Is Florida becoming too expensive?

[JustCurious]

For those that don't know, the legislature will be called back for a special session to "solve" the property insurance crisis.

Actually, they are having a special session to "solve" the property tax crisis.

http://www.nytimes.com/2007/05/03/us/03florida.html

 

[brewer12345]

losses will be subsidized by all of Florida's insured's

Maybe. If we get another 2005 season or hurricane Andrew, Citizens will end up being subsidized by the FL taxpayers.

 

[Arif]

My grandfather lives near Tampa and he mentioned that his insurance was going up to $2500 per year with reduced coverage (no wind, etc.). He only owed 14k on the house so he decided to put the balance owed on a BT card at 3.9% and cancel his insurance. He's 80 but he's pretty sharp. After Katrina insurance fiasco he feels why bother with the insurance because if something does happen to the house he'll be dead by the time they decide the gov't forces them to pay policy owners.

 

[tiredofwork]

Actually, they are having a special session to "solve" the property tax crisis.

http://www.nytimes.com/2007/05/03/us/03florida.html

Right. Was thinking tax and typed insurance.

 

[tiredofwork]

Maybe. If we get another 2005 season or hurricane Andrew, Citizens will end up being subsidized by the FL taxpayers.

Well, I suppose this could be done through a sales tax increase if they had to do it.

 

[brewer12345]

Well, I suppose this could be done through a sales tax increase if they had to do it.

What I was getting at was that the state backs Citizens with its own balance sheet/credit. If a big, costly hurricane hits FL, Citizens will become quite insolvent and the state will have to pick up the pieces. That's why S&P downgraded Florida's credit rating when they passed the insurance legislation that expanded Citizens.

 

[Patrick]

I recently refied my house here in northern FL and had to pay the State and County tax stamps AGAIN on the refied amount even though ownership didn't change hands (one way that the government fleeces the property owners). Where I live the property taxes are very high (22 millage rate) and we only get the 3% cap on increases if we homestead the house. Don't get me wrong, I love it here, but it isn't cheap.

 

[Rich_by_the_Bay]

What I was getting at was that the state backs Citizens with its own balance sheet/credit. If a big, costly hurricane hits FL, Citizens will become quite insolvent and the state will have to pick up the pieces. That's why S&P downgraded Florida's credit rating when they passed the insurance legislation that expanded Citizens.

That's my understanding. At least the homeowners are protected and will remain whole.

Florida has untapped options to remedy such a short-fall. With a population of ~18mm and no state income tax, that may be a fall-back (even at 2-3%). Lacking such a calamity, a state income tax seems unlikely. There's also talk locally of tapping in to gaming revenues.

 

[brewer12345]

At least the homeowners are protected and will remain whole.

I'm not so sure I would make that assumption. The system that the state has set up pretty much ensures that a major hurricane would send many private insurers into insolvency at the same time Citizens gets hammered. The actions of the state gummint reduced insurance costs in the short term, but effectively cut off the ability of local insurers to disperse big catastrophes to a wider base of capital via the reinsurance market.

I am glad that I personally will not have to find out what happens if the whole system goes over the waterfall.