Editor's Note. All Ideas in this section for tax reform are solely for informational purposes by it's author and do not necessarily reflect our groups endorsement. In order to have a free transfer of ideas, we first must be committed to listening to others.
August 15, 2009
Taxation, Insurace, & Health Reform Thoughts
HRH on any federally mandated and operated universal health care program!
Insurance is the process whereby risks of any kind are spread among the greatest number of people.
For example, then, if we could have worldwide, natural-catastrophe insurance, the entire world population would bear the risk, cost of, and compensation for each earthquake, each hurricane: each disaster the Earth encounters.
But not all 6 Billion people WANT to participate in such risk reimbursement, and some cannot afford to participate. Hence, we have a reduction in the “population” who want to cover the cost of disasters caused by Nature.
The result is a higher cost to the people who want to purchase worldwide catastrophe insurance.
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In any discussion regarding insurance, there are three basic factors to consider:
First is the description of services (risks) to be covered by the policy or the terms of the contract.
Second is the size of the “population” paying the premiums.
Third is the actual cost of the services to be covered/reimbursed.
For any insurance system to be viable and self-sustaining, these factors must be in such alignment as to provide appropriate levels of service to the insured group at appropriate levels of premium.
When any insurance program allows ANY individuals to receive benefits from the program without paying premiums, the premium cost for all PREMIUM PAYERS will rise!
When every participant is allowed unlimited services, the premiums will rise!
When new services and procedures are added to the program, the premiums will rise!
As one can readily see, without parameters in any insurance program, the program becomes unsustainable due to the rise in cost of services with a resulting increase in premium cost.
Unfortunately, those specific parameters or contract terms are now being referred to as “rationing”.
Private enterprise and the free market would easily determine these parameters (or the risk management) because the insurance companies want to maximize profits.
To say it another way, the premiums paid by any “population” must relate to the risks protected or services insured, in order to sustain an insurance program in the free market system.
In order for the free market, private enterprise system to provide a viable and sustainable program into the future, there would necessarily be limitations on the health services provided which would be directly related to the total premium cash pool received.
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Every time large pools of money are generated, there are abuses of that money and of the power which comes with that money. Taxes are a very obvious example of both the abuse of the large pool of money and the abuse of the power which comes with that money.
So it is ALSO, but more controlled because of the profit factor, in the private sector where large sums of compensation, perquisites (perks) and benefits are siphoned off for those few with the power to do so - leaving less funding available for research and development, ingenuity, or even incentives for those at the lowest rungs of the corporate ladder – while driving up the costs of the product or service.
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Should we have a discussion regarding the provision of health care to ALL residents within the borders of our nation – as a partnership between government and private enterprise - all of the above factors (insured population, contract terms, premium pricing, abuse and greed) must be considered.
In such a partnership, if any group is allowed NOT to pay their fair share of the risks involved, and premiums remain viable for the overwhelming majority of the US population, then presumably those unpaid premiums will be paid by the taxpayers.
In such a partnership, if the medical service providers are allowed to raise costs (added services, new technologies, executive compensation, et al) at will merely because there is a large pot of money from which to draw those expenditures, then, presumably, the taxpayer will pay for those abuses.
THESE are the rising costs of health care about which all participants are “talking”, but to which NONE is referring.
If there is NO limitation (rationing) on the amount of service to be provided in such a health care partnership, then all receivers of benefits will anticipate that they will have all the latest services and technology available when needed, thus driving up even further the cost of any health care partnership system.
If the administrators do NOT create new and less costly technologies, and find new efficiencies in their operations, and the pool of partnership funds remains available to the health care industry without restriction, then, again, the “cost” of health care rises, and, should premiums remain viable for the vast majority, the taxpayer will foot the bill.
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The United States has a wonderful medical care distribution system. We have learned well how to perform heart transplants, extremity reattachments, facial remodeling, ad infinitum. So, we have the skills, technology and personnel to keep a pretty healthy and normally functioning society.
We ALSO already have, interestingly enough, a system of health care which covers the least financially advantaged among us - a system of health care “clinics” where service is provided to all comers – regardless of citizenship or financial status - at minimal cost to the patient - or for free, in many cases.
We also have Medicare and Medicaid - health insurance programs (entitlement programs) operated by federal and state governments which, when they run short of operating cash or funds to pay for the medical care being provided, merely appropriate (the power of “assessment”) the shortfall of funds from taxes paid by the citizenry now and forever into the future – a major breach of trust by elected officials against the citizens of this country to conserve our tax dollars.
Thus, in truth, we already have 1) “rationed” health care (limitations on contracted services via the terms of the policy), 2) government sponsored health care insurance premium programs AND 3) a public health care system open to all comers - paid for courtesy of those who actually pay taxes.
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Now we have the federal government coming forward with a desire to “reform” both the medical services industry and medical insurance industry - adding millions of individuals to a health care system, increasing the cost of the system as a whole by the services demanded by those new entrants - in order to provide ALL the residents within our borders with some form of health care.
There is little real, honest, open public discussion regarding the limitations discussed above (other than “rationing”) for the so-called “universal” health care program now being created at the federal level.
So, how will such a program be funded? Will it be self-funded by sustainable and reasonable insurance premiums paid by all the beneficiaries – all the residents within our borders?
The answer seems to be a resounding NO.
And, if the creation of new operating efficiencies – ALONE – is not sufficient to cover the additional gross premium cost and the added non-paying insured population, who will pay this bill?
The discussion now going on seems to ASSUME that the taxpayers – through the government’s power of assessment to create additional taxes on the wealthy, more taxes on business payrolls, even penalty taxes on individuals who choose not to participate in such a program - will pay for the cost of continuing sustainable health insurance premiums while adding millions of individuals to the health care system!
When the taxpayers pay for a government program, it means that TAXES will be used to pay for it.
Since all of our tax money is already spoken for for years to come, that will mean NEW TAXES (or additional government debt to be paid back by future generations with THEIR tax dollars) to pay for such a health care system including a health care insurance industry.
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This is my simple message: When government creates a program for the benefit of all or any group of residents, the ONLY source of money to pay for that program is TAXES!!!
EVERY individual within our borders MUST be educated to the fact that ALL programs started and operated by our governments are paid for ONLY with tax dollars, and that EVERY person pays those taxes. Even if you do not pay a tax directly, you pay it indirectly through the higher than necessary cost of goods and services because of the added taxes.
Therefore, whenever any new government program is established, EVERY individual in the country will pay higher taxes and fees, whether it be income taxes on April 15, gasoline taxes, inheritance taxes, park entrance fees, or ANY OTHER item of revenue!
So it is with any new health care reform program. The ONLY way for government to pay for any such program is to raise taxes immediately today, or at some point in the future.
EVERYONE in this country MUST be educated about this!!! One way or another, no matter on whom the initial fees and taxes are placed, ALL the residents will pay for such a program in HIGHER TAXES!!
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I also offer the following suggestions for any new health care and health insurance programs.
There is a discussion regarding implementation of a “fine” for any person who does not have health care insurance of some kind. I have not heard that this also applies to the indigent and homeless who have no funds to pay for food and housing, let alone health care insurance premiums.
In response to any UN equal distribution of costs for health care should the least fortunate among us continue to receive free benefits, there are many needs in our society which have gone unsatisfied and which can be satisfied by even the least advantaged among us.
In the past, we have had the Works Progress Administration and the Civilian Conservation Corps which provided jobs and financial support for persons lacking the financial ability to feed and clothe themselves.
Why not establish a Health Care Premium Corps wherein those wanting to receive health care benefits who cannot afford to pay for health care insurance spend time working for the good of our society while earning the benefits they desire. With millions of new people working for the betterment of our country, great works will be accomplished. This would also create personal responsibility and a “buy in” to the program for those who have heretofore received benefits with no personal “cost” to themselves.
Therefore, it is my suggestion that EVERY individual covered under any new health care system be required to either pay the appropriate premium OR work for their premiums.
In many areas of the insurance industry, individuals are allowed to choose from a menu of risks to be insured and compensated. Auto insurance, property insurance, liability insurance and even life insurance all come with multiple choices and resulting benefits. Some beneficiaries will want to pay an insurance premium commensurate with reimbursement for all aspirin tablets and band-aids. Some will want to pay a premium ONLY to cover the recovery from catastrophic or life threatening incidents. The greater the premium paid, the more and higher level of benefits provided.
This discussion of multi-tiered benefits seems to be lacking and should also be a part of the mix.
Additionally, in any government operated health care system, ALL recipients must be required to maintain themselves in the best possible health through regular physical activity, prudent eating habits and periodic testing to discover illnesses which are growing in the body.
Any participant refusing such a positive living standard would be required to pay a “penalty” premium.
Because any such program as currently proposed will be a PUBLIC program imposed by the government, all practical discussions regarding the analysis of benefit to cost WILL NEVER take place, and the taxpayers will, once again, pay a greater percentage of their hard-won earnings in taxes.
Whether Republican or Democrat, liberal or conservative, the above dissertation should provide sufficient information to show that NEW TAXES or NEW PUBLIC DEBT will be the ONLY way to pay for such a public program of health care for all residents of our nation.
For any one group in our society (such as those receiving benefits without paying dollars toward the cost of those benefits) to thereby cause increased taxes on any other group of individuals within our society is ABOMINABLE!
My conclusion is that, based on past experience, any government health care system for ALL the residents of the United States would be absolutely cost IN efficient and UN workable in practice, if only due to the many demands of premium payers for minimal premium costs, combined with an increasing population of benefit recipients demanding unlimited benefits, plus the additional abuses of the system, OR such tax increases that the costs (taxes and premiums) of the program would far outweigh the benefits (reductions in the actual cost of health care services) of such a program!
The objective of good health for all United States residents is noble. The methods and procedures for attaining such a lofty goal are not yet in place or being developed.
May 22, 2009
How to make medical care more affordable.
Rationing and cookbook medicine coming from government and insurance companies who will gain full power over medical care.
Why patients need to put power in their hands.
See the 30 minute Video “Faces of Government Health Care”
Hear how government run medical care fails patients in Britain and Canada from patients and their doctors.
Sunday June 7, 2009 3 p.m.
The 912Project
American Legion Post #14 1500 4th Street North St. Petersburg, Florida
Dr. McKalip is a private practice brain and spine surgeon in St. Petersburg , Florida . He is the President-elect of the Pinellas County Medical Association, President of the Florida Neurosurgical Society, serves on the Board of the Florida Medical Association (FMA) and is on the Florida Delegation to the AMA’s key policy making body, the House of Delegates. He also is the Founder of the Florida Taxpayers Union. He serves as the Chairman of the Council on Medical Economics for the FMA and led the effort to write a health system reform plan for the FMA that focuses on individual financial empowerment of patients. Dr. McKalip founded Doctors for Patient Freedom and is working to ensure that individual savings, choice and competition create better and more affordable medical care for Americans. Dr. McKalip has written and spoken on the unintended consequences of expanded government and corporate control of health care financing and medical decision making including rationing, cookbook medicine, unsustainable economic models for government and unaffordable or unavailable private insurance products and financing options for patients. ______________________________________
If you want to make your ideas and viewpoints known on various pertinent fields & subjects affecting our country and local region to the incoming President-Elect & his Executive administration you can do so in the form of the daily Citizen's Briefing Book. I commented on the inappropriate & untimely sale in a recession of the Graham-Rogall public housing complex to condo developers by the city housing authority members appointed by the city mayor, and some of the ridiculous expensive payroll workings of the Federal Civil Service System. You can also do is by going to the website WWW.change.gov . There you can select and comment on various fields & subjects after providing various general info on yourself ( no SSA # required ) and your e-mail address. After acceptance you will be asked to provide an acceptable password and a desired Log-in name which could even be your given name, in truncated form, if you wish. I found many of the ideas & comments very sincere, insightful and intelligent and hope you will provide some of your own soon. Our country needs every citizens help to survive, maintain our standard of living & upgrade our education levels, and confirm our democracy strategic position in the world. If you feel that this is a worthwhile endeavor please forward this e-mail to your friends & family members.
Sincerely,
Mr. Rod Moren Overtaxed St. Pete Taxpayer, past member of the disbanded Cut Property Taxes Now organization, and present member of the Florida Taxpayer Union ( FTU ) encouraging the passage of the 1.35% property tax initiative presently being debated in the Florida Courts.
December 15, 2008
(Editor Note) The following is a study of Public Safety for Orlando , Orange County by Matthew Falconer at www.TaxpayerBudgetReviewBoard.org
ORLANDO-ORANGE COUNTY TAXPAYER BUDGET REVIEW BOARD
PUBLIC SAFETY REPORT
Public safety is one of the “core functions of government.” Public safety budgets have increased across central Florida by over one hundred million in the past five years yet crime has risen dramatically. The 2006 F.B.I. Annual Crime Report has shown crime in Orlando increased more than any other major city in the United States. Our report will provide recommendations on how to reduce wasteful spending and better protect the lives and property of citizens of Orange County and the communities therein.
Our study found three major areas of waste in public safety in Orange County and the thirteen cities within it; duplication of services, jagged jurisdictional boundaries of services, and an overemphasis on fire suppression throughout the county. Before moving on we want to clarify that our goal is not to create one large central government. We recognize the political and cultural differences in the communities and our mission is not to consolidate governments. We will suggest a consolidation of the services those governments provide. We also want to point out that layoffs are not our agenda. While staffing will be reduced in wasteful areas our goal is to reallocate those resources into more productive roles. The following report outlines the inefficiencies and recommends reforms for improved services to our citizens.
DUPLICATION OF SERVICES
The most obvious waste found throughout Orange County is the duplication of services. This waste is found in all government departments, but nowhere is the waste more costly than public safety. Throughout Orange County we spend $700 million a year on public safety and our estimate is that more than 20% of that money is wasted through inefficiency.
There are obvious areas where duplication is unnecessary, Orange County has ten 9-1-1 call centers. Orlando and Orange County both have individual SWAT teams, mounted horse patrols, marine patrols, and canine units. Each of the 13 public safety agencies in Orange County has some duplication of services and administrative functions that can be shared effectively. Departments like Crime Scene Investigations can benefit greatly by shared resources for equipment and specialized personnel. Gangs and crime know no jurisdictional boundary and are best fought on a regional basis.
GEOGRAPHIC BOUNDARIES
The map of Orange County and its thirteen communities is included herein as appendix A-1. If we started Orange County today we certainly would not draw the jurisdictional boundaries with uneven and jagged boundaries that make our services inefficient to deliver. The current boundaries are a result of annexations of individual properties over decades, but our government services do not need to follow those jagged boundaries.
To eliminate the inefficiencies inherent with jagged boundaries and the duplication of services from neighboring communities we have divided Orange County into four separate service zones. Each zone is bordered by a major roadway for easy distinction and each zone attempts to contain within it the major cities and maintain the cultural identity of the area.
We have attached as appendix A-2 the Orange County Zone Map. Orange County is divided into four zones, three suburban zones and one urban core. It is our recommendation that government services for public safety be regionalized along those new zone boundaries.
REGIONALIZATION OF PUBLIC SAFETY IN ORANGE COUNTY
It is our recommendation that we regionalize public safety throughout Orange County. Regionalization will eliminate much of the waste and duplication of services without creating a massive central bureaucracy. The regionalization of public safety services will follow our Orange County Zone Map. Each zone will have one public safety command center. Each zone will have a single 9-1-1 call center and dispatch. Each zone will have three to four fire suppression centers.
Beyond the regionalization of service areas, all governments in Orange County will share services that are duplicative or specialties that are not needed on a daily basis. It is likely that Orange County only needs one SWAT team. Departments like Crime Scene Investigation benefit from the sharing of expensive equipment and expertise. Investigative services are better regionally as are most police specialty agencies. By regionalizing public safety we will reduce costs and increase the safety of the public at the same time.
SEPARATE FIRE SUPPRESSION FROM EMS
Our study included a fire recourse allocation study for Orange County. We acquired lists of fire responses for various communities that were classified by EMS, structural fires, vehicle fires and other response classifications. We found that 95% of responses did not involve an actual fire, despite the fact that 70% of fire rescue budgets go toward fire suppression. The dispatch of fire suppression equipment, costing as much as $1 million per vehicle, to fender benders because one paramedic is on the truck is extremely wasteful and disingenuous.
Here is an example of one fire station in Orlando for the month of September 2008. Station 2 (there are 19 stations in Orlando) had 502 EMS responses, 130 investigations/enforcement, 56 standbys, and 5 extinguish and control of fires. Of the actual fires four were vehicle or grass fires and one was structural. Vehicle fires can be put out with a fire extinguisher by police or other public safety personnel (like Nascar does), and “most of the vehicle fires are burned out by the time the fire truck gets there” according to our research.
By separating fire suppression and EMS, we can allocate the proper amount of resources to fire suppression. Given the fire allocation study we conducted, we believe we can reduce the number of manned fire suppression stations in Orange County to three or four per zone. Further, we believe we can close at least one station per zone at night when the number of fires drops and road traffic allows for quicker response times.
Appendix A-3 is attached as our fire suppression reorganization map. Our plan is to use existing fire stations to house the new regional fire suppression stations and close the remaining units or convert them to EMS stations. This will reduce the number of expensive fire trucks needed in Orange County by more than half. This same effort has been done in other states. In Cherry Hill, New Jersey, the fire department was regionalized and the fire chief testified that the region is now better served. Chief Giorgio testified that Cherry Hill achieved savings through such measures as a reduction in the fleet from 24 engine companies to 10, from five ladder companies to three, and from five rescue companies to three. They have also achieved a 43 percent reduction in heavy apparatus, such as ladders, engines, and rescue vehicles. Asked why “less is more” when it comes to fire equipment and personnel, Chief Giorgio explained that “there is a base requirement that will meet the service needs of each community. Once that requirement is satisfied, any additional equipment and personnel are superfluous and an unnecessary expense. “
POTENTIAL COST SAVINGS FROM FIRE RESCUE
Here are the budgets for fire rescue in Orange County; Orange County: $188,000,000; Orlando: $73,000,000; Winter Park: $9,147,000; Winter Garden: $9,147,000; Ocoee: $4,960,000; Maitland: $4,266,196; Lake Buena Vista: $12,000,000. We are spending $300,000,000 a year in Orange County for fire rescue services and our estimate is that half of that money is wasted because of duplicative services and overspending on fire suppression. That equals $150,000,000 a year of hard earned taxpayer money that is wasted by the current system of public safety.
INNOVATION
Albert Einstein was famous for saying “insanity is doing the same thing over and over again and expecting different results.’ Orange County needs to change the way we protect the public if we are to achieve better results. The following are just a few ideas on how to improve public safety without raising taxes.
Citizen Observer Program (COPS)
Most cities and counties already have a citizen observer program. The citizens are volunteers and work in areas designated by the government. Some drive in specially marked cars, but most volunteers perform back office functions and clerical duty. The difference between existing COPs programs and what we propose is full time pay for Citizen Observers. The current volunteer program has schedules that are inconsistent and turnover is such that the required training actually reduces productivity. With full time paid Citizen Observers, the benefits will be seen by the community. The following is how the program will work and why it will help solve our current crime crisis.
OUTLINING THE NEED
Currently police officers go from one 911 call to another. There are almost no routine police patrols to deter crime. I recently made a 911 call due to a theft, and after two hours I just gave up. Metro West spends nearly $500,000 per year to pay off-duty police officers to patrol their streets. In order to be safe our community needs eyes on the street watching our neighborhoods and preventing crime before it happens. Even when a police car is on patrol it does very little to deter crime. The police officer is behind glass with the air conditioning on. Our COPs program will have individuals on bicycles going places where patrol cars cannot and they will be able to hear what is going on.
THE PLAN
The plan is for both the City of Orlando and Orange County to dedicate $1 million annually to the COPs program. The candidates will be full time employees at a rate of $10 per hour. They will receive health insurance but no pension because their job is not permanent. Each candidate can serve for only two years to make room for a new candidate to gain job experience.
Each new region in Orange County will have 50 full time observers on the streets of our communities. The observers will be given bicycles and radios and patrol communities in the 4 p.m. to 12 p.m. shift and the 8 p.m. to 4 a.m. shift when most community crimes are committed. The observers will ride through specific areas, seek out criminal behavior, and report events to a uniformed supervisor. They will also talk with residents to find out who is committing the crimes in the area and attempt to gather information to solve existing crimes.
THE BENEFITS
The benefits of the program far outweigh the costs. Having paid citizen observers on the streets of central Florida will make our communities safer. The observers will be young people in good physical condition, many of who have not held a full time job before. It is good for the community and good for the workforce. The COPs program will work because it is low cost and puts observers where the crimes are being committed. Instead of writing police reports we will start to catch criminals and prevent crime. The observers will also have the ability to interact with the public in ways that uniformed police officers cannot.
THE ECONOMIC REALITY
The average police officer in central Florida costs the public $100,000 a year with pay, benefits, pension, and training. Adding the cost of vehicles, supervisors, and other overhead it costs nearly $150,000 a year to put a police officer on our streets (calculated by the budget divided by the sworn police officers on patrol). Our economy simply cannot afford to acquire the manpower to make our streets safer, especially in this time of economic hardship. The Citizen Observer Program will put eyes on the street and allow the uniformed police officers to make the arrests and respond to 911 calls.
The City of Orlando recently approved $1 million to buy Segway scooters and pay for staff to ride around Orlando telling people about the City. The reality is that taxpayers need safer communities more than they need downtown promotional ambassadors. The salaried COPs program is a time that has come and is desperately needed in central Florida.
Local Road Ranger Program
Most people in Florida are familiar with the Road Rangers that serve the Florida turnpike and other toll roads in Florida. These private sector service vehicles assist motorists by coming to their aid when they have car problems or are involved in an accident. Since 2000, when the program began, state transportation managers estimate that rangers have made close to 2 million assists.
They respond to typical road maladies: flat tires, abandoned cars, empty fuel tanks. They clear debris and get broken-down cars out of traffic. ''The Road Ranger is the biggest bang for the buck that a taxpayer could have when it comes to getting from point A to point B,'' said Florida Highway Patrol Lt. Pat Santangelo. The following is how the program will work and why it increase rescue response time, reduce waste, and will help solve our current crime crisis.
OUTLINING THE NEED
The public needs uniformed officers to apprehend criminals, not to respond to fender benders. My son recently had a fender bender and it took over one hour for FHP to arrive. In order to better serve the taxpayer and keep our uniformed law enforcement members focused on more important duties we need to have Road Rangers take care of the mundane tasks of responding to fender benders, broken down cars, and non-life threatening situations.
The road rangers can also put out most vehicle fires and respond to fire alarms that are suspected false alarms. By responding to vehicle accidents the road rangers can quickly determine if medical assistance is needed. In many cases 9-1-1 calls are reports of abandoned vehicles or simple accidents that are reported as injuries. The road rangers will reduce waste and increase public safety by clearing accidents off our streets more quickly.
THE PLAN
At first each region of Orange County will get two road rangers who work 7 a.m. to 7 p.m. shifts Monday through Friday. On weekends one road ranger from each region will be working the same shift. After three months an analysis will be done of the need for additional road rangers. As the number of fire suppression stations is reduced those personnel that are surplus will be added to the road ranger program and other public safety areas.
THE BENEFITS
The benefits of the program far outweigh the costs. Having road rangers respond to fender benders will reduce response time and clear accidents quicker. Our uniformed law enforcement officers will dedicate the additional time to quicker 9-1-1 response and community patrols.
OTHER METHODS TO INCREASE EFFICIENCY
There are dozens of ways to increase the efficiency of the services provided by our government. Here are just a few;
1. Consolidate Public Safety records
2. Consolidate investigation units
3. Regionalize training for public safety agencies including police, fire, EMS, school and corporate security.
4. Consolidate 9-1-1 communications.
5. Consolidation human resources for public safety.
6. Consolidate IT for public safety
7. Consolidate fleet maintenance for public safety.
8. Reduce administrative costs.
NOW IS THE TIME
The general public wants two things from government; public safety and a lower tax burden. The only way to provide both is to get more from the tax resources we currently have. Increasing taxes will further damage the economy and the current level of crime is unacceptable to central Floridians.
Our study group, the Orlando-Orange County Taxpayer Budget Review Board (www.TaxpayerBudgetReviewBoard.org) is committed to helping the citizens of central Florida by making their government more efficient. We call for a permanent commission on regionalization and consolidation of government services.
1. Current 3% SAve Our Homes constitutional amendment stays in place as is!!! NO changes for homesteaded property!!
2. APPRAISE non-homesteaded property at current market value: for non-business purchases (includes a 2% cap) for rentals (monthly rents x 100) for owner occupied business property (median rental rate of 5 geographically nearest comparables)
3. TAX RATE is 1/2 of 1%, not 10 mils!! $200,000 non homestead property = $1,000 in taxes!! Tax rate change ONLY by voter referendum and ONLY for one year!!
4. CAP ALL revenues at 3% increase over prior year. NO EXCEPTIONS!! All excess revenues collected will be given back to the taxpayers in the following year's budget!!
5. CAP ALL spending at 3% increase over prior year. NO EXCEPTIONS!!
6. Zero-based budgeting; no more unfunded mandates!! Cannot subdivide current districts to allow more revenues!!
DICK RICHARDS AD VALOREM - PROPERTY TAX - PLAN
All provisions of the Save Our Homes Constitutional Amendment and Homestead Exemptions will remain in place without modifications;
Establish real property taxable VALUE;
The maximum increase in assessed value for any homestead (personal residence) property under the Save Our Homes Constitutional Amendment Cap is 3%.
For NON-homestead property, taxable value will be established by one othe following three methods.
Step 1, or the first and primary method of valuation: Because it is the most objective, use acquisition cost or purchase price, limiting any year to year prior increase to 2% until the property is transferred again.
Step 2, for rental property: the taxable value will be the lesser of 100 times the total monthly rents for all units, including those available for rental but not yet occupied, or the value established in Step 1 above, limiting any year to year increase to 2% until the property is transferred again.
Step 3, for owner/occupied business property: The property appraiser will use the MEDIAN - not the average - rental per square foot for at least five like properties nearest to the property being appraised. All values established by this method are open to annual negotiation between owner and appraiser. The maximun increase in taxable value, once established, will be 2% per year until the property is transferred.
Establish real property tax RATE
Because the NON-homestead taxable value would be capped as above, and since the Save Our Homes Amendment provides a limited increase in taxable value of all Homestead real property, the ad valorem tax RATE for all real property would be established at 1% times 1/2 the value established as above.
Any one-time, one year increases, in this tax RATE can only be initiated by the voters, not by the elected officials or the tax entity board, and passed by 75% of the voters at any election called for this purpose
Limits on property tax REVENUE
Whereas, Florida by constitutional amendment, has established maximum property tax revenue - by limiting the taxable value increase from year to year (not the tax rate) - for homestead or personal residence real property - which is not to be changed in this plan;
And whereas, there will be added property tax revenue through new construction and annexations;
Therefore, the total overall limit on all real property tax revenue growth would be equal to the rate of inflation for the previous calendar year.
Any excess ad valorem tax revenue received by local taxing districts in any given year - including those produced by new construction and annexations - would be used to reduce the following year's property tax revenue after the above values and tax rates have been established for each given fiscal year. There would be no method for overriding the property tax revenue limitations. The overrde feature is in the tax RATE which would automatically provide an increase in revenue if voter approved.
Limits on taxing authority SPENDING:
Local taxing authorities would be limited to a total budget spending increase of no more than 3% in any given year, even though authorized property tax revenue might produce more than 3% available money.
Any property tax revenue received in excess of this 3% spending cap would be used to reduce the following year's property tax revenue after all of the above steps have been taken. This spending cap would not apply in those year's when the voters passed the one-time, one year change in ad valorem real property tax RATES as provided above.
Other provisions
Legislation should be passed to provide portability of the Save Our Homes 3% cap and all homestead exemptions for all persons at least 55 years of age from any current primary residence to the next primary residence.
Legislation should be passed to provide that all state mandated programs be funded by the state, that all county programs be funded by the county, that all local programs be funded by the governmental entity which is instituting the regulation requiring additional tax funds, and that there will be no funds provided by a lower taxing district for programs authorized, recommended or mandated by a higher taxing authority.
Legislation should be passes to establish "zero based" budgeting by all taxing authorities in the state, including but not limited to the State of Florida, all counties, all municipalities, all special taxing districts and every other governmental agency or authority which collects or receives taxes from any and every source in the state.
"Zero based " budgeting is the process whereby every organization or agency which receives revenue of any and every kind from any and all tax levied in the state show on paper why they should exist and the necessary expenditures for their existence; or in other words justify the NEED for the expenditure of tax monies for every entity requesting tax funds; or build their budgets from the ground up.
All documents produced in the zero based budgeting process will be made available to the general public BEFORE presenting any request for expenditure of tax funds to the approving body for any consideration, whether workshop or meeting of the body, whether a public forum open to "Citizens Comments" or not.
This process would apply to all entities, agencies, not-for-profit social service organizations and for-profit business entities which receive grants, stipends or revenues of any kind, the money from which is produced by any tax collected within the state.
Legislation should also be passed such that no new taxing authorities (fire districts, police districts, etc.) may be created (subdivided) from currently existing ones (cities, counties, etc.) in order to take in more tax dollars.
July 3, 2008
Research on currently enacted real property taxlegislation
California Proposition 13 became Amendment 13A to the California Constitution in 1978. Massachuseets enacted the "2.5" plan and Colorado enacted a Taxpayer Bill of Rights.
There are FOUR prongs to making sure that property taxes stay within affordable limits in terms of a usuable tax revenue source.
I. Designing specific methods for valuing real property.
II. Limits on Tax RATES!
III. Limits on gross property tax REVENUE!
IV. Limits on SPENDING!
The following is what I found.
1. Designating specific methods for valuing real property
Acquisition cost
This would mean that all property would be assessed at the latest sale/purchase price. This would mean that, as properties are transferred in an upward economy, those who hold the property the longest would pay the least amount of tax, creating some inequities.
Calllifornia uses "full cash value" as shown on the 1975/6 tax bills. Property value increases by a maximum of 2% per year from that date OR the most recent acquisition price.
Market Value
Currently used to excess and abused in Florida, this assessment method sets all real property at the highest market level as estimated by the Property Appraiser - even though no sale has occurred for many years for any given property. This can be a fairer method of valuation - all properties are appraised at current year values. With this method, taxes rise more rapidly for the whole real property segment
Florida has abused this valuation method by appraising property at what it could be used for IF it were to be used for the most expensive use development. Apartment buildings and waterfront marinas are being appraised as potential condominium prices etc.
Massachusetts uses the term "Full and Fair Cash Valuation" which if twisted to highest and best use would put them in the same position as Florida's appraisal system. Colorado uses "market approach".
Income Value
The formula for this method is current rent times some multiplier to provide the value of the rental property. One formula might be total current monthly rents time 100. Another might be annual rents times 8.
ll. Limits on Tax RATES!
Millage Rates
Michigan has a 1.5 mil maximum rate or other rate by voter approval.
Florida's maximum rate is 10 mils.
Florida's new (June 2007) legislation provides a "rolled back" millage rate for 2007/8 as follows.
Prior year ad volorem tax revenue (less dedicated increment)
Divided by: Taxable property value (less new construction and annexations)
Florida's new maximum millage rate for 2008/9 is:
Rolled back rate less taxes voted by super majority plus growth in Florida per capita income.
Florida's new maximum millage rate for 2009/10 is:
Maximum rolled back rate plus growth in Florida per capita income OR an adopted higher rate
Percent of gross property value appraisal
With this method there is no need to set a cap or other limiting trigger because whatever the value of the property as determined in 1. above, it cannot be taxed higher than the percentage applied by statute.
California's Proposition 13 limited the rate to 1 % of the value of the appraised property.
Massachusetts uses a maximum of 2.5% of the value of the property
The range of tax rates being used across the country is 0.5% - 3.64%
Some states provide for an override by voter referendum.
Some states provide overrides only for very specified expenditures like schools or bonds, etc.
lV Limits on Spending!
8 states have limitations on state level GENERAL EXPENDITURES.
Michigan provides no expenditures beyond the revenue limits.
Colorado provides that spending increases are limited to inflation and the % of change in population in the prior calendar year.
A Pinellas local initiative group suggests rolling back budgets to 2000/01 plus inflation and population growth for a 3% maximum per year with referends for overages. Schools would be exempt.
V Other Comments
California offers a portability of property values for those over age 55
Michigan provides that all state mandates must be funded by the state!
Colorado allows local districts to reduce or end subsidies to state mandates.
Colorado's Taxpayer Bill of Rights is the right to know, the right to receive mailings and notices, and the right to confidentiality.
A Pinellas local initiative group proposes that all governments use a ZERO based budget process. That would mean that all budgets, local and state, would be based on starting with NO money and build the budgets from the ground up with what is deemed NECESSARY by those who vote on and approve the budgets
Sunday