(The Center Square) – Eliminating or significantly reducing Florida property taxes could “fundamentally destabilize local finance” for municipalities that rely on the revenue, according to a new study released as tax relief legislation moves forward.
The study, conducted by Wichita State University and released by the Florida League of Cities, a group that lobbies for the state’s municipalities, found that cutting homestead property taxes would likely result in less funding for police and fire departments, public works services and parks unless other revenue sources are found.
Property taxes make up approximately 43% of municipal general fund revenue and are the only stable, locally controlled revenue sources for Florida cities, the study said.
Fully eliminating homestead property taxes would mean a nearly 38% loss in ad valorem revenue and a 14% drop in general fund revenue, according to the study.
High fixed-dollar exemptions ranging from $250,000 to $500,000 would result in a 25% to 35% revenue loss, the study said.
“Cities of all sizes spend more on public safety than they receive in property tax revenue, meaning even modest losses can create structural gaps,” the study said.
Rural communities would likely feel bigger impacts, according to the study. The communities would struggle to find other revenue options and would face steeper service cuts compared to larger cities with more diversified bases, the study said.
The study suggested the state could help replace the lost revenue or provide relief that is income-based or senior-focused. It also proposed giving local governments more control over expanding revenue options and providing residents with fiscal-impact disclosures to explain the tradeoffs for lower tax bills.
Four of eight property tax relief proposals recently cleared the House State Affairs Committee. If approved by the full legislature, they would move to an election ballot for voters to consider.
House Joint Resolution 201 would eliminate non-school property taxes for homesteads. House Joint Resolution 205 would do the same for homesteads owned by people age 65 and older. House Joint Resolution 209 would allow for a $100,000 exemption for owners with property insurance, and House Joint Resolution 211 would increase the maximum value of the accrued Save-Our-Homes benefit that can be transferred to a new homestead.
The proposals seek to provide relief for homeowners while maintaining funding for police and schools.
