By Mitch Perry, Florida Phoenix
In Summary:
Florida city and county officials are raising concerns about Gov. Ron DeSantis' proposal to dramatically expand homestead property tax exemptions, warning it could result in billions of dollars in lost local revenue. Advocates argue the plan could reduce funding for services while shifting tax burdens to businesses and renters, with no guaranteed long-term replacement funding from the state. The proposal will be debated during a special legislative session and could ultimately go before Florida voters as a constitutional amendment.
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City and county governments would face major reductions in revenues for essential services if Gov. Ron DeSantis’ plan to substantially cut homeowners’ property taxes is approved by lawmakers and then 60% of the public as a constitutional amendment later this year.
Related: Municipal governments, healthcare, and public safety could be hit under the property tax plan released by DeSantis.
Advocates for local governments in Florida held emergency “webinars” Monday morning ahead of this week’s special session on the topic to provide as much information as possible to their members on a plan unveiled five days ago, and which the Legislature is expected to approve (or reject) by Wednesday.
Under a proposed joint resolution filed in the Senate last week, homeowners who are permanent Florida residents by the end of 2026 would be eligible to receive a $150,000 homestead exemption in 2027 and a $250,000 exemption beginning in 2028.
The $250,000 exemption alone would cost counties an average of $4.8 billion annually, or $8.65 billion with full elimination of homestead taxes by fiscal year 2030-31, according to the Florida Policy Institute. The Florida Association of Counties (FAC) said it would cost counties $4.6 billion by fiscal year 2028-29.
“We know this is a tax shift,” said Jeff Scala, deputy director with FAC in a webinar with members. “They’re framing this as a tax cut, but there are small businesses, all businesses, they’re going to feel the pain. Renters — they’re not going to get an exemption. This proposal makes Florida more unaffordable.”
Just as problematic, said both Scala and Casey Cook, chief of legislative affairs for the Florida League of Cities, is that there are no guaranteed replacement revenues for local governments, school districts, and special districts that collect revenue through property taxes.
They made that assertion even though the proposal includes a trust fund designed to provide grants to help local governments maintain essential services.
“It looks good, but really you’re subject to the whims of future legislators funding that trust fund,” Cook said. “As we can learn from history, trust funds when there are recessions get raided first. And so, there is no dedicated revenue source to offset the loss associated to local governments.”
“It’s vague. It’s confusing. We don’t know how it’s going to work,” Scala said. “This isn’t a full plan. In that magic fund, legislators are going to be forced to pick winners and losers amid thousands of funding requests among the 67 counties.”
Spending restrictions
He noted that there’s no plan yet for where money for the trust fund would come from, how much would be included, who would qualify, and how long it would last. “It’s quite the admission that local revenues will not be able to provide the core essential services if the state needs to create a trust fund,” he said.
Under the proposal, ad valorem taxes levied by counties and cities would be used only for six programs:
- Public safety (defined as law enforcement, fire service, and emergency medical services).
- Education and public schools.
- Infrastructure, including road and bridge construction and maintenance and stormwater control.
- Natural resource projects, including flood control.
- Issuing bonds for any of the aforementioned programs and to make debt service payments for existing obligations.
- Retirement benefits of local government employees.
Not listed are items like libraries, parks, Medicaid payments, senior centers, or special assessment districts, such water management districts.
Passage of the proposal would jeopardize local governments credit ratings as well, Cook said.
“When you reduce a revenue source, a credit rating agency is going to look at that, and they going to say it’s more risky to lend money to you for those major infrastructure projects,” he said.
Budget commission
Cook noted that the Florida Taxation and Budget Reform Commission (TBRC) is scheduled to meet next year and suggested that it would be better to analyze a property tax reduction. That commission meets once every 20 years and has a broad charge to examine state and local government revenue needs. It also has authority to make statutory recommendations to the Legislature and place constitutional amendments on the ballot (Florida TaxWatch also believes so, releasing a statement later Monday urging the Legislature to have the issue taken up by the TRBC).
The Florida League of Cities has prepared city-level impact data showing the estimated revenue loss for every city in Florida under the proposed $250,000 homestead exemption.
Members of the Florida House and Senate are poised to vote on this much-hyped plan, having just approved a state fiscal year 2026-2027 budget that will soon head to the governor’s desk.
“I’m assuming that people who are running for these offices are going to be supportive of helping out their homeowners because people need relief,” DeSantis said during a press conference Monday in Pasco County. “And so, I’d anticipate you see those folks who are running for various offices are going to be supportive of this.”
And the governor told the group of supporters who attended the press conference that after the members of the Legislature approve his plan, they can expect to read a flood of stories about how devastating it would be for local governments, advising them to dismiss such reports.
“You guys can just set your clock to November and just count the many times where media tries to say you’re not going to have access to any services if this passes, because they’re going to say it non-stop,” he said.
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