When Michelais Josemond bought his two-bedroom condo in Tamarac four years ago, he paid $185,000 and had a property tax bill of about $2,500.

Today, his apartment is worth $18,000 and his tax bill is zero.

He is among the more than 18,800 homeowners in Broward County and 16,700 in Palm Beach County–living in houses, condos or coops–who are not required to pay property taxes because the value of their units is less than their $25,000 homestead exemption.

That’s a 135 percent increase between 2008 and 2010 in Broward, and a 48 percent increase in Palm Beach, county records show. While these homeowners still must pay fees such as fire assesments, the loss of this revenue, coupled with a drop in tax revenue overall, is forcing municipalities to slash payrolls and services.

“The reality is nobody wants to be taxed,” said Scott Maxwell, a city commissioner in Lake Worth, which saw a 85 percent jump in untaxed property and expects a $4 million budget shortfall. “At the end of the day, if we’re honest with ourselves, we need to understand that each of us should contribute a little something to the community.”

Overall, non-payers make up only about three percent of homeowners in both Broward and Palm Beach counties.

But in Sunrise, Lauderdale Lakes, Margate, and Lauderhill, more than 10 percent of homeowners pay no property tax. In Palm Beach County, at least five percent don’t pay in Palm Springs, Lake Worth and Mangonia Park.

Ten Broward cities saw the number of exempted homes more than double from 2008 to 2010. They include Lauderhill (560 to 2,448), Tamarac (410 to 1,366) and Plantation (133 to 926).

Among the hardest hit in Palm Beach were Lake Worth (301 to 558), Greenacres (112 to 190) and West Palm Beach (252 to 491).

Condos are falling off the tax rolls at the fastest rate. In Broward, 87 percent of the exempted properties are condos; in Palm Beach it’s 82 percent.

Angela Kelly lives in Lauderdale Lakes, which has seen an 86 percent spike in homeowners paying no taxes. The city blamed that, in part, for its $9 million budget deficit, and Kelly told city commissioners the exemptions are not fair.

“Condos need to contribute,” she said. “Single family and townhouse [owners] should not bear the burden alone.”

Josemond, 37, a restaurant manager, said he’s sympathetic but he can’t afford one more bill.

“I don’t mind paying; it’s not fair to the city” that some people don’t, said Josemond, who lives in Tamarac’s Lakeside Condos, where a third of the 208 units are not required to pay taxes. “I don’t want to go down the street and have the street light not work.”

But his condo is underwater and his adjustable mortgage jumped from $1,095 a month to $1,700, he said, and he can’t pay any more.

Municipalities get about 35 percent of their revenue from property taxes – so when values plummet, so does the amount they can collect. To compensate, they can cut expenses, explore other revenue sources or raise taxes.

Budgets are being decided now and must be in place by Oct. 1. By law, cities in Florida cannot have unbalanced budgets.

In South Florida, home values peaked in November 2005, and then swiftly fell. The median price in Broward topped out at $391,100 but now is $165,000, according to Florida Realtors, a trade group. Palm Beach County’s median hit $421,500, and dropped to around $193,000. Over the same time frame, condo prices in the two counties have fallen by nearly 70 percent.

In 2008, as a way to give homeowners some tax relief, lawmakers approved increasing homestead exemptions from $25,000 to $50,000 on the non-school portion of the tax bill. It allows the first $25,000 of value to come off the top of a tax bill, but homes must be worth more than $75,000 for the $50,000 exemption to apply.

“The legislature felt it necessary to increase the homestead exemption. I don’t think they anticipated the unintended consequence in a down housing market,” said Maxwell.

Broward County Property Appraiser Lori Parrish said while the exemptions help in good times, “when there are bad times, you spread the tax burden over a lesser number of people.”

It’s not only the non-payers that concern the cities.

While Boynton Beach has 976 homeowners who don’t pay property taxes, “those paying between $100 and $200 make up 27 percent [of the tax base] now,” said City Commissioner Marlene Ross said.

To cope, the city has hired a consultant to recommend ways to recover some of the lost revenue.

In West Palm Beach, 491 property owners pay no taxes but Commissioner Kimberly Mitchell said she believes there won’t be much growth in those numbers. “I believe the drop has bottomed out,” she said.

Palm Beach County Property Appraiser Gary Nikolits said that might not be enough.

“Unfortunately the legislature keeps putting these [increased homestead] items on the ballot,” he said. “Before long there will be no taxable value upon which to levy.”

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