Massive drop in revenue potentially looming for Sunshine State’s cities and counties
Vincent Long, the administrator for Leon County in Florida, is in a race to slow the county’s spending. So far, he has frozen hiring, cut travel and other expenses, and begun a yearlong analysis for commissioners on how best to restructure the county’s finances and organization.
Leon County, which includes Tallahassee, has cast a closer eye on its coffers under a new measure to slash property taxes in the state. This is where things get strange: The measure isn’t even law—yet.
Florida residents will vote on the proposal in November. If it passes, it would dramatically reduce property taxes for many homeowners. The initiative could prove popular in a state where the cost of owning a home has spiraled. So city and county managers across the state are making their plans now for a massive drop in revenue.
“It’s not a haircut, it’s an amputation,” Long said. “You can’t make a historic change to our primary revenue source without also making a historic change to the very role and function of government.”
The proposal is spurring urgent responses from local governments faced with the prospect of plummeting tax revenue. Cities and counties are scrambling to prepare for a potential overhaul of how they pay for all sorts of services, from policing to pothole repairs.
Local officials across the state say the issue is dominating discussion in commission meetings and budget workshops. Among the measures they have taken so far: freezing hiring and capital projects, planning possible service cuts and floating proposals to increase other fees and taxes to offset the shortfall.
In June, Florida’s Republican-led legislature approved a proposed constitutional amendment for the November ballot that had been promoted by GOP Gov. Ron DeSantis. The amendment would expand the so-called homestead exemption—a reduction in the taxable value of a homeowner’s primary residence—which typically results in a lower property-tax payment. It would increase the exemption to $150,000 in 2027, from the current $50,000, and to $250,000 in 2028, with additional adjustments thereafter for inflation.
The measure, whose original version lawmakers revised to protect funding for schools, requires the backing of 60% of voters to pass. A recent poll pegged support among the state’s voters at 64%.
Supporters of the amendment, including DeSantis, argue that growing property-tax collections have led to irresponsible spending by local governments. Opponents say the sharp reduction of property taxes would gut funding for key areas, including infrastructure, parks and libraries.
Numerous states have considered proposals to slash property taxes in recent years as homeowners’ tax bills have risen along with home values. 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 that is simple and transparent.
In the 2027-28 fiscal year, the Florida changes would reduce property-tax revenue in the state overall by nearly $5 billion, according to the Office of Economic and Demographic Research, a research arm of the legislature. That would increase to $8.8 billion in 2028-29 and $10.8 billion in 2030-31.
The amounts would vary widely for individual counties, with a large one like Miami-Dade projected to lose $304 million in the first year and a small one like Okeechobee expected to lose $3.7 million, according to an analysis by the Florida Association of Counties. Suburban counties with high proportions of homestead properties would face the sharpest exposure, and economically distressed small counties would be the least equipped to respond, the study said.
In Hillsborough County, which includes Tampa, the chief financial administrator presented a report to county commissioners last month detailing the anticipated effects of the ballot measure. A lengthy list of possible responses included eliminating or reducing county services like parks and aging services, closing underused facilities and increasing or adding new assessments, such as a higher fuel tax and more park fees.
In Panama City, in the Florida Panhandle, Mayor Allan Branch sent a letter to other mayors in Bay County last month suggesting they convene a summit to discuss how they might share equipment and services, such as fire patrol and public-works fleet maintenance, thereby reducing costs.
In Pensacola, to the west, Mayor D.C. Reeves said the city already was dealing with repercussions. Financial institutions have called city officials to ask how the city plans to repay bonds backed by property-tax revenue. He said he was entering negotiations with the fire union on its next three-year agreement but was uncertain how to proceed given that the city’s revenue stream could change dramatically over that time.
Amendment backers reject what they consider alarmist responses to the proposal 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 they have 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 one such county, Wakulla, in Florida’s Big Bend region, property taxes make up more than half of general revenue. In 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.
Even 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, but smaller-scale, 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. T. Michael Stavres, the city manager, suggested the possibility of introducing a fire fee to help pay for fire services—prompting commissioners to request he prepare a proposal for a study of the issue. He also ran through potential service cuts that commissioners could consider, noting that they would be painful.
“It’s like throwing a pebble into a pond,” Stavres said. “Those ripples go out and people will feel that eventually.”