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Official Publication of the Florida Professional Firefighters July-August-September 2007

PPRROOPPEERRTTYY TTAAXX RREEFFOORRMMWe are under five (5) months until Florida’s Property Tax Reform, as proposed in a Constitutional

Amendment, is put before the voters of our state for ratification. That seems like a long time, but itwill be here before we know it. The following update from the FPF is based on action taken by 500Delegates in attendance at the 63rd Annual Convention, June 7-8, 2007, which was to stronglyoppose the amendment. The FPF has moved forward on a two prong approach. One involvesentering the legal system by asking the Florida Supreme Court to rule against the amendment asbeing unconstitutional. The other will be to prepare for a strong statewide campaign against thepassage of the amendment.

The first step has been to review the potential for legal action as to the constitutional validity ofthe amendment. Fortunately, a substantial law suit has already been filed by Mayor Eric Hersh fromthe City of Weston in Broward County, alleging that the State Legislature, in approving the place-ment of this amendment on the January 29th ballot, has ignored and trampled the home rule author-ity of local governments. In addition, Hollywood and Coral Gables Firefighter Locals have individual-

Over 500 IAFF/FPF members stood on the steps of the Florida Capitol to rally against our unfair tax reform

ly stepped up and joined in this law suit as inter-veners. According to our General Counsel, thesuit is well prepared and soundly argues theunconstitutional issue. The Florida SupremeCourt received this case in July, and hasremanded it down to the Leon County CircuitCourt (Judge Charles Francis) for his review andruling. A motion to expedite the lower court’sconsideration and ruling has been directed bythe Supreme Court. The only court in Floridathat has the authority to block or remove it fromthe January 29th ballot is the Supreme Court.

FPF General Counsel Richard Sicking hasrecommended joining the legal challenge as a“Friend of the Court” (“amicus curie” in legal jar-gon) when the case moves to the SupremeCourt. This will allow the association a moredirect participation in the case. In addition, wehave forwarded the legal briefs to the IAFF fortheir review and assistance.

Secondly, the FPF has been meeting with anumber of other statewide organizations/associ-ations in an effort to build a coalition which willban together and gear-up for a statewide cam-paign to inform voters on the ramifications of thisamendment. The initial group consists of theFTP/NEA (teachers), the Florida Association ofCounties, and the Florida League of Cities. TheFPF and FTP/NEA have stepped up in terms ofcommitting both financial and in kind supporttoward this effort, and their NationalOrganization will likewise assist. Several groupsare currently conducting some preliminarypolling which we can use as a building block inour strategy to defeat the amendment. Weanticipate more groups will join the coalition.Interestingly, a number of groups, who youwould automatically think should join this effort,are sitting this one out in hopes that the amend-ment will fail on its own.

Regrettably, organizations such as theFlorida Realtors have committed a million dol-lars, and the other business associations(Associated Industries, the Florida RetailFederation, and the Florida Chamber ofCommerce) are now considering joining the frayas supporters.

It should prove to be one of the biggest cam-paigns in recent memory. Costs are estimatedat a minimum of 3 million per side. The onestrong advantage that we have is that theamendment must pass by a vote of 60%.Interestingly, the 1992 constitutional amend-ment, which created “Save Our Homes,” onlypassed by a margin of 53%, and was phased inover a three (3) year period of time.

The FPF and others in the coalition are notagainst responsible tax reform. However, thecurrent proposal is ill-conceived, will underminelocal government’s ability to properly financeservices, and obviously will jeopardize publicsafety.

The FPF opposes the proposed constitution-al amendment calling for property tax reductionsbecause it will result in:

• Significantly reduced budgets for public safetyagencies without providing an alternative fundingsource

• Firefighter and Paramedic Layoffs• Increased response times to 911 calls result-

ing in potentially great fire losses and higher mortal-ity incidents involving emergency medical calls

• Increased injuries to Firefighters due to per-sonnel shortages resulting in higher workers compen-sation claims

• Curtailing the ability of Fire-Rescue depart-ments to respond and assist in statewide or regionaldisasters, i.e., hurricanes and wildfires

• Higher property insurance rates for home-owners and commercial property owners due toreduced fire protection (ISO Rating)

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See Pages 12-14 for what experts are saying aboutProperty Tax Reform

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When the FloridaProfessional Firefighters andFlorida Fire Chiefs Associationformed the Alarm Team, “A-Team,” or the “Peacemakers”,they believed that successfulvoluntary peer mediation wouldprovide a fair, just and reason-able resolution to labor conflict,and contribute to long-termlabor stability. The alternative,litigation, grievances, ULPs,etc., is costly, time-consuming, and stressful.The outcome is placed in the hands of an out-side third-party (judge, arbitrator, or PERC)whose perspective and power are limited to adiscrete dispute. Someone wins. Someoneloses. But a win, or even a series of wins, maynot improve the parties’ overall relationship. Agood labor relationship cannot be imposed bylegal rulings. It occurs only through the parties’mutual voluntary efforts. Who better to helpfacilitate “Labor Peace” than experienced andqualified PEERS.

Take the Clearwater Fire-Rescue Depart-ment, for example. In the past two years, man-agement has committed at least six unfair laborpractices. IAFF/FPF Local 1158 filed six ULPcharges, won the first three at PERC, and wonfull settlements from the City on the rest. Ineach case, the City paid Local 1158’s attorneysfees and costs. During the same two years,management broke a ten year history of no fir-ings with a string of firings, and other adversepersonnel action that have devastated careers.Local 1158 has won each case brought to arbi-tration (three firings and a demotion) and onearbitration case the City attempted to vacate incircuit court. So far, the litigation tally is Local

1158 – 10, the City – 0.Unfortunately, the situation hasnot improved.

The City holds its course.Grievances continue.Arbitrations are pending.Careers are being ruined.Clearwater Fire-Rescue’smorale is at an all time low.Now the parties are back atthe table in very difficult con-tract negotiations where the

City has proposed that all employees (includingthose exempted for years) be required to obtainCounty EMT certification, knowing that the threeemployees who were reinstated by the arbitra-tors are fighting to require the Medical Directorto accept them back.

When communications break down, differ-ences increase, and conflicts continue to arise.Often, a voluntary accord cannot be reachedalone. That is why the FPF and FFCA havejoined together to form the Alarm Team, i.e., the“Peacemakers.” A team of peers that are wellversed in the successful way a Fire-RescueDepartment should operate its labor relationsefforts.

The initial Peacemakers are FPF President/CEO Bob Carver, FPF Vice President GaryRainey, FPF Trustee Walt Dix, IAFF 12th DVPLarry Osborne, former long-time IAFF 12th DVPDominick Barbera, and five (5) FFCA represen-tatives. When a situation like Clearwater arises,the Peacemakers, if requested, will take aproactive approach early on to ward off an esca-lating conflict. They will work the case as ateam, with representatives from FPF/IAFF andFFCA assigned to each case. Using peer medi-ation, they will meet on-site with the parties, help

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with communication, and promote reconciliationto encourage the parties to reach a mutuallyacceptable agreement.

Because the parties control the outcome,they can reach a creative solution that might notbe available from a judge, an arbitrator, orPERC. If an agreement is reached, it can bereduced to writing and ratified as part of a con-

tract, MOU, etc. If not, nothing is lost; the par-ties can pursue their other options. ThePeacemakers give parties a peer-supportedopportunity to resolve conflicts for themselves,fairly and at the least cost and stress to theFirefighters, Florida’s Fire-Rescue departments,and the citizens we serve.

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Generally speaking, theinterim period between the endof legislative sessions, aroundMay 1st of each year, andGeneral Elections is ratherslow. This interim is shapingup to be just the opposite.Considering that we wereextremely involved in oneSpecial Session on PropertyTaxes (June 12th-15th), thereis yet another one beingscheduled for September 18th,which will deal with the StateBudget Shortfall (the currentshortfall is estimated tobe $1 billion dollars).No word yet as towhether the AutomobileInsurance PersonalInjury Protection issuewill likewise be takenup. In addition, Senateand House Committeemeetings for the March-May ’08 LegislativeSession are scheduledto begin that week.

The Florida Senate andHouse Committees have post-ed their “2007-2008 Interim

Projects” that they will be work-ing on. The SenateGovernmental OperationsCommittee will be reviewing allof the local pension plans todetermine the asset amounts ofeach, and identify statutorymechanisms that can bestassure their full funding status.In the House, the Urban andLocal Government Committeewill be reviewing the 1,494“Special Districts” which cur-rently exist in Florida.According to their outline, the

last suchreview wasdone in April of1996. We willbe monitoringboth of theseprojects andkeep youinformed as totheir progress.

I have alsobeen monitor-ing the Budget

and Taxation ReformCommission meetings whichhave been occurring here in

Tallahassee. At their lastmeeting, there was a greatdeal of discussion regardinglocal mandates, pension bene-fits, and the collective bargain-ing process. It’s quite obviousthat the Florida League ofCities has visited and dis-cussed many of these issueswith them. We plan to repre-sent the Firefighters’ andParamedics’ point of viewbefore the commission as well.

The FPF Political Instituteis in full swing. Currently, thereare 27 active Senate and 173House campaigns that we aretracking. We will be sendingour initial questionnaire to eachof the candidates, and in turn,providing that information tothe appropriate FPF DistrictVice Presidents and LocalPresidents. We have also hada steady stream of candidateswho have traveled toTallahassee to meet with us.We are only 15 months awayfrom the 2008 GeneralElection, and there is alreadythis level of activity.

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Submitted by: Pat MacNichols, Divisional Field Representative, MDAOn May 22, 2007, Florida Governor

Charlie Crist signed House Bill 99, also knownas the Iris Roberts Charitable Solicitation Act,into law, thereby paving the way for locals tobe exempt from permit requirements if certainconditions are met. The landmark bill wasspearheaded by President Bob Carver of theFlorida Professional Firefighters Associationand sponsored by Representative Ed Hooper,FPF DVP Emeritus, of Pinellas County, FL.Named after 9 year old Iris Roberts, 2-termFlorida State MDA Goodwill Ambassador, thislegislation, effective July 1, 2007, has beenlong awaited by locals currently preventedfrom on street solicitations by prohibitive ordi-nances. A letter writing and email blitz to

Florida legislators, along with visits to the State Capitol to lobby support, were among the intensiveefforts conducted by MDA with the dauntless help of Iris Roberts, her mother, Kimi Roberts,Firefighters, member families and key sponsors. Iris and Kimi never let a day go by without makingsure the bill was on track. The bill passed unanimously in the Florida House on April 19th and in theSenate on April 18th.

Months in advance of the Spring Legislative Session, President Carver and key members of hislegislative team, drafted the language of the bill, attended committee hearings, and rallied supportfrom legislators known for their dedication to fire service issues. “It was the right bill, for the right rea-sons, for the right cause,” said Carver as the bill steadily moved along to the Governor’s desk forapproval.

The Iris Roberts Act helps IAFF/FPF locals,who for years have been hamstrung by prohibi-tive ordinances, that prevented them from hittingthe streets. From South Florida to thePanhandle, from the Gulf Coast to the SpaceCoast, countless affiliates are ready, willing andnow able to fill their boots for “Jerry’s Kids.”Susan King Poole, MDA Regional Director,Jacksonville, FL told President Carver and theFPF membership, “As you know, researchadvances are being made every day, and a curefor neuromuscular disease is within our grasp. Ithank you from the bottom of my heart on behalfof Florida’s children and adults that will have abetter quality of life, and probably soon, a longerlife because of your commitment and hard work.”

Representative Ed Hooper addresses Florida House of Representatives on the Iris Roberts Act. Iris Roberts and her mother, Kimi,

anxiously await a vote of approval.

L-R: Representative Ed Hooper, Iris Roberts, Senator Don Gaetz,Governor Charlie Crist, Iris’ mother Kimi, brother J.C., and sisters

Hannah and Tammy

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Our Firefighters and First Responders puttheir lives on the line every day for the citizensof Florida, and I commend you for your braveduty. As Florida’s Attorney General, I understandthe importance of public safety and the role weshare in protecting it.

One of the greatest threats to Florida is theuse of the internet to sexually exploit children.The Federal Internet Crimes Against ChildrenTask Force has reported that one child out ofevery seven, between the ages of 10 and 17,are solicited online by a child predator in ourcountry. When it comes to the volume of childpornography, Florida ranks fourth in the nation.To combat these heinous crimes, the AttorneyGeneral’s Child Predator CyberCrime Unit worksto identify, arrest and prosecute online childpredators and child pornographers. Thanks tothe support of Florida’s legislature, theCyberCrime Unit will be expanding throughoutthe state, adding 50 additional staff members toincrease the level of protection we can offer ourchildren.

Another important step Florida has taken is aseries of new laws and enhanced penaltieswhich place our state in the forefront of thenation’s efforts against child pornography andthe internet solicitation of children. TheCyberCrimes Against Children Act of 2007makes Florida the only state that specifically tar-gets “grooming,” which occurs when the internetpredator lies about his age in order to breakdown a victim’s inhibitions.

In addition to enhancing penalties for internetpredators who groom their victims online, thelaw creates a new, separate penalty for preda-tors who communicate online with a child, orsomeone they believe to be a child, and thentravel to meet that person for the specific pur-pose of further sexually abusing him or her. Thenew crime has been hailed by law enforcement

as a critical tool to launch more investigationsand build stronger cases against those who aretargeting Florida’s children on the internet.Florida continues to be a national leader withsome of the strongest laws against child pornog-raphy and internet solicitation of children.

While it is important to have stronger lawsagainst internet child predators and childpornographers, it is just as important for childrenand parents to be aware of the dangers encoun-tered online, and to employ basic safety tips forsurfing the internet. To encourage awarenessand education, my office recently unveiled sev-eral new resources to fight cybercrime, includingOperation SafeSurf, a cybersafety website locat-ed at http://www.safeflorida.net.

In addition to the website, the AttorneyGeneral’s Office will be presenting CyberSafetyprograms in schools across the state, beginningthis fall. The presentations will feature informa-tion that will enableschool children toidentify potentialinternet threats sothey can protectthemselves. TheAttorney General’sOffice will be workingin partnership withthe district schoolsuperintendents andthe state’s sheriffs tobring this importantmessage to our chil-dren.

As Florida’s Attorney General, I am commit-ted, along with you, to ensure the public safetyof our citizens. I appreciate your dedicatedservice to the people of our state, and look for-ward to continuing to serve you as your AttorneyGeneral.

Attorney General Bill McCollum

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RETIREMENT UPDATES

In addition to administering the FloridaRetirement System Pension Plan, the Divisionhas oversight responsibility for the Chapter 175(Firefighters’ Pension Trust Fund) Plans.

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As part of our commitment to public service,we are proud to announce the 39th AnnualPolice Officers’ and Firefighters’ PensionConference. The Conference is scheduled forOctober 22 – 24, 2007 at the Radisson Hoteland Conference Center, 12600 Roosevelt Blvd.,St. Petersburg, Florida. This program is offeredfree of charge. There is no pre-registration, butthe participants may register on the morning ofthe program at the hotel. We encourage every-one to make their hotel reservations right awayby calling the Radisson Hotel at (727) 572-7800,or toll free at 1-888-333-3333. The hotel holds alimited number of rooms at a special conferencerate of $149 single/double until September 21,2007.

The Division is in the process of reviewingthe 2006 Annual Reports. We encourage you tomake sure that your plans’ 2006 Annual Reportshave been filed and approved to avoid delays inthe release of this year’s state premium taxmonies. Annual Report templates for 2006 havebeen placed on the website for downloading.The Board may contact the Municipal PoliceOfficers’ and Firefighters’ Trust Fund Office toobtain copies. Completed 2006 Annual Reportsfor the Chapter Plans were due on or beforeFebruary 1, 2007. The reports for the Local LawPlans were due no later than March 15, 2007.You may contact the Division with questions con-cerning a plan’s eligibility by telephone at (850)

922-0667, toll free at (877) 738-6737, or byemail at mpf@dms.myflorida.com.

The distribution of the state premium taxmonies to all eligible cities and districts will takeplace as soon as we receive final numbers fromthe Department of Revenue. A listing of the dis-tribution amounts and the initial distribution datewill be posted on our website at http://www.myflorida.com/frs/mpf as soon as it becomesavailable.

Also, remember to check the division’s web-site for updates from the Department ofRevenue concerning the Insurance Premium Tax(IPT) Database. Please check the IPT “ContactList” to make sure that the name and e-mailaddresses are up to date. This is the methodused by the Department of Revenue in commu-nicating with the cities and districts regardingdatabase issues. The contact person must pro-vide updates to the Department of Revenue nolater than September 3rd each year. Insurancecompanies use this address information to allo-cate the premium tax monies that you receiveunder Chapter 175, as well as for theCommunications Service Tax (CST) for cities.Your city/district may be losing significantamounts of tax monies if these databases arenot updated!

During the 2007 legislative session, therewere no amendments to Chapter 175, F. S.Proposed HB 3/SB198, which would haveexpanded the foreign investment authority,passed the House but died on the calendar inthe Senate; HB 241, which would have allowedCommunity Development Districts to participateunder Chapter 175, died in committee; and HB257/SB 2910, which would have expanded theline of duty disability benefits for catastrophicinjuries, also died in committee.

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My first six months as Florida’s Chief Financial Officer and State Fire Marshalhave provided me many opportunities to meet various people engaged in thefire and rescue services, and to hear more about issues that impact ourstate’s First Responders.

In May, the State Fire Marshal's Office held a dedication for thestate’s new Urban Search and Rescue training facility at the FloridaState Fire College, where I met the leaders of the state’s nine US&RTask Forces, and several members of the Light Technical Task Forces.Also in May, we hosted a reception for the recipients of the 2006 FireService Awards, awarding Cabinet resolutions in recognition of out-standing achievements.

During Arson Awareness Week, May 6-12, the State Fire Marshal'sOffice teamed up with the Tallahassee Fire Department in a demonstrationin which a vehicle was set on fire to show how arsons can be successfullyinvestigated. The event was in keeping with the national Arson Awareness Weektheme, “Vehicle Arson: Who Pays for This Crime?” and drew members of the mediawho helped bring attention to this costly crime.

In June, I had the honor of speaking to participants at the 63rd annual conference ofthe Florida Professional Firefighters.

Thank you for the invita-tion and the warm welcome,and thanks to those whotook the time individually tospeak to me about specificconcerns and interests.Two key issues we talkedabout were pensions andproperty taxes. We mustensure Florida's nearly $138billion retirement fund con-tinues to be one of thefinancially strongest funds inthe country, and that proper-ty tax cuts do not impactFirst Responders and their

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jobs. We must make our voices heard for responsible tax cuts that do not leaveFloridians unprotected, and FPF members may be the best force for communi-

cating that message to voters before the January 29, 2008, amendmentvote.

We also agreed that recent legislation providing coverage for abroader range of First Responder injuries was an important and big winfor our men and women in uniform. As CFO, I oversee the Division ofWorkers’ Compensation, and we work hard to ensure that injured work-ers get the coverage and the benefits they need to recover and getback to their jobs, or get the benefits they need to take care of theirfamilies if they cannot return to work. Our mission is to inform and

assist injured workers, employers, carriers and health care providers infulfilling their responsibilities under workers' compensation law, serve as a

resource for employees, and investigate disputes and attempt to facilitateagreements between employees and their employers or carriers. The average

penalty assessed against non-compliant employers has risen from $7,500 to nearly$26,000.

In other news, Les Hallman, Director of the Division of State Marshal, hasannounced a new chief for the Bureau of Fire and Arson Investigations. Chief DanSpillman has been actively involved in all facets of Florida’s fire and emergency servic-es for over 32 years, most recently as the Public Safety Director for Taylor County.

Chief Spillman previously served 22 years with the City of Tallahassee FireDepartment, where he retired as Deputy Chief. He has over 20 years experience in firescene investigations and holds a bachelor’s degree in Fire Science and Safety, as wellas an associate’s degree in Fire and Arson Investigation. In addition to Chief Spillman’slaw enforcement experience in arson, he has served as a Reserve Deputy for the LeonCounty Sheriff’s Office and as a member of the FDLE-North Special Operations Team.

Meanwhile, Director Hallman has an assignment to serve on Florida’s newConsumer Fireworks Task Force. In May, the Governor signed legislation creating thetask force to look at Florida’s consumer fireworks laws and make recommendations tothe Legislature. As the fire service is all too aware, Florida’s fireworks laws leave muchto be desired from an enforcement standpoint, and Director Hallman will be a strongvoice for safety and enforcement. Please support him and provide any relevant infor-mation to help us fight for consumer fireworks laws that will protect the citizens and fireservice personnel of Florida. CFO Alex Sink and State Fire Marshal Director Les Hallman

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When it comes to planning your financial future, there’s no time like the present.

Question: Experts say you’ll need 70% to 90% of your pre-retirement income to enjoy the lifestyleyou had before retirement. But how do you save that kind of money for the future while managingtoday’s expenses?

Answer: By setting retirement goals and creating a plan to meet them.

To help you establish your retirement goals, start by answering these three questions:

1. At what age would I like to retire from the Florida Retirement System?

2. What will my retirement income be?

3. Will I have enough money to support my lifestyle?

The Florida Retirement System (FRS) provides access to FREE retirement planning resources tohelp you answer those questions, as well as to create a plan (these services are only available

for FRS members).

• Retirement Forecast. Log onto MyFRS.com to see what the value of your FRS plan mightbe in the future.

• ADVISOR SERVICE powered by Financial Engines®. Log onto MyFRS.com to receive free, personalized, and unbiased retirement and financial planning guidance. Investment Plan members can find out how to make the most of their account balance. Pension Plan and Investment Plan members can learn how to invest their personal savings in a non-FRS tax-deferred account.

• MyFRS Financial Guidance Line. Call toll-free to speak with an unbiased financial planning and retirement professional who can answer your goal-setting and retirement planning ques-tions. They can also assist you in reviewing the online ADVISOR SERVICE. To speak with a financial planner, call:

The MyFRS Financial Guidance Line1-866-446-9377, Option 2 (TTY 1-888-429-2160)Monday through Friday from 9:00 a.m. to 8:00 p.m. ET

The key to a financially secure retirement is to start planning for it right away. Check out the freeMyFRS financial guidance resources today to get your future on the right road to retirement.

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July 2007

Property Tax Reform:

Beware of Unintended Consequences

By

J. Antonio Villamil

J. Antonio Villamil is a former U.S. Undersecretary of Commerce for Economic Affairs, and served until December 2006 as Chairman of the Governor’s Council of Economic Advisors of Florida. He is currently the CEO of The Washington Economics Group, Inc. based in Coral Gables.

Among statutorily enacted changes in the State Special Legislative Session just concluded, a so-called “cap” on the growth of property tax revenues collected by the 67 counties of Florida and over 400 municipalities was voted into law. Henceforth, local property tax revenues cannot exceed the growth of Florida’s Personal Income per capita and the value of new construction in a given year. School district funding at the local level is excluded from the cap. The cap can also be overridden by a super-majority vote of the elected local commissions, or by unanimous vote if the cap is to be exceeded by a certain amount, or by public referendum if the cap is to be nullified for a given county or municipality.

The cap is only one of the many and complex changes brought about by the Special Session on property tax “reform.” Other legislative mandates include a rollback to the property tax rate of 2006, and a further reduction in property tax revenues collected based on the fiscal spending of counties and municipalities in prior years. In addition, in late January 2008, voters will be asked to decide on whether to amend the State Constitution once again, to allow for super-sized homestead exceptions, among other changes. School funding is not exempted from the likely local revenue reductions if the voters approve the proposals, with Tallahassee “promising” to somehow make up the decline in local school revenues. Furthermore, current property owners under Save our Homes (SOH) could opt to stay in SOH or opt out of the system and move into the new super-sized exemptions.

Ideas in Action

Ideas in Action is a public forum to present discussion in vital issues affecting the economy, public policy, and concerns that touch the lives of many Floridians. The opinions expressed in this Ideas in Action are those of the author

and do not necessarily reflect those held by the members, staff, or the distinguished Board of Trustees of Florida TaxWatch.

106 N. Bronough Street (32301-7723) ♦ P.O. Box 10209 (32302-2209) ♦ Tallahassee, FL♦ Phone: 850/222-5052 ♦ Fax: 850/222-7476

“Improving taxpayer value, citizen understanding and government accountability”

Confused so far? So am I, and so are probably many economists as well as good number of policymakers and local elected officials. The changes, current and proposed, have brought a high degree of uncertainty to future public revenues at the local level for funding schools, fire and police protection, parks, infrastructure maintenance, economic development programs and others. All these are the types of expenditures that we economists’ term “quality of life” or “amenities” – vital programs to attract, retain and expand high-wage jobs and the so-called creative class of knowledge workers to our counties and cities.

The mandates from Tallahassee have brought significant complexity and uncertainty to the property tax structure of Florida. In essence, they violate a principle of best practices of public finance, which is simplicity and transparency in the levy of taxes.

The Tallahassee mandates also violate other principles of best practices in taxation. The new system is not equitable to purchasers of second homes and renters, as only primary residences are included in the proposed super-sized exemptions. The proposed changes also provide little relief to income-producing (commercial) properties. These properties will continue to be taxed on the “highest and best use” principle as opposed to the “income” or “usage” method to determine taxable value. In fact, commercial properties could suffer much higher impact fees and other forms of fees in the future, as local governments look for alternative revenue sources to fund vital programs.

Finally, and perhaps most importantly, the Tallahassee-mandated cap will likely lead to severe problems over time in funding vital local programs for special needs populations in our many counties and municipalities, especially in large urban counties like Miami-Dade. This is due to the “one size fits all” approach for using a statewide estimate, called Florida Personal Income Per Capita (PI), as a key part of the “cap” for property tax revenue growth in all the myriad of counties and municipalities of Florida. As an economist and recent economic policymaker, I have a very serious problem with the cap approach -- the “cookie cutter” approach -- to such a large and highly diverse state.

o First, the cap takes away the flexibility of local elected officials and administrators, who are closer to the needs of their localities, to take advantage of opportunities and/or emergencies at the county and municipal levels – requiring cumbersome and politically charged procedures to override the Tallahassee-mandated cap.

o Second, tying the fortunes of local government property tax revenue growth to Florida Personal Income Per Capita (PI), an estimate subject to revisions, creates significant measurement problems. Personal income is estimated by the U.S. Bureau of Economic Analysis (BEA) for the nation. Then the BEA estimates personal income for the states, with about a year lag. All of these estimates are subject to “benchmark” revisions. Utilizing a per- capita measure is also methodologically troublesome, as state government estimates the resident population of Florida, subject to revisions once again. These revisions are large for a

number of Florida’s counties due to net migration flows, both domestic and internationally. In Miami-Dade, we have always undercounted the resident population due to volatile international immigration. Therefore, the PI mandate will likely underfund local needs year after year.

o Third, personal income (PI) is defined as the gross income accruing to households from all sources, including wages and salaries, and also includes passive income like investment returns on stocks and bonds, among other variables. Therefore, if the U.S. suffers a recession, or if the U.S. equity markets decline sharply, or when a hurricane hits the state (like Hurricane Katrina in Louisiana and Mississippi that wiped out properties, and therefore, the “rental income” contained in PI), PI tends to decline sharply. In conclusion, the PI cap is “pro-cyclical,” accentuating economic downturns and fiscal emergencies at the time when local public needs are the greatest, due to negative events outside the control of local officials.

o Fourth, linking in part local property tax revenue growth to the growth in PI is barely sufficient to cover the average increase in prices paid by local and state governments to produce public services. This index for the U.S. was increasing at an over 5 percent annual rate in the first quarter of 2007, above Florida’s average PI growth of around 4 percent. In essence, in terms of so-called “purchasing power,” the real cuts to counties and municipal governments are quite significant when taking into account price changes for state and local government purchases.

o Finally, the “new construction” portion of the cap is less of an issue, since it is a county- and city-specific measure. However, there will likely be unintended consequences. For example, counties and cities may be tempted to relax the permitting of new construction so as to increase taxable revenue. This could impact growth management efforts. Furthermore, the “new construction” part of the cap may be also hurtful to dense urban counties and municipalities that are already close to being “built out.”

As a member of the 2006 Property Tax Reform Committee, I argued for consideration of a number of more simple measures -- implementing a five-year moving average of property taxable values at the county and municipalities levels to smooth “peaks and valleys” in local revenues, for example. I also recommended that the current Tax and Budget Reform Commission of Florida be allowed more time to study the whole tax structure of the state, and come up with effective changes next year based on a systems approach to taxation, budgeting and best practices in fiscal governance.

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Dear Florida Professional Firefighters,

On behalf of Commissioner Charles Kossuth of the Public EmployeesRelations Commission, we wanted to quickly share with you some of thethings we hope to accomplish here at PERC in the next few years regardingtechnology, and how we can use it to help the people of Florida like you.Our current website (http://dms.myflorida.com/perc) offers online access tobasic PERC information, along with access to our Publications, Forms, andNewsletters - all easily downloadable at the click of a button. For the gen-eral public, we plan to expand our website to offer online access to viewcase information such as dockets, orders, certifications, elections, and more. Thispublic information will be easily accessible by simply typing in a case number, and clicking Go. Forrepresentation attorneys, we plan to offer a secure login area that allows each attorney to accessrelated data to their ongoing cases. As part of this, the representation attorney will be able to log into the website and submit filings for their respective cases. This will be easier and faster than tradi-tional methods such as fax, postal service, or hand delivery of individual filings. We also plan tohave some of our PERC Forms available to be filled out online, instead of downloading the form andfaxing it to us.

We also plan to offer a webpage that allows you to register your email address so that you canbe notified via email when a new issue of our PERC Newsletter is available online for viewing andprinting. It is our goal to keep the costs of printing, publishing, and mailing the Newsletter at a mini-mum, and we believe technology can help us do that by offering this service online.

In general, we here at PERC recognize how technology can help us help you, and are excitedabout our plans for the future. We welcome any input you may have on how to better serve you.For technology related questions or suggestions, feel free to email me at trevor.flanagan@perc.myflorida.com.

LEGAL UPDATESSubmitted by: Stephen H. Cypen, Law Offices of Cypen & Cypen

KEY FACTS REGARDING STATE AND LOCAL

GOVERNMENT DEFINED BENEFIT RETIRE-

MENT PLANS: National Association of StateRetirement Administrators (NASRA) has justissued “Key Facts Regarding State and LocalGovernment Defined Benefit Retirement Plans.”Here are the highlights:

• Public Pension Plans are in Good

Financial Condition. As a group, state and local

pension systems have nearly 90 cents for everydollar they owe in liabilities. The assets are pro-fessionally managed and invested on a long-termbasis using sound investment policies. Thealmost $3 Trillion (in real assets, not IOUs) heldby these plans are an important source of liquidityand stability in the nation’s financial markets.

• The Bulk of Public Pension Benefit

Funding is Not Shouldered by Taxpayers. On

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NON-PROFITORGANIZATIONUS POSTAGE

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PERMIT NO 559

a national basis, employer (taxpayer) contribu-tions to state and local pension systems make uponly one-fourth of all public pension revenue.Earnings from investments and employee contri-butions compose the remainder. In 2005, invest-ment earnings accounted for 74% of all publicpension revenues; employer contributions were17%. Unlike corporate workers, most publicemployees are required to contribute to their pen-sion plans.

• Public Retirement Plans Attract and

Retain the Worforce that Provides Essential

Public Services. There are more than 20 millionworking and retired state and local governmentemployees in the U.S. Retired public employeeslive in virtually every city and town in the nation.(About 90% stay in the same jurisdiction wherethey worked.) Active public employees make upmore than 10% of the nation’s workforce, andtwo-thirds are employed in education, publicsafety, corrections or the judiciary. Retention ofexperienced and trained personnel in these andother positions is critical to the continuous andreliable delivery of public services.

• State and Local Pension Plans are an

Integral Component of National, State and

Local Economies. Public plans distribute morethan $140 Billion annually (an amount greaterthan the total economic output of 22 states) inbenefits to nearly seven million retirees, benefici-aries and other recipients, with an average annu-

al pension benefit of roughly $20,400. Thesepayments are steady and continuous, and providea robust and reliable economic stimulus to localeconomies throughout the nation. Recent studieshave found that public pension funds and thebenefits they distribute make important contribu-tions to local, state and the national economies.

• State and Local Plans are Subject to

Comprehensive Oversight. While private sectorplans are subject solely to federal regulation,state and local plans are creatures of state consti-tutional, statutory and case law and must complywith a vast landscape of state and local require-ments, as well as industry accounting standards.These plans are accountable to the legislativeand executive branches of the state; independentboards of trustees including employee represen-tatives and/or ex-officio publicly elected officials;and ultimately, the taxpaying public.

• State and Local Pension Funds Earn

Competitive Investment Returns. For the 10-and 20-year periods ended June 30, 2006, publicpension plans generated strong investmentreturns of 8.5% and 9.5%, respectively, exceed-ing investment benchmarks and closely trackingreturns generated by corporate pension plans.

We appreciate NASRA’s regular reminders ofthese important data. We just do not understandwhy so many local officials and local governmentsstill don’t get it.