Bill Summary – FastDemocracy

HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #:     HB 503 Limitation on Local Fees for Virtual Offices
SPONSOR(S): Fabricio and others
TIED BILLS:       IDEN./SIM. BILLS: SB 578
    REFERENCE                                                   ACTION                  ANALYST            STAFF DIRECTOR or
                                                                                                           BUDGET/POLICY CHIEF
    1) Local Administration, Federal Affairs & Special          14 Y, 0 N               Roy                Darden
       Districts Subcommittee
    2) Ways & Means Committee                                   21 Y, 0 N               Rexford            Aldridge
    3) State Affairs Committee                                  20 Y, 0 N               Mwakyanjala        Williamson
                                            SUMMARY ANALYSIS
The Florida Constitution grants local governments broad home rule authority. Non-charter county governments
may exercise those powers of self-government that are provided by general or special law. Counties operating
under a county charter have all powers of self-government not inconsistent with general law or special law
approved by the vote of the electors. Municipalities have governmental, corporate, and proprietary powers that
enable them to conduct municipal government, perform municipal functions and provide municipal services,
and exercise any power for municipal purposes except when expressly prohibited by law.
Counties can levy and collect taxes, both for county purposes and for the provision of municipal services within
a municipal services taxing unit, in a manner provided by general law. A municipality can raise amounts of
money necessary for the conduct of municipal government and may enforce that receipt and collection in a
manner prescribed by ordinance not inconsistent with general law.
The bill prohibits a county, municipality, or local governmental entity from adopting or maintaining in effect any
ordinance or rule that has the effect of imposing a tax, charge, fee, or other imposition on a virtual office. It also
prohibits a municipality from levying on or collecting from a person any tax, charge, fee, or other imposition on
or with respect to the utilization of a virtual office.
The Revenue Estimating Conference estimates that the bill has a zero or negative indeterminate impact on
local government revenues.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h0503f.SAC
DATE: 2/21/2024
                                                        FULL ANALYSIS
                                                I. SUBSTANTIVE ANALYSIS
    A. EFFECT OF PROPOSED CHANGES:
         Present Situation
         Ordinances
         The Florida Constitution grants local governments broad home rule authority. Non-charter county
         governments may exercise those powers of self-government that are provided by general or special
         law.1 Counties operating under a county charter have all powers of self-government not inconsistent
         with general law or special law approved by the vote of the electors. 2 Municipalities have governmental,
         corporate, and proprietary powers that enable them to conduct municipal government, perform
         municipal functions and provide municipal services, and exercise any power for municipal purposes
         except when expressly prohibited by law.3 A local government enactment may be inconsistent with
         state law if the State Constitution preempts the subject area, Legislature preempts the subject area, or
         local enactment conflicts with a state statute.
         Local governments exercise these powers by adopting ordinances. The adoption or amendment of a
         regular ordinance, other than an ordinance making certain changes to zoning, may be considered at
         any regular or special meeting of the local governing body. 4 Notice of the proposed ordinance must be
         published at least 10 days before the meeting in a newspaper of general circulation in the area; state
         the date, time, and location of the meeting, the title of the proposed ordinance, and locations where the
         proposed ordinance may be inspected by the public; and advise that interested parties may appear and
         speak at the meeting. Municipal ordinances must also be read by title or in full on at least two separate
         days.5 Ordinances may only encompass a single subject and may not be revised or amended solely by
         reference to the title.6
         Local Government Revenue Sources
         Local governments obtain revenue necessary to fund their operations and pay necessary expenses
         from a variety of sources. The nature of these revenue sources and the purpose for which such
         revenue may be used varies. Among the sources of governmental revenue are taxes, various fees and
         assessments, charges for goods or services, fines and penalties, gifts, grants and intergovernmental
         transfers and borrowing.7
         In an overarching sense, all of these sources of revenue share some common attributes. They are all
         sources of revenue available to governments to be spent for their operations. They all represent a
         diversion of resources from the private sector to the public sector of the economy. There are also
         important legal, economic, and practical differences between these revenue sources and the purposes
         for which the funds that they generate may be used. For example, some levies are often government
         exactions of money to pay for governmental goods or services that are either unrelated or only distantly
         related to the activity, person, or entity being taxed. Alternatively, there may be some direct “benefit” to
1 Art. VIII, s. 1(f), Fla. Const.
2 Art. VIII, s. 1(g), Fla. Const.
3 Art. VIII, s. 2(b); see also s. 166.021(1), F.S.
4 See ss. 125.66(2)(a) and 166.041, F.S. In addition to general notice requirements, a local government must provide written notice by
mail to all property owners before adopting a zoning change involving less than 10 contiguous acres. Ss. 125.66(4)(a) and
166.041(3)(c)1., F.S. If a zoning change involves 10 or more contiguous acres, the local government must conduct two public heari ngs,
advertised in a newspaper, before adopting the ordinance. Ss. 125.66(4)(b) and 166.041(3)(c)2., F.S.
5 S. 166.041(3)(a), F.S.
6 S. 125.67 and 166.041(2), F.S.
7 See generally Joseph Bishop-Henchman, How Is the Money Used? Federal and State Cases Distinguishing Taxes and Fees, Tax
Foundation (Mar. 27, 2013), https://taxfoundation.org/blog/how-money-used-federal-and-state-cases-distinguishing-taxes-and-fees (last
visited Feb. 9, 2024).
STORAGE NAME: h0503f.SAC                                                                                                     PAGE: 2
DATE: 2/21/2024
         the payer, but there is limited or no ability to avoid the levy. The lines differentiating between these
         revenue sources are not always clear.8
         Counties can levy and collect taxes, both for county purposes and for the provision of municipal
         services within a municipal services taxing unit, in a manner provided by general law.9 A municipality
         can raise amounts of money necessary for the conduct of municipal government and may enforce
         receipt and collection in a manner prescribed by ordinance not inconsistent with general law. 10
         Effect of Proposed Change
         The bill prohibits a county, municipality, or local governmental entity from adopting or maintaining in
         effect any ordinance or rule that has the effect of imposing a tax, charge, fee, or other imposition on a
         virtual office. It also prohibits a municipality from levying on or collecting from a person any tax, charge,
         fee, or other imposition on or with respect to the utilization of a virtual office.
         For the purposes of these prohibitions, the bill defines a:
              “tax, charge, fee, or other imposition” as any amount or in-kind payment of property or services,
                regardless of whether such amount or in-kind payment is designated as a user fee, privilege
                fee, occupancy fee, or rental fee.
              “virtual office” as an office that provides communications services, such as telephone or
                facsimile services, and address services without providing dedicated office space.
    B. SECTION DIRECTORY:
         Section 1:        Creates s. 125.01035, F.S., relating to limitation on local fees.
         Section 2:        Creates s. 166.272, F.S., relating to limitation on local fees.
         Section 3:        Provides an effective date of July 1, 2024.
                             II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
    A. FISCAL IMPACT ON STATE GOVERNMENT:
         1. Revenues:
             None.
         2. Expenditures:
             None.
    B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
         1. Revenues:
             The Revenue Estimate Conference estimated the bill to have a zero or negative indeterminate fiscal
             impact on local government revenues, as the bill prohibits local governments from levying on or
             collecting a tax, charge, fee, or other imposition with respect to the utilization of a virtual office
             space.11
8 See City of De Land v. Fla. Pub . Serv. Co., 119 Fla. 819, 823, (1935) (“What controls our judgment in cases…involving the attempted
imposition of taxes of the character here…is the underlying reali ty of the tax ordinance rather than the form or label of the challenged
tax.”); City of Gainesville v. State, 863 So. 2d 138, 144-45 (Fla. 2003) (when determining whether a charge is an assessment or fee, the
name of the charge is only one factor to consider among a list of factors).
9 S. 125.01(1)(r), F.S.
10 S. 166.201, F.S.
11 Revenue Estimating Conference, Limitation on Local Fees for Virtual Offices,
 http://edr.state.fl.us/Content/conferences/revenueimpact/archives/2024/_pdf/page176 -177.pdf (last visited Feb. 9, 2024).
STORAGE NAME: h0503f.SAC                                                                                                         PAGE: 3
DATE: 2/21/2024
       2. Expenditures:
            None.
   C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
       None.
   D. FISCAL COMMENTS:
       None.
                                               III. COMMENTS
   A. CONSTITUTIONAL ISSUES:
       1. Applicability of Municipality/County Mandates Provision:
           The county/municipality mandates provision of Art. VII, s. 18 of the Florida Constitution may apply
           because this bill prohibits counties and municipalities from levying certain tax, charges, fees, and
           other impositions on virtual offices; however, an exemption may apply because the bill may have an
           insignificant fiscal impact.
       2. Other:
           None.
   B. RULE-MAKING AUTHORITY:
       The bill neither provides authority for nor requires rulemaking by executive branch agencies.
   C. DRAFTING ISSUES OR OTHER COMMENTS:
       None.
                           IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
   None.
STORAGE NAME: h0503f.SAC                                                                                 PAGE: 4
DATE: 2/21/2024