DANIEL W. O'CONNELL
ADMINISTRATIVE AND GOVERNMENTAL LAW
BARNETT BANK BUILDING
TALLAHASSEE. FLORIDA 32301
January 5 1976
;' January 5, 1976
Mr. Daniel W. O'Connell JAN: 19:76 -.
P. 0. Box 20429- -
Tallahassee, FL 32304
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Dear Dan: '
We would greatly appreciate your comments on the enclosed memorandum
from Frank Caldwell which concerns the upcoming referendum on the
Presidential Preference Primary ballot (March 9th) regarding a con-
stitutional amendment to allow ad valorem taxation for water manage-
ment districts. Frank Caldwell, you may recall, was formerly Legislative
Assistant to State Representative Jack Shreve, and in that capacity
was responsible for the drafting of the Water Resources Act of 1972.
Particular points of concern are:
1. Does the seemingly arbitrary difference in taxation rates (0.05
mills west of the line between Ranges 2 and 3 East, and 1.00 mill
East of the line between Ranges 2 and 3 East' create an inequity
likely to cause judicial invalidation of the constitutional
2. Does the wording of fthe ballot as prescribed by the Legislature
present the referendum to the electorate in a legally valid manner,
considering the fact that the ballot will not disclose differential
village caps for separate regions of the state? ...
It should be noted that the line between Ranges 2 and 3 East bisects
the Northwest Florida Water Management District, creating a situation in
which neighboring property owners could be taxed at different millage
rates while receiving identical levels of government service.
We are currently attempting to determine what posture Florida Audubon
should take on the upcoming referendum. Your advice.on the matters
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January 5 1976.
discussed above and your thoughts on the issue in general would be
'greatly appreciated, :
Enclosure : .- :
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S..'." 'Charles ILe-:
,i ..;c.. r Vice President--Conservation
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',i .frankR Calwell -
/ 1516 Willow Wick Drive
*~. r1 Tallahassec, Florida 32303 '.
October 27, 1975-
The 1975 Florida Legislature adopted Coxnittee Substitute
for Senate Joint Resolution 1061 (CS/SB 1061) proposing a
constitutional amendment which would authorize the governing
boards of water management districts to levy ad valorem taxes
upon the assessed value of real estate and tangible personal
property in the district. By virtue of passage by a three-fourths
vote of the r.er.bership of each house, House Bill 2325 places the
proposed amend- .nt on the Presidential Preference Primary ballot
in March, 1976.
The proposed amend.eent seeks to address a dilemma created by.
the Florida Water Resoutces Act of 1-972. The dilemma resulted
Sfro : a desire by the Legislature to create regional water man~age-
rient districts with uniform authority in all areas of the state.
Two such districts, with many of the powers contemplated in the
1972 act, were already in existence. The Central and.Southern
Florida Flood Control District had been established since 1949,
and the Southwest Florida Water Management District had been in
operation since 1961." Both of these agencies were created by
special legislative act, and both were authorized by their
enabling legislation to levy ad valorem taxes. The State
Constitution, as revised in 1968, contained three provisions
pertinent to the current dile-..a:
Article VII, 1(a), prohibits ad valorem taxation
for state purposes.
Article VI'l, g 9(b), provides that special districts
(ruch as water c:"...nagce-.cnt districts) may only levy an ad
valorc:;. tax upon rcfcrr'en:iu approval of the frccholders
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S" ".. 'residing in the district. '
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Article XII, 2 a nd 15, "grandfathcrod" all villages
authorized on the effective date of the revision to be
continued "until reduced by law. 0
The authorized millages levied in the two pre-1968 water
management districts produced in excess of $ 20,000,000 in 1972.
The Legislature did not choose to jeopardize that source of
revenue; yet it sought to create districts of similar power in
the balance of the state. The policy adopted by the Legislature
is expressed in 373.503(1), Florida Statutes:
373.503 Manner of taxation.-- .
,* (1) lt-isthi' finding of-the legislature-tha t.-
the general regulatory and administrative func- '
iions of the districts herein authorized are of.
general benefit to the people of the state and ;
should substantially be financed by general .
appropriations. Further, it is the finding of the; .
I__ legislature that water resources programs of par-
ticular benefit to limited segments of the popu- .
)ation should be financed by those most directly
benefited. To those ends, this chapter provides
ror the establishment of permit application fees .
and a method of ad valorem taxation tofinanrcv
-the-works of-thedlistrict.'- -'""""
The Legislature sought to preserve the taxing capabilities
of the two existing districts, while also providing another source
of funding for the newly established districts. The concept has
been analogized to the Minimum Foundation Programs for state
funding of local education and law enforcement efforts. -;
The Legislature sought to assure that a minimal level of.
water resource research and planning would be provided to every
area of the state, with the capability for local residents to
increase that level of funding if the need could be properly
established. This localized flexibility was further enhanced by
the original concept that fees to cover the costs of administration
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Sof the various permit systems would be set by each board at levels
commensurate with local costs. .
While the Legislature recognized the need for data collection,
research, planning, and similar activities which are-of benefit to
all Floridians, and are not directly related to property values,
it did not feel that the residents of Northwest Florida, for
example, derived any particular benefit from a drainage canal
system constructed in Dade County.
The Legislature recognized that the electorate in a district
would not be inclined to vote to extend an ad valorem tax unless'
the need were thoroughly understood, and did not wish to jeopardize
the taxing authority of the existing entities while creating the
new districts.-It therefore devised the policy set forth in 373.
503(1), Florida Statutes, to justify the expenditure of general
revenue for functions which had, in some cases, been previously
funded by local ad valorem revenues.
The impression should not be left that a state interest in
water management is a new phenomenon. In 1907, the Governor and
most members of the Cabinet were designated as the Governing Board
of the Everglades Drainage District. In 1929, the same officers
were designated the head of the Okeechobee Flood Control District.
The territories and assets of these-districts were ultimately
transferred to the Central and Southern Florida Flood Control
District, created in 1949.
In the first 20 years of its operations (1950-1970), the
Flood Control District received $62,803,461 in State General
Revenue Funds. These monies were matched with Federal Appropriations
of $176,422,000, and revenues generated by Ad Valorem taxation
amounting to $75,797,563. The history of the Southwest Florida
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SWa.ter Management Distict reflects a similar pat-~rn of the
substantial com,.itment of general revenue dollars to fund localized
construction projects. The 1975 Appropriations Act provides
$2,343,000 in general revenue funds to the Flood Control District
and $1,828,400 to the Southwest Florida Water Management District
for fixed capital outlay. In addition, all five districts will
receive $400,000 each in general revenue funding for general
A cursory examination of this historical pattern could lead one
to conclude that the State only has a financial interest in water
management activities when there is a matching effort to generate
local funding. This is not altogether a valid conclusion. One of
the lessons learned in South Florida has been that prospective water
management, in the form of planning and regulation, is far less
expensive than remedial water management, in the form of public
works facilities. Another distinguishing characteristic of the old
and the new districts is their distinctive topography. The'flatlands
of South Florida make it particularly susceptible to both flood and
drought, while the relief of the upper portions of the state allows
for th construction of relatively small scale works to provide both
reservoirs and-flood control structures.
Thus, the 1972 Legislature found that the financing of "general
regulatory and administrative functions," as well as the more traditional
supplemental funding of land acquisition and construction costs, were
proper expenditures of state funds. No attempt was made to precisely
define "general regulatory and administrative functions," and none
should be now made. Administrative functions would surely include
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data collection, research, and policy planning, e., development of
Sthe water use plan, as well as personnel, budgeting, and similar
functions. Regulatory functions would include promulgation of
regulations and the issuance and enforcement of permits issued
under such rules.
In general, "Water resources programs of particular benefit
to limited segments of the population" were envisioned as those
activities directly associated with physical water management
"projects," such as dams, canals, and other works designed to
enhance the use of a-water resource. Examples include navigable
streams, channelization or other improvements to drainage works
designed to protect developments constructed in a natural flood
plain, or conversely, reservoirs constructed to correct overdrainage.
Obviously, there are wide areas of.overlap between these
Categories. For example, at some point in the "planning" process the
emphasis shifts from general policy to blueprints for a specific
project. There should not be an attempt to precisely defined either
of these categories. Maximum flexibility should be encouraged to
assure that essential functions can be funded by either state or
local revenues. In some instances, state funding may be a desirable
supplement to a-district program. In other instances, a district
board may wish to supplement a state-sponsored program with additional
local dollars, as the two older districts have often done.
Under the present constitutional provisions, that flexibility may
be obtained by convincing a majority of the electors in. a district
.(or a basin within the district) of the need for local funding.
Unfortunately, the old adage that "You don't miss the water 'til the
well runs dry," is an accurate characterization of public attitudes
regarding water management.
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Sthe o0% of Florida' s resent population which rides in the territor
/ presently subject to ad valorem taxation will (a) recognize the
benefits derived from the works of the Flood control and Water Manage-
ment Districts; or (b) recognize the inequities of double taxation
inherent in the present system. For either reason, the proponents
hope that the 80% will "grant" or "impose" the "benefits" or "burdens"
of ad valorem taxation on the 20% residing in the three post-1968
That strategy was dealt a serious blow by the insertion of
Slanguage limiting the taxing power in Northwest Florida to 0.05 mill.
This means that a "yes" vote in central and south and southwest Florida
will assure that those residents will continue to pay up to 1.00 mill,
while their bretheren in northwest Florida will have a constitutional
guarantee that --even if a majority of .northwest Floridians should ever
wish to impose a higher millage-- property there will never be subject
to more than a nuisance tax.
The characterization "nuisance tax" is deliberate. Based on
1974 property valuations in northwest Florida, a full 0.05 millage
assessment would generate approximately $250,000. The Northwest
Florida Water Management District received a general revenue grant of
$500,000 for fiscal year 1974-75, and $400,000 for fiscal year 1975-76.
This level of funding is barely adequate to begin accumulating and
assessing the data necessary to the orderly development of a.district-
wide water use plan. Implementation of any of the regulatory and permit-
ting systems authorized by Chapter 373, Florida Statutes, will require
supplemental funding such as permit application fees. A little planning,
like a little learning, is a dangerous thing. If Northwest Florida is
not to "drink deep" at the Perian Spring, it should taste not the kind
/"shallow draughts" cymolized by a q uart-milio dollar budget.
7- A water management prtam for a district of th a eographic size
and hydrologic complexity funded at such a meager level is a cruel
hoax and a mere nuisance to the taxpayer.
Assuming, arcuendo, that there is a rational basis for authorizing
a reduced millage cap for northwest Florida, it remains difficult to
rationalize the line chosen to serve as the boundary between the 0.05
and 1.00 mill assessment. The "line between ranges two and three east"
serves as the western boundary of Jefferson County from the Gulf of
Mexico to the Tallahassee Base Line. North of the Base Line, the
boundary meanders eastward, then follows the shoreline of Lake
Miccosukee. The present statutory eastern boundary of the Northwest
Florida Water Management District m-eanders from approximately five to
approximately twelve miles east of the range two and three east line.
Unless the District boundary.is revised to follow a political rather
than a hydrologic boundary, those property owners in northeastern
Leon and western Jefferson Counties could be subject to a 1.00 mill
levy, while their neighbors are subject to only a 0.05 mill levy to
support the same water management services. .
Although the proponents of CS/SJR 1061 urged that the question be
put to the voters in March, 1976, there is no provision specifying a
different effective date than that established by Article XI, 5(c),
of the State Constitution. Thus, if ratified in. March, 1976, the
amendment would take effect on January 4,.1977. Since tax assessments
Share based on the evaluation on January 1, the governing boards would
not be authorized to levy their village until the 1978 tax year.
As the Legislature expressed in 1972, a property-based tax is
neither the only nor necessarily the most desirable method of
r/.to adopt the ppmosBd-~semsw~e Wm me s-- eeSa reprsttatives
Sof 'the water managemer JNistricts, affected stat fgncies, and
water-use/conservation oriented interest groups should form a
statewide study committee to address the full range of policy .
questions relating to the financing of water management programs.
Specific issues the committee should address include:
-- The appropriate role of a property tax as the basis for financing
water management programs:; There is often a direct correlation
between the construction of a water management work, such as a dam
or canal, and a benefit to a particular parcel of real estate. In
those instances, the ad valorem tax is generally an equitable financing
tool. In other instances, such as the draining of "non-productive"
Wetlands, that land with the lowest assessed valuation is the very
land most (economically) "benefited" by the drainage works financed
-by taxes on other property not benefited by such drainage. Other
water management practices, such as planning and regulation of water
usage, benefit all affected persons without regard to property ownership.
Such functions should be financed either from a general revenue source
or through'a system of "user" or "benefit" fees.
-- The appropriate role of "User" or "Benefit" Fees as a basis for
financing water management programs: The term "user fee" is emotionally
charged. Nonetheless, the time has come for major water users, as well
as the individual domestic users attached to a municipal water. supply
system, to pay a reasonable fee for the water they use. The committee
should address the philosophical and practical problems of assessing
a reasonable price to the benefits derived through planning, regulation,
and permitting; and to equitably distributing that cost.
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today: The vital fir-t step, in determining who. should bear the costs
of water management programs is to determine the full cost of those
programs. These costs include both the relatively obvious fiscal
costs associated with the location, acquisition, treatment and disposal -
of water, and the less obvious "costs" associated with the allocation
of the resource to one use versus an alternative use. This cost
analysis will require input from both physical scientists and resource
- The statutory and/or constitutional framework necessary to
implement the reco.-..ended program: The two pre-1968 districts rely-on
special act provisions outlining" the details of the assessment, collection,
and use of their property tax revenues. The general statutory provisions
contained in Par: V of Chapter 373, Florida Statutes, have never been
used. These provisions are so co.plex:;and confusing that apparently
no one has noticed -- or cared about -- a typographical error transposing
two lines of type in subsections (6) and (7) of 373.563. The
transposition occurred bet'.:een. the printing of the 1963 and'1965
editions of the Florida Statutes, and has remained uncorrected to date.
The cor.-.ittee should offer .draft legislation to implement its recom-
mendations in ti-ne for orderly consideration by both houses of the
Legislature at/the 1976 and 1977 sessions.