Local governments brace for up to $10.8B in annual revenue loss by 2031
Florida’s Republican-led legislature approved the proposed constitutional amendment in June at DeSantis’ urging. The measure would increase the homestead exemption — a reduction in the taxable value of a homeowner’s primary residence — from the current $50,000 to $150,000 in 2027 and $250,000 in 2028, with additional inflation adjustments after that. Lawmakers revised an earlier version of the proposal to protect school funding.
Supporters, including DeSantis, argue that rising property-tax collections have fueled excessive local government spending. Opponents say the sharp revenue reduction would gut funding for infrastructure, parks, and libraries. As covered in MSI’s earlier report, the ballot measure was expected to cut homeowner bills by thousands of dollars.
The revenue losses would vary widely by county. Miami-Dade is projected to lose $304 million in the first year, while Okeechobee would lose $3.7 million, according to an analysis by the Florida Association of Counties. Suburban counties with high concentrations of homestead properties face the sharpest exposure, the study found, while economically distressed small counties are the least equipped to respond.
In Hillsborough County, which includes Tampa, the chief financial administrator presented a report to county commissioners last month detailing the anticipated effects. A list of possible responses included eliminating or reducing county services such as parks and aging services, closing underused facilities, and increasing or adding new assessments including a higher fuel tax and more park fees.
Panama City Mayor Allan Branch sent a letter to other mayors in Bay County last month suggesting they convene a summit to discuss sharing equipment and services such as fire patrol and public-works fleet maintenance.
In Pensacola, Mayor D.C. Reeves said financial institutions had already called to ask how the city planned to repay bonds backed by property-tax revenue. He said he was entering negotiations with the fire union on a new three-year agreement but was uncertain how to proceed given that the city’s revenue stream could change dramatically over that period.
Amendment backers reject what they describe as alarmist responses and say local governments should trim bloated spending and focus on core functions.
The situation is especially precarious for the state’s 29 counties designated “fiscally constrained” because of their small property-tax bases, said Casey Cook, chief of legislative affairs at the Florida League of Cities. “Their tax base is getting largely wiped away,” he said. “It takes these communities from being self-reliant to state-dependent.”
In Wakulla County, in Florida’s Big Bend region, property taxes make up more than half of general revenue. During the county commission’s budgeting process, which is currently under way, commissioners are preparing two budgets for next year — one if the amendment passes and one if it doesn’t, said Chairman Ralph Thomas.
More dire discussions are taking place in some small rural cities, said Jeff Brandes, president of Florida Policy Project, a research and policy organization. Some are weighing whether they can continue to function or whether they should be absorbed by the surrounding county.
In Oviedo, near Orlando, Mayor Megan Sladek earlier this year raised a similar question for residents: Should the city proceed with plans for an $18 million police-station expansion, or dissolve the department and rely instead on the county sheriff’s office?
At a city commission workshop in Winter Haven in central Florida last week, commissioners grappled with the amendment’s potential fallout. City Manager T. Michael Stavres suggested the possibility of introducing a fire fee to help pay for fire services, prompting commissioners to request a proposal for a study. He also ran through potential service cuts commissioners could consider.
“It’s like throwing a pebble into a pond,” Stavres said. “Those ripples go out and people will feel that eventually.”
The measure requires the backing of 60% of voters to pass. The Florida exemptions would be the largest in the U.S., said Jared Walczak, senior fellow at the Tax Foundation, which favors a tax system it describes as simple and transparent.