Review of Florida's "Save Our Homes from Excessive Property Taxes" Amendment

I strongly support meaningful property-tax relief for Florida homeowners. Floridians should not be priced out of homes they already own simply because the value of those homes increased. This proposal takes several significant steps toward addressing that problem. However, after reviewing the actual constitutional language, I believe there are important issues that Floridians need to understand before deciding whether this proposal truly solves the property-tax problem or simply redistributes it.

What the Amendment Does

The proposal substantially changes Florida's property-tax system. For existing Florida residents qualifying for homestead, the non-school homestead exemption would increase to $150,000 beginning January 1, 2027, and then to $250,000 beginning January 1, 2028. The exemption would subsequently be adjusted for positive inflation.

The proposal also creates a different system for people establishing Florida residency after January 1, 2027. Generally, those new residents would initially receive only a $50,000 exemption for non-school levies and would have to wait five years before receiving the larger exemption.

Another major provision reduces the maximum annual assessment increase on certain non-homestead residential and non-residential property from 10% to 5% for non-school levies. These are meaningful protections.

The Biggest Concern: Tax Relief Does Not Necessarily Mean Tax Elimination

The most important issue is found in Article VII, Section 9. The amendment substantially reduces the taxable value of homesteaded property, but it does not eliminate the constitutional authority of counties and municipalities to levy property taxes.

Counties would still generally have authority to levy up to 10 mills, and municipalities would still generally have authority to levy up to 10 mills. That distinction matters.

If a county currently levies 5 mills and loses substantial revenue because hundreds of thousands of dollars of homestead value becomes exempt, nothing in this amendment appears to categorically prohibit that county from increasing its millage rate on the taxable property that remains, subject to existing constitutional and statutory limitations.

That creates the possibility of a tax shift rather than a complete tax reduction. Commercial property, rental property, second homes and other non-homestead property could ultimately shoulder a larger percentage of the local property-tax burden.

Even homestead owners whose properties remain partially taxable could be affected by millage increases. The amendment does provide additional protection to non-homestead property by reducing the annual assessment-growth limitation from 10% to 5%, which is positive. But limiting assessment growth and limiting the tax rate are two different things. A property can have its assessment growth limited while the taxing authority increases its millage rate.

Section 9 Deserves Particular Attention

Section 9 says counties, school districts and municipalities may levy ad valorem taxes and may be authorized by general law to levy other taxes. It then attempts to restrict county and municipal property-tax revenues to specified governmental purposes, including public safety, education, infrastructure, natural-resource projects, bonds, retirement obligations and government operations.

The problem is that the final category is extremely broad. It allows property-tax revenue to fund the operations and administration of county officers, commissioners and municipalities, along with expenditures approved by county or municipal governing bodies unless prohibited by general law.

That language potentially makes the supposed spending restriction far less restrictive than it initially appears. If the objective is to force local governments to prioritize essential services, the Constitution should clearly define those services rather than include language broad enough to potentially encompass a significant portion of ordinary local-government spending.

The Fiscal Impact Is Not Fully Known

This is another major concern. The Senate's own bill analysis stated that the Revenue Estimating Conference had not reviewed the proposal at that point and described the fiscal effect as a "negative indeterminate impact."

The Senate staff analysis also acknowledged that the proposal was expected to significantly reduce local-government revenues. That does not mean property-tax relief is bad. Reducing government revenue can be the intended result of tax reform.

But before permanently changing the Florida Constitution, taxpayers deserve to know how much revenue will disappear, which jurisdictions will be most affected, what services could be affected and whether local governments are likely to respond by increasing millage rates, assessments, fees or other taxes.

Property-tax reform should reduce the taxpayer's overall burden, not simply move the bill from one taxpayer to another.

Potential Impact on Renters and Businesses

This is where the proposal could produce unintended consequences. If a substantial amount of homestead property is removed from the taxable base, governments still have budgets to fund. Unless spending falls proportionately, the remaining revenue has to come from somewhere.

That could place additional pressure on commercial property, rental property, second homes and other non-homestead property. And businesses do not simply absorb property taxes.

Higher commercial property taxes can ultimately appear in rents, prices and operating costs. Likewise, landlords faced with higher property-tax burdens may pass those costs to tenants through higher rents.

Therefore, a property-tax amendment designed to help homeowners must be evaluated based on the entire tax system, not merely the savings printed on a homesteaded homeowner's tax bill.

What I Like About the Proposal

There are several provisions worth supporting.

The substantially larger homestead exemption provides real relief to existing Florida homeowners. Reducing the non-homestead assessment cap from 10% to 5% provides additional predictability for businesses, landlords and owners of non-homestead property.

Indexing exemptions for inflation helps prevent inflation from slowly eroding the value of the tax protection. And requiring government to reconsider its dependence on continually rising property values is a conversation Florida absolutely needs to have.

What I Would Change

I would strengthen this proposal before calling it comprehensive property-tax reform. First, there should be safeguards preventing local governments from simply increasing millage rates to recover revenue lost through the expanded homestead exemption.

Second, any authority to impose or increase alternative taxes or fees to replace lost property-tax revenue should receive careful scrutiny and, for significant new revenue sources, consideration should be given to requiring voter approval.

Third, the Legislature should require transparent fiscal modeling showing the impact on homeowners, renters, businesses and local governments before additional phases of property-tax elimination occur.

Fourth, the definition of permissible uses of remaining property-tax revenue should be tightened. A restriction on government spending means little if a broad catch-all provision allows essentially ordinary governmental expenditures to continue.

Finally, meaningful tax reform must include spending reform. Government cannot permanently reduce one of its largest revenue sources while assuming spending can continue growing at the same pace.

Conclusion

I support the goal behind this proposal: Floridians desperately need property-tax relief. There is a lot in this amendment that moves Florida in the right direction. Increasing the homestead exemption and reducing assessment growth on non-homestead property can provide substantial relief.

But voters should understand what the amendment does not do. It does not simply abolish property taxes. It does not eliminate local taxing authority. It does not guarantee that millage rates will remain where they are today. And it does not guarantee that revenue losses will not ultimately be shifted onto businesses, renters, second-home owners and other taxpayers.

Real property-tax reform should have one simple objective: Reduce the overall tax burden on Floridians, not move that burden from one group of Floridians to another.

I support reducing property taxes. I also believe we must close the loopholes that could allow government to replace the revenue through higher rates, additional taxes, fees or a disproportionate burden on businesses and renters. Florida taxpayers deserve tax relief that stays tax relief.