Florida officials are voicing alarm about a referendum on the November ballot that would sharply cut local government homestead property tax revenues.
Mike Fasano, tax collector for Pasco County, Florida, which has several bonds outstanding, said, "I am quite concerned about those bonds."
The measure, which passed Florida's legislature earlier this week, in addition to cutting taxes, gives law enforcement and a few other government activities priority for revenues. There is no mention of paying off the bonds, Fasano said.
It isn't clear with reduced revenues from lower taxes that there would be enough money to pay off the bonds, Fasano said.
The proposed changes
If passed, once the cuts are fully enacted after two years, Pasco County would see an 18-20% reduction in its budget revenues, Fasano said.
The measure would change the state constitution to increase the homestead property tax exemption in the first year to $150,000 from $50,000 and to $250,000 in the second year, with a goal of increasing it to $500,000 ultimately.
Homestead property exemptions apply to the first $25,000 of assessed value, with a second $25,000 exemption, which doesn't apply to school district taxes.
Florida's House of Representatives and Senate voted Tuesday largely along party lines to approve putting the measure on the November ballot.
"Which firefighters and police officers do Republicans want to lay off," asked Florida House of Representatives Democratic Leader Fentrice Driskell. "Which parks should start charging entrance fees? How much should Floridians have to pay to use their local libraries? Nothing in [the Republican] tax plan ensures these critical services will remain protected."
Florida House Representative Kelly Skidmore, a Democrat on the House Ways and Means Committee, called the amendment "a lie," adding residents will end up paying more.
The Republican leaders of the Florida House and Senate didn't immediately respond to a request for a comment.
Senate President Ben Albritton in a statement called the "massive property tax cut" a celebration of America's 250th anniversary.
"To ensure local governments do not pass along the cost of homestead property relief on to small businesses, the amendment provides additional tax savings for non-residential property," he said. "Currently, the assessment increase for a non-residential property is limited to 10% annually. The amendment limits the annual assessment increase to 5% beginning January 1, 2027."
The 5% cap would also apply to vacation and investment properties.
George Kruse, commissioner of Manatee County, said it would be "physically impossible" to address the $150 million in lost revenue without major new fees and massive cuts to services. Some costs are effectively impossible to cut, he added. The sheriff's department accounts for more than 50% of spending and cuts can be appealed to the state. There are state mandates for 911 service and other services. There are union contracts that have to be observed, he said.
That leaves about $50 million for veteran's affairs, parks, libraries and animal control, Kruse said. If the referendum were to pass, there would be $150 million less in revenues in the 2028 tax cycle, which starts in November 2027, he said.
Manatee County is in a better position than smaller state counties, Kruse said. Some get 97% of their revenues from property taxes, mostly on properties with modest assessed values.
Kruse asked what the state would do about those counties?
In order for the measure to pass, it needs 60% of voters' approval.
"We don't think [the referendum] passes," said John Mousseau, chief investment officer and executive vice president at Cumberland Advisors. "Without a state income tax, property taxes function as a cornerstone of revenues for most communities. There is no question the bond rating agencies will look askance at this as it would potentially jeopardize debt service coverage. So if rating agencies cut ratings, future financing will cost more and hurt infrastructure projects (and those are key given the growth in Florida)."
