Pensacola Mayor D.C. Reeves warned Monday that a proposal in Tallahassee to eliminate property taxes on homesteaded homes could force the city to scale back basic services, potentially wiping out more than a quarter of its non-public-safety budget.
“There is no scenario where you can lose 27% of a recurring budget ... and expect that services will remain the same,” Reeves said at his weekly press conference.
City officials estimate Pensacola could lose roughly $9 million a year if the proposal moves forward.
Florida lawmakers are considering a constitutional amendment that would eliminate non-school property taxes on homesteaded properties — meaning the portion homeowners pay to cities and counties, but not the taxes that fund public schools.
Supporters say the proposal would provide relief to homeowners struggling with rising housing and insurance costs. But city officials across Florida warn it could leave local governments scrambling to replace a key source of revenue used to fund basic services.
The proposal is advancing in the Florida House as House Joint Resolution 203. If approved by the Legislature, the amendment would still need support from at least 60% of voters statewide to take effect.
RELATED: Property taxes and redistricting were big topics at Okaloosa delegation meeting
The potential impact on cities grew earlier this year after lawmakers changed the proposal. An earlier version would have gradually increased the homestead exemption over a 10-year period. But lawmakers later removed that phase-in and replaced it with immediate elimination of the tax.
At a Feb. 23 Pensacola City Council agenda conference, Councilman Charles Bare said the change would dramatically accelerate the financial impact on cities.
“The 10-year phase-in is not in there anymore,” Bare told the council. “So it would be a $9.1 million hit on year one.”
Property taxes — known as ad valorem taxes — are one of the largest unrestricted revenue sources cities can use to pay for services such as police and fire protection, parks, and road maintenance.
In Pensacola, public safety already accounts for the largest share of the city’s general fund budget.
“Outside of police and fire … every other line item is about what we would lose,” Reeves said during the council discussion.
Bare said that kind of budget math could leave cities facing difficult choices about what services or assets they would have to cut to make up the revenue.
“What do we do?" Bare asked, "Do we sell off parks? … Are we going to raise taxes somewhere else?”
He also warned that if the state simultaneously limits how much cities can raise taxes on non-homesteaded properties — and rejects other potential revenue options — local governments could be forced to consider major structural changes in how services are delivered, including the possibility of functional consolidation with county services like law enforcement.
Councilman Casey Jones said eliminating property taxes on homesteaded homes could also shift more of the tax burden onto renters and businesses.
“What it's gonna do is shift a lot of the tax burden to not just those homes that are not homesteaded but a lot of the commercial properties as well,” Jones said.
He said businesses would likely pass those higher costs along to customers.
“Groceries are probably gonna start costing more, eating out's gonna cost more,” Jones said.
City Finance Director Amy Lovoy told council members the $9 million estimate is likely conservative because it reflects current property values and does not account for future growth in the tax base.
“What you are seeing is just a reduction from the current market value,” Lovoy said, meaning the long-term revenue loss could grow as property values increase.
RELATED: Florida House, Senate remain far apart on budget as session nears end
Bare called the proposal the “nuclear option” and said lawmakers have not outlined a clear plan to replace the revenue cities would lose.
He said he hopes the measure ultimately stalls in the Senate, noting that one possibility is that the proposal could simply “die” if the other chamber never takes it up.
Some council members also questioned whether eliminating property taxes would significantly reduce the financial pressure facing many homeowners.
Council Vice President Jennifer Brahier said property taxes are not the primary driver of rising housing costs for many residents, pointing instead to sharply increasing insurance premiums.
She said the cost of insuring her home has risen dramatically over the years, while her property taxes have increased only slightly because of Florida’s homestead limits.
Beyond the financial impact, Council President Allison Patton also raised concerns that the proposal would weaken local governments’ authority over their own finances.
“Doing it this way is really just totally taking away home rule and putting it all into Tallahassee,” Patton said.
For Reeves, the debate ultimately comes down to a tradeoff between lower taxes and the services cities provide.
“If the park is important to you across the street, if the sidewalk is important to you, if having one of the safest cities in the United States is important to you,” Reeves said. “... A vote for that under the way it's presented now is a vote to decrease your services at the city.”
