News Article

Many are unsure what the future holds with the State gambling with the questionable projected revenue to balance the budget. Add to that the uncertainty of the potential damage of the next hurricane season and the amount of underwriting the state has pledged to cover.

We all know that when the State is short on money the easy solution is to pass more of the cost on to local government. However if local government has miss their revenue and expenditures they will need to raise taxes. But then the State pushed by Charlie wanted to roll back the taxes collected by local government eliminating the ability to correct their revenue stream if needed.

Then comes the class action lawsuit against Brevard County for their EMS and Fire Fee. If all the stars line up and the state passes along more of the costs, the insurance companies refuse to write policies, the State absorbs more of the liability without sufficient funds and our storm damage increases and Brevard is trying to repay 40 to 60 million to the tax payers where will all the money come from?

Although, the picture may look bleak I think we can survive but a large part of our future plans will hinge on this Legislative Session and the language placed on the ballot in November. I might be thinking too deep or giving them too much credit but you can't look at legislation any other way but calculate the worst case situation. One bill that has been filed to further reduce taxes eliminates the education system from any further cuts. In the last ballot fight the cops stayed out and the educators contributed far more cash just due to their numbers. That leaves the firefighters standing alone should another round of tax cuts makes it to the ballot with education held harmless. That is not a fight we can win by ourselves so we will need to work extremely hard this session to mitigate as much damage as possible.

Worried that it couldn't pay for a big hit, state may reduce its fund that aids insurers

TALLAHASSEE This is the first in a series of stories looking at major issues facing the Florida Legislature, which convenes its annual session March 4.

Still miffed that their gamble to reduce out-of-control insurance premiums largely failed last year, Florida lawmakers are about to debate another roll of the dice.

Advisers warn Gov. Charlie Crist and others that U.S. financial markets are so weak that Florida would be unable to deliver on its current promise to protect insurance companies by paying up to $28 billion in hurricane claims.

The solution offered by Chief Financial Officer Alex Sink is to roll back Florida's catastrophe fund before the next hurricane season -- a move that might protect the state from a big storm but could end up increasing premiums for millions of homeowners.

The bill, which had its first public airing this week, redraws familiar battle lines between the House and Senate over how much risk to take in the elusive campaign to corral insurance rates.

'It's not just about lowering rates,' said House Speaker Marco Rubio, who endorses Sink's bill. 'We have an unaffordable insurance market. We also have an unsustainable one. We are basically one hurricane away from the largest tax hike in Florida history.'

The risk he was talking about is a potential bill from the Florida Hurricane Catastrophe Fund, a state pool created years ago to help insurers pay claims from a large catastrophe.

In their efforts to lower home insurance rates at almost any cost last year, lawmakers doubled the size of the Cat Fund, selling insurers backup hurricane coverage at a fraction of the rate charged by unregulated, largely offshore reinsurers.

The concept was to pass those savings -- an estimated 20 percent rate cut -- to consumers. But the reality is that many insurers simply doubled up on their reinsurance, giving homeowners reductions that averaged 12 percent, if there was a reduction at all, while racking up an estimated $3.7 billion profit in a storm-free year.

Insurance executives told a Senate investigative panel this month that such profits are justifiable in the face of the losses they risk in Florida.

Unconvinced, Senate Banking and Insurance Chairman Bill Posey is calling for the appointment of an independent counsel to investigate the industry. He joins Gov. Charlie Crist in accusing the industry of greed at the expense of suffering homeowners.

'Last year we had $3.7 billion in profits go out of this state and we're going to hear the companies whine like crazy if they have to pay a dime for another storm,' Posey said. 'I think the people back home tend to think they've been shafted pretty badly and I tend to agree with them.'

In the meantime, lawmakers this week took up Sink's plan to lay off some of the risk Florida undertook in doubling the size of the state Cat Fund. The bill promises to keep insurance at the forefront of the legislative session that starts next month.

Proponents of the reduction say Florida should seize the opportunity to reduce the state's exposure to hurricanes, a risk that carries its own threat to consumers.

The Cat Fund works like a giant insurance policy. In trade for about $1 billion in premiums a year, the Cat Fund promises to pick up $28 billion in insurers' hurricane losses. But the money is not banked.

To cover storm claims, the fund would have to sell what would be some of the biggest bonds in U.S. history, in uncertain markets. Those bonds would then be paid off by consumers in the state, through surcharges on home, auto and business policies.

Actuaries say a Category 3 hurricane hitting an area such as Tampa would result in surcharges of 4.77 percent a year for 30 years -- or $57.24 a year on a $1,200 homeowner's policy.

Sink estimates that reducing the Cat Fund by $3 billion would reduce that assessment by half a percent.

But that $6.83 a year potential savings could cost homeowners as much as a 3.9 percent increase in their insurance bills before the wind ever blows as insurers replace their discounted Cat Fund coverage with protection from private reinsurers.

After two years of spectacular rises, reinsurance prices are now tumbling, in part because of hefty competition from Florida's Cat Fund.

In year-end earnings calls this month, Bermuda insurers report their sales in U.S. hurricane regions are down 20 percent and more; they remain four to eight times higher than what the state charges.

'We lost business to people who are giving 40 percent reductions. And I find it mind-boggling that that's happening, but it happened, so we canceled the business,' Aspen Insurance Holdings CEO Christopher O'Kane told analysts last week.

If the Legislature does nothing to the Cat Fund, those reductions would be passed to homeowners. But Sink contends they can be used to offset the cost of her Cat Fund cut.

Democratic Senate Minority Leader Steve Geller, co-chairing the Senate's insurance investigative panel, wants the savings passed on to consumers.

'I think reducing insurance rates is one of the most critical issues in the state of Florida,' he said.

The Legislature will not vote on Sink's plan until after the session begins in March, but Sink is already soliciting support from the private sector. She traveled to New York earlier this month to explain the plan to the Reinsurance Association of America.

Ron Littlepage is a political columnist for The Times-Union. His column usually appears on Sundays, Tuesdays, Thursdays and Fridays.

And after several years of home values increasing dramatically, prices are dropping.

Because property taxes are based on a home's value, property taxes will be going down.

Not so fast, especially if you've enjoyed the benefit of the Save Our Homes amendment to the state constitution. Here's why:

Let's say you live in a home that had a market value last year of $400,000. This year the market value has decreased to $350,000.

Because you've lived in the home for a dozen years, the home's assessed value last year was only $200,000 because of Save Our Homes.

That amendment says the assessed value of homesteaded property can only increase by 3 percent a year, or the rate of inflation, whichever is less.

The rate for this year has been set at 3 percent so your assessed value will increase to $206,000. That's the figure your property taxes will be based on, not the lower market value.

Voila, if the millage rate stays the same, your property taxes will go up. That would change only if the market value dropped below the assessed value set by Save Our Homes.

Of course, it's not quite that simple. Nothing is when it comes to Florida's convoluted property tax system.

In promoting Amendment 1, which voters approved last month, Gov. Charlie Crist told taxpayers that doubling the homestead exemption to $50,000 will save homeowners $240.

That was based on a statewide average. In Jacksonville, if the millage rate stays the same, the savings would be a little less - about $223.

The $6,000 increase in the assessed value would shave off another $54 (6 X 8.9344, the affected millage rate).

And don't forget that the millage rate can be increased, reducing savings further. Or fees can be raised.

As predicted, a lawsuit has been filed challenging portability, the provision that allows homeowners to take their Save Our Homes benefits when they move anywhere in Florida.

The lawsuit contends that portability violates the U.S. Constitution by giving in-state homeowners an advantage over new arrivals.

He was quoted as telling The Buzz, a tampabay.com blog, that 'one of the things that gives me most comfort, as I assume they're testing the constitutionality, is the fact that it will now be in the constitution, so I'm pleased with that.'

Uh, governor. That lawsuit is based on the U.S. Constitution, not the state constitution. Maybe you skipped that course in law school.

If the lawsuit succeeds, everyone should be worried. The plaintiffs are asking for a refund for the extra property taxes they paid for the last four years, the statute of limitations for such claims.

If they win, that will come out of all our pockets and there will be no savings in property taxes.