Orange County Property Tax Reform Summary June 26, 2007 Board of County Commissioners

Presentation Outline l Special Session Statutory Changes Proposed Constitutional Amendment l Impact to Orange County l Summary

Presentation Outline l Special Session Statutory Changes Proposed Constitutional Amendment lImpact to Orange County lSummary

Special Session Overview 2007B Special Session l Legislature released property tax reform plan on June 11 l Special session convened on June 12 l Special session adjourned on June 14

Special Session Overview 2007B Special Session Three bills passed HB 1-B SJR 4-B HB 5-B Statutory changes effective immediately Constitutional amendment to voters on January 29, 2008

Presentation Outline l Special Session Statutory Changes Proposed Constitutional Amendment lImpact to Orange County lSummary

Statutory Changes House Bill 1-B l Establishes “maximum millage” rates for counties, cities and special districts l Fiscal Year Roll back taxes to fiscal year level Allows increase for new construction Reduces property taxes by an additional percentage cut (3%, 5%, 7% or 9%) based on prior tax performance

Statutory Changes l Fiscal Year Additional tax cut if constitutional amendment passes l Fiscal Year and thereafter Maximum millage rate equal to prior year proceeds plus new construction and personal income growth House Bill 1-B

Statutory Changes l Bill provides methods for overriding maximum millage rates l Fiscal Year : Traditional rolled back rate requires 2/3 vote Maintaining current millage rate requires unanimous vote Voter referendum required to exceed the current FY millage rate l House Bill 1-B

Statutory Changes l Fiscal Year and thereafter: Up to 10% above the maximum millage rate requires 2/3 vote 10% or more above maximum rates requires unanimous vote or referendum l Maximum rates based on prior year maximum rate even if board adopts a higher rate with a super majority vote House Bill 1-B

Statutory Changes l Governments that don’t comply with statutory requirements lose their ½ cent sales tax revenue sharing from the state House Bill 1-B

Presentation Outline l Special Session Statutory Changes Proposed Constitutional Amendment lImpact to Orange County lSummary

Proposed Constitutional Amendment l January 29 special election l Increases homestead exemption 75% of first $200,000 of home value exempt 15% from $200,001 – $500,000 of home value is exempt $500,000 upper limit is indexed to personal income growth Minimum exemption = $50,000 Minimum exemption increased to $100,000 for low income seniors l Allows the option to keep the “save our homes” exemption instead of the new exemption until the home is sold

Proposed Constitutional Amendment $25,000 tangible personal property exemption for all businesses Affordable housing and working waterfronts assessed on income approach Allows the Legislature to limit local government taxes

Presentation Outline lSpecial Session Statutory Changes Proposed Constitutional Amendment lImpact to Orange County lSummary

Impact to Orange County Fiscal Year l Rollback to Allows increase for new construction l Either a 3% or a 5% cut for all millage rates except Fire Rescue MSTU l Fire Rescue MSTU is treated as independent district and will have a 3% cut l Approximately a 15% reduction in the county aggregate millage rate

Impact to Orange County FY property taxes $723Million $843Million $719Million FY property taxes (no change in millage rate) FY property taxes (rolled back w/ 5% cut)

Impact to Orange County $723Million $843Million $719Million $120M or 16.6% Increase FY property taxes FY property taxes (no change in millage rate) FY property taxes (rolled back w/ 5% cut)

Impact to Orange County $723Million $843Million $719Million $120M or 16.6% Increase $124M or 14.7% Decrease FY property taxes FY property taxes (no change in millage rate) FY property taxes (rolled back w/ 5% cut)

Impact to Orange County l Fiscal Year : Additional $60 – $70 million additional tax cut if constitutional amendment passes l Fiscal Years and thereafter: Taxes capped at prior year’s property tax level plus new construction and personal income growth

Presentation Outline lSpecial Session Statutory Changes Proposed Constitutional Amendment lImpact to Orange County lSummary

Summary l Property tax reform passed during special session l Statutory requirements go into effect immediately l Constitutional amendment subject to voter approval on January 29, 2008 and would be effective beginning in Fiscal Year l Budget process is underway and adjustments are being made l Full budget discussion In July

Orange County Property Tax Reform Summary June 26, 2007 Board of County Commissioners