Government officials in Flagler County and its cities were sobered, vexed and rattled today by the Florida Legislature’s approval of a ballot measure that would ask voters this November whether they wish to all but phase out homesteaded property taxes for all but the richest, and sharply cap non-homesteaded property taxes. Only school taxes would be exempt.
“It’s a tax shift. Think of it that way. They’re not doing away with taxes,” Flagler County Property Appraiser Jay Gardner said today. “They’re moving them from point A to point B.” What is point B? “We don’t know at this point.”
The House in a 74-25 vote and the Senate in a 30-9 vote approved the measure today. It would raise the homestead exemption to $150,000 starting in January, and to $250,000 every year after that. It would lower the cap on taxable valuations of non-homesteaded properties from 10 percent to 5 percent in 2027. (See the bill’s analysis here.)
It would restrict the use of property tax revenue to specific purposes, assuming voters approve the constitutional amendment with more than a 60 percent majority in November. Police, fire and emergency services, government administration, courts, utilities and stormwater, transportation, economic development, parks, libraries, health care and cultural events would be permissibly funded.
Constitutional officers (with sheriffs’ exception) were not initially on the list of “top-level categories” of permissible funding but were subsequently added. The fate is less clear for programs such as animal control, beach management. Programs like Flagler County’s Environmentally Sensitive Lands would be wiped out, as might be mosquito control districts, water management districts, the Florida Inland Navigation District and many other property-tax-supported services.
“What’s so sad is that I don’t think those making those decisions truly understand funding at the local level,” Bunnell City Manager Alvin Jackson said. “It is what it is.”
With roughly 60 percent of the county’s properties being homesteaded, says Gardner, Flagler County government stands to lost in the range of $35 million in the first year and upwards of $60 million in the second year in property tax revenue, or the lion’s share of the roughly $110 million in property tax revenue that goes into the county’s general fund.
Cities would also experience disproportionate hits to their general funds. In Palm Coast, property taxes this year generate $43 million of the general fund’s $67 million. The general fund pays for essential services, from public safety to parks and recreation to roads to animal control and code enforcement, among other services. A significant share of that $43 million in revenue would be eliminated.
How much precisely isn’t yet clear. Those numbers are being crunched ahead of a workshop later this month, Palm Coast City Manager Mike McGlothlin said this afternoon. He wasn’t surprised by the legislature’s decision.
“Right now I would encourage everyone to take a breath and remain calm. We’re going to work through this challenge the way we have other ones,” McGlothlin said. “I don’t think anybody can speak with any authority on what exactly needs to take place, so, given that we need to get the numbers tightened up, develop concrete plans, right now that’s where we should be.”
Next, he said, will be an evaluation of services in line with council priorities, since ultimately it will be the council’s decision on what to prioritize. But like his administrative colleagues, like elected officials, he has no illusions about what’s ahead, should voters approve the measure in November: “We’ll be looking at severe cuts of some type of course, to the budget, but what those would entail, it would be impossible for me to project.”
Palm Coast City Council member Ty Miller called it a complex issue, “and I absolutely understand the thought process that lowering property taxes is a good thing, but I also think that it’s perhaps painting with too broad a brush,” he said this afternoon. “I don’t think anyone has a full picture of how this will affect our ability to provide public safety, parks and rec., public works, etc. In any case we’ll be the ones tasked with implementing whatever framework comes out of this, and that’s what I’ll focus on because it’s the only thing I control as one of five policy makers.”
Acting County Administrator Adam Mengel spoke in similar terms of the potential financial hit ahead: “It is significant and it would involve, not to sugarcoat anything, it would involve programmatic cuts that are going to be difficult for the board.” Commissioners (if not the public) are going to have to “rethink some of the assumptions we’ve had in the past as far as what the government provides and what the government does not provide.”
Jackson, the Bunnell city manager, was in the middle of a discussion about those very issues with his finance director when a reporter called this afternoon. The director, he said, was on her way to get the precise numbers on the Bunnell impact, though he had preliminary figures: Bunnell’s general fund totals $7 million. Property tax revenue accounts for $3.1 million of that. The cuts ahead will amount to about $1 to $1.5 million.
The administration was already restructuring the budget for this coming year anyway, Jackson said. “Now we’ll have to look at some additional options, how we restructure some of the services to reduce the cost,” he said. “There may be a few programs we may not be able to do. We are looking at those options.”
Jackson has been in municipal government for 41 years. He recalled his years in Eustis in the late 1980s and early 1990s when Gov. Bob Martinez won enactment of a new tax on services. It generated huge revenues–three times more than projected. That drew a backlash from the Legislature, which pressured the governor to approve rescinding the tax. He did. By then, local governments had built budgets on the expectation of the additional revenue. They had to make large cuts.
City directors took 5 percent cuts in pay, budgets were reduced from 5 to 10 percent. “I remember counting toilet paper for parks and rec. We could only put out X number per week,” Jackson said. “I remember us pretty much cutting back our office supplies, the whole works. But we came up with strategies to make it through that time, and I don’t see why we can’t do it this time.”
But Jackson was dismayed by the lawmakers’ disconnection between policy and reality. “I think the Legislature did not examine all of the nuances,” he said. “Most definitely, the legislators have not identified how do you replace the revenue sources. They allude to trust funds, but how do you fund those trust funds?” He added: “Really a true transparency is, there has to equally be a reduction in services, and that’s what the public truly doesn’t understand. I don’t think the Legislature truly understands those nuances. Or the governor.”
Flagler County Commissioner Kim Carney was caught off guard by the outcome of the special session, and she had a particular concern: “I hate that it’s on Ron DeSantis’s way out, because I don’t know what he’s leaving behind. I don’t know what’s the motivation of it. We’ve been trying to get some information out of the CFO’s office, Blaise [Ingoglia]. We’ve not been successful at that.”
Carney sees the county needing some guidance, whether it’s from consultants or through more clarity from lawmakers. Meanwhile, she expects that “municipalities are going to get crushed by this.” She had been a city commissioner for nine years in Flagler Beach, where the majority of property tax revenue is from residential properties, though the proportion of homesteaded properties there is not as high as in Palm Coast and the county.
DeSantis and some legislators have claimed that homesteaded property owners are crying for tax relief. But no homesteaded property owners have appeared before local government boards to complain, because for the homesteaded, taxes have not only been kept artificially low due to the 3 percent cap on annual taxable valuation increases (the “Save .Our Homes” Amendment), but because inflation has gradually diminished the effective tax burden.
Flagler Beach City Manager Dale Martin on Monday emailed Rep. Sam Greco, who represents all of Flagler County, with a different perspective on tax burdens.
“While my TOTAL property tax bill (City, County, Schools, other agencies) has increased less than 3% for the past two years (an increase of approximately $200 annually, or less than $1/day),” Martin wrote the legislator, “it is my homeowner’s insurance that creates a more significant financial burden. My property insurance was not renewed” (he had attached the insurer’s letter of termination) “due to ‘catastrophic loss exposure.’ In obtaining a replacement policy, my insurance increased 50%, from $4,200 to $6,300 (and that does not include flood insurance). It is imperative that the State of Florida review and address property insurance relief which is likely more burdensome to Florida property owners than are property taxes.”
Martin also attached a document for Greco that shows how Flagler Beach’s property taxes are distributed across the city’s general fund, with almost 50 percent of the typical tax bill supporting public safety.
A campaign-like website set up by the DeSantis administration called “Save Our Homes” features a calculator that allows any property owner in Florida to see what her/their/his property taxes would look like if the new “Save Our Home” measure was adopted. But the calculator is inaccurate, because it projects the DeSantis proposal to eliminate all homesteaded property taxes, not the legislative proposal adopted today, which preserves school taxes. So most people who use the calculator will falsely see that they will pay no property taxes in the future.
County Commission Chair Leann Pennington said there’s no question that affordability is a real issue. No local official would disagree, she said. “The critical question for me is what replaces the revenue that funds the local services people don’t want to see dismantled.”
“I’m for some sort of reform but I don’t believe that this comes without additional fees and a shift in taxes,” Pennington continued. “I suspect there’ll be higher taxes in other avenues to replace the taxes. It’s obviously going to be very painful to parks, libraries, animal control, code enforcement, beach management.”
Joe Saviak, the attorney whose firm–Douglas Law in St. Augustine–represents Palm Coast and Marineland, along with other local governments in the region, and who continues to lead leadership programs and seminars in Flagler County government, expects the November measure to pass. “The Florida Legislature wants to provide meaningful property tax relief to keep Florida affordable while ensuring funding for priorities such as public safety, education, and infrastructure,” he said in a text. “Looking at the history of proposed constitutional amendments aimed at tax relief in our state, it’s likely to pass.”
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