax policy and use it to overturn the Florida Supreme
Court decision that overruled the state law giving private school tuition
vouchers to children who were attending failing ''We gave it our best shot,'' said
Allan Bense, chairman of the commission and former Florida House speaker.
``I'm very disappointed but particularly about Amendment 5. I thought
that was Bense said that because the rules of
the commission require a super-majority vote to place any amendment
on the ballot, proponents were forced to compromise and revise their
proposals to get 17 votes from the 25-member commission. In the end, that may have doomed the
proposals, he said. The tax reform amendment was tied to eliminating
property taxes to win votes, and that led to reducing taxes that pay
for schools which left schools worried about seeing their funding cut,
he said. Opponents to Amendment 5, led by a
large coalition of business, health care, education and other interest
groups, successfully argued that the the ballot language was misleading
because it implied that schools would be protected indefinitely from
budget cuts when in fact the amendment specifies that the legislature
must protect school spending only the year the amendment takes effect
-- in 2010-11. Leon County Circuit Court Judge John
Cooper first ruled Amendment 5 unconstitutional on the grounds that
the language was misleading. Several justices repeated his reasoning
Wednesday that the title and summary could confuse voters. ''The average person is going to read
this and say, ` OK, those property taxes are gone but the state is going
to put that same amount of money back into the school system -- I don't
have anything to worry about,'' said Chief Justice Peggy Quince. ``What
will put them on notice... that this isn't a feature of it?'' Mark Herron, the attorney representing
the Florida Association of Realtors and other proponents, disagreed
and said the amendment ''doesn't imply or infer'' that the money will
be replaced more than the first year. But Justice Wells disagreed. ''Unfortunately,
like I find with some warranties, it's not a lifetime warranty and I
don't have any recourse,'' he said. Cooper also heard challenges to Amendments
7 and 9 in July but left them on the ballot. The Florida Education Association
and a coalition of education and civil liberties groups appealed the
ruling. Their argument: the Taxation and Budget Reform Commission had
no authority to place on the ballot proposals designed to constitutionally
protect state-paid tuition vouchers at private schools and end the ban
on state aid to religious groups. Several of the justices appeared to
be persuaded by the opponents' reasoning that the commission must limit
what it can place on the ballot to issues relating to the budgetary
process, not just those that have a budgetary impact. Florida Solicitor General Scott Makar,
defending the commission, argued that its scope was not supposed to
be limited to ''cramped, narrow reform'' but was ``supposed to be broad
and remedial.'' Justices Barbara Pariente and Harry
Lee Anstead, as well as Quince and Wells, challenged that conclusion. ''We all know that everything the Legislature
does has an impact on the budget,'' Anstead said. By allowing the commission
to focus on any issue that simply impacts the budget and is not limited
to the process, he argued ``they could do anything.'' Pariente said she was concerned about
the sweeping title of Amendment 7, ''Religious Freedom,'' which repeals
the 100-year-old ban on direct state funding of religious institutions,
including religious schools. She questioned what that had to do with
the job of reforming the state's taxation and budget process. ''Seems to be to be as far afield as
you can get,'' Pariente said. ``If they had proposed repeal of the class
size amendment, which is really impacting the budget, I think they'd
have a closer argument.'' Opponents also argue that the title
of Amendment 9 -- ''Requiring 65 percent of School Funding for Classroom
Instruction'' -- is misleading. They say that because nearly all Justice R. Fred Lewis decried what
he said was the ''game-playing'' that has increasingly enveloped the
amendment process -- in which proponents try to snag voters with misleading
or incomplete ballot titles and summaries. ''It's starting to become a game and
these things ought to fly on their own merit,'' Lewis said. ''Why not require, if anyone wants
to change the constitution, that it not be misleading, that it not engage
in all these catchy phrases and political arguing that's popular today?''
Lewis added. To make the point, Pariente read aloud
the ballot title of Amendment 5, which says: ``Eliminating state required
school property tax and replacing with equivalent state revenues to
fund education.'' ''Nobody in their right mind isn't
going to think: `Isn't that a great idea','' she said. Herron responded that voters would
read the other 75 words -- beyond the ballot title --which more fully
describes the amendment. Quince then interjected. ``Even if
the voter, voting on that title, reads the rest of the 75 words, where
does it tell that voter that this replacement of state revenues to fund
education is for the year 2010-2011 alone?'' After the hearing, Herron, who has
successfully challenged and defended several constitutional amendment
proposals, said he agreed with Lewis that the process of ballot wording
has become too politicized and needs reform. As to the prospect of restoring Amendment
5 to the ballot, Herron was more circumspect: ''I've gotten beat up
a lot of times,'' he said. ``Sometimes you win. Sometimes you lose.'' For more information about this or any other
issue, please contact Senator Don Gaetz, by e-mail at
gaetz.don.s04@flsenate.gov, by letter, 217
Miracle Strip Parkway, SE, Ft. Walton Beach, FL 32548 or call 1-866-450-4DON toll free from anywhere
in Florida.
Sponsored by Senator Jeff Atwater (R-Palm Beach) Co-sponsored by Senator Don Gaetz (R-Niceville)
The “Homeowners Bill of Rights” (Senate Bills 2860 and 1196) grew out of a series of hearings conducted this year by the Senate Select Committee on Property Insurance Accountability. The Select Committee subpoenaed insurance company chief executives and actuaries and placed them under oath and asked them questions to which Floridians wanted answers. Senator Atwater chaired the Select Committee. Senator Gaetz was a member appointed by the Senate President.
After more than twenty hours of testimony under penalty of perjury, the evidence was clear and troubling. Some insurance companies have cynically and purposefully taken advantage of policyholders, cancelled coverage without adequate notice or reason, failed to pay claims on time, generated unapproved hurricane risk models as justification for skyrocketing rates, used savings which were supposed to go to consumers to engage in internal stock buybacks, and boosted their profits to historic highs while poor-mouthing to the public and regulatory agencies.
Insurance companies are private corporations. While there is a legal and constitutional limit to what the state legislature can and should do to control them, Senators Atwater and Gaetz, joined by other senators, introduced Senate Bills 2860 and 1196 to level the playing field between insurers and insureds. This legislation, which has come to be called the “Homeowners Bill of Rights,” passed both houses of the legislature with the support of both Republicans and Democrats.
Here are some of the major provisions of this legislation:
1. Homeowners have the right to rates that are based on real, not manufactured risk.
Insurance companies use “risk models” to predict probable maximum loss from hurricanes. The Select Committee found that some “risk models” were devised primarily to justify high rates and weren’t based on valid, reliable assumptions. Thanks to this new law, self-serving “models” are now illegal. The models and assumptions behind them must be publicly available and approved in advance by the State of Florida.
2. Homeowners have the right to choose among competitive insurance companies with a reduced dependence on Citizens Insurance.
The state is eliminating anti-competitive barriers to new insurers entering Florida. The legislature has provided incentives for more companies to enter the market. In return for these incentives, companies must agree to write at least 15 percent of their policies for consumers transferring out of Citizens Insurance, a state-owned insurer. Over time, this will “de-populate” Citizens and reduce the insurable risks which could be passed along to all Floridians in case of a year of devastating storms and losses.
3. Homeowners have the right to fair trade practices and prompt payment of claims.
The bill requires insurance companies to pay undisputed amounts of partial or full claims within 90 days. Insurers are prohibited from withholding payment on a partial claim until a full claim has been settled. Violations subject companies to penalties under the law.
4. Homeowners have the right, through their state government, to stop insurers from unreasonable, unjustified rate increases.
Under current law, if the state’s Office of Insurance Regulation denies a rate increase, insurers can appeal the denial to an arbitration panel. Arbitrators don’t have to be familiar with insurance law, or rate setting or even live in Florida. Some arbitrators are even chosen by insurance companies. The result is that rate increases denied by the state are often approved by arbitrators who “split the difference.” The new law eliminates insurers’ ability to use arbitration to overturn rate denials.
5. Homeowners have the right, through their state government, to severely punish insurance companies that violate the law.
The law, as it stands now, only allows the state Office of Insurance Regulation, to issue what amounts to a slap on the wrist if insurance companies commit an unfair trade practice. The result is that some insurers thumb their noses at the public. Now, companies that break the rules are subject to stiff penalties of up to $200,000.
6. Homeowners have the right to know how insurance companies make their decisions.
Companies are required to make public their claims-handling procedures and are forbidden from using “trade secrets” as an excuse to cover up unfair, unreasonable or illegal practices. The Office of Insurance Regulation can now release a document marked as a “trade secret” to the public under certain circumstances.
7. Homeowners have the right to know in advance if insurers are planning cancellations.
If an insurer plans to nonrenew more than 10,000 policies within a 12-month period, the company must inform the state at least 90 days before issuing any notices of nonrenewal. After any policy is non-renewed, consumers must have at least six months notice before they lose their coverage.
8. Homeowners have the right to be protected against excessive profits by insurance companies.
The new law allows only “a reasonable margin for profit and contingencies.” The current practice has permitted insurers to reap historic profits while telling the public that they are still recouping losses.
9. Homeowners have the right to be protected from insurance risks dumped on them by irresponsible actions of others.
Under current law, policyholders could experience an expensive assessment to fund deficits incurred by the state-owned Citizens Insurance Company. The new law reduces by 40 percent any assessments persons who are insured by commercial carriers might have to pay to fund deficits in Citizens. The law also requires new structures built within 2,500 feet of the coast to meet the higher standards recently included in the Florida Building Code.
Right now, purchasers have no documentation of the windstorm rating of a home they’re purchasing. The Homeowners Bill of Rights requires disclosure of a home’s windstorm mitigation rating for any home located in a wind-borne debris region and insured by Citizens for $500,000 or more.
11. Homeowners have the right to lower premiums if they mitigate risk to their properties.
The Office of Insurance Regulation is required to develop a method of tying discounts for property insurance to the numerical rating of a structure based on the uniform home rating scale. Floridians can go to www.mysafefloridahome.com to arrange inspections of their property, a numerical risk rating and advice on how to take specific actions to reduce risk. Persons with modest-priced homes in wind-borne debris areas can obtain state grants to help with putting on shutters and making other improvements that mitigate or reduce risk.
In addition to this “Homeowners Bill of Rights,” the state is also providing free help in finding insurance companies and comparing rates. By going to www.shopandcomparerates.com , owners of homes and businesses can learn about all the insurance companies, old and new, that are willing to write policies in each county. Information is provided on this website that will help you find the coverage you need and compare prices among insurers.
The “Homeowners Bill of Rights” takes important steps toward leveling the playing field between insurance companies and policyholders. But Senator Atwater and Senator Gaetz believe these are just steps and are committed to expanding and improving homeowners’ rights in the next session of the Florida Legislature.
For help or more information:
Citizens Property Insurance Corporation: Here you can find first-hand information on Citizens, links to find an agent in your area, coverage options available, and news related to the company.
Federal Alliance for Safe Homes: Here you will find information for all homeowners insurance coverage options, suggested safeguards and improvements to your home, and news on insurance reform at the federal level.
Florida’s Chief Financial Officer (Alex Sink): Outside of the Office of Insurance Regulation, the CFO’s office is the next best state source for information and answers on any insurance questions you may have. Their website is very consumer friendly. Pensacola Regional Office, Clifford Long (850) 453-7800 HELPLINE 877-My-FL-CFO
Florida Hurricane Catastrophe Fund: Here you can find detailed information about what the catastrophe fund does and answers to any other questions you may have.
Florida Insurance Council: This is an insurance trade association website, where you can find news and opinion articles related to the insurance market in Florida and statistics on hurricanes and insurance rates in Florida.
Florida Office of Insurance Regulation: Here you can find information for any insurance questions you may have, rate filings for insurance companies, actions of Commissioner McCarty, and licensed property and casualty companies in Florida. (850) 413-3140 Consumer Line to Commissioner’s Office
Florida task force for long-term solutions for Florida’s Homeowners Insurance Market: Here you can read the final report of this state sponsored commission, as well as minutes from their meetings and other task force publications. www.myfloridacfo.com/hurricaneinsurancetaskforce
Insurance Information Institute: This nonprofit organization is involved in insurance reform across the country and offers information on the homeowners insurance market in Florida.
To read the full text of the hearings of the Senate Select Committee on Property Insurance Accountability, go to: www.flsenate.gov → committee pages → Select Committee on Property Insurance Accountability → meeting transcripts.
For more information about this or any other issue, please contact Senator Don Gaetz, by e-mail at gaetz.don.web@flsenate.gov, by letter, 217 Miracle Strip Parkway, SE, Ft. Walton Beach, FL 32548 or call 1-866-450-4DON toll free from anywhere in Florida.
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