As the clock ticks down to a Nov. 3 vote on the Save Our Homes referendum that would greatly reduce the property taxes flowing into Florida city and county coffers, local governments from Pensacola to Key West are preparing for what, for them, would be a worst-case scenario.
That scenario would be passage of the constitutional amendment championed by Gov. Ron DeSantis and passed by the Florida Legislature over strenuous local government objection.
“It’s a scared world out there,” Milton City Manager Ed Spears told city council members at a recent meeting.
The Save Our Homes amendment will require support from 60% of voters. DeSantis touts the proposed amendment as historic legislation to free homesteaded Floridians from the burden of property taxes.
If passed, the Save Our Homes initiative would raise homestead exemptions for Florida taxpayers from $50,000 to $150,000 on Jan. 1, 2027 and to $250,000 at the beginning of 2028.
In Gulf Breeze, that equates to an approximate 15% reduction in tax revenue, or about $300,000, in year one of implementation and a 27% reduction, or $530,000, in year two, according to City Manager Samantha Abell.
For Milton the reduction in tax revenue is estimated at $495,085, or about 19% under the year one $150,000 homestead exemption and $608,672, or about 23%, under the year two $250,000 homestead exemption.
Numbers provided by Milton spokeswoman Bethany Anderson also indicate that in the first year of the increased homestead exemption approximately 68.5% of Milton’s 2,051 homesteaded properties, or 1,404 homes, would be fully exempt from city property taxes. By the next year about 95%, or 1,958 homes, would be fully exempt.
“We know we’re talking hundreds of thousands of dollars coming out of the Milton budget,” Milton City Councilman Larry McKee said.
Gulf Breeze in unique position
In Gulf Breeze, total ad valorem tax collections amount to just under $2 million, or not quite half of the city’s overall law enforcement budget of $4 million. Abell said it is not uncommon for municipalities to spend more than is brought in on property taxes to fund public safety.
She said Gulf Breeze will be in better shape to stave off the blow from Save Our Homes than many other municipalities in the state.
“We rely on a diversification of revenues, and we’re looking at this as more a tax shift than a tax reduction,” she said. “We’ll look to adjust non ad valorem fees to ensure law enforcement and other essential services can continue.”
She said outside of the city’s Community Redevelopment Area, 70% of homes in Gulf Breeze are homesteaded.
But Gulf Breeze leaders have been forward thinking in creating enterprise funds and utilities as sources of revenue. Doing so has allowed the city to lower the reliance on property taxes to the extent that they comprise only 20% of the overall budget, Abell said.
“I don’t expect the city to be hit as hard as cities that don’t have the enterprise and utility funds our city has,” she said.
At a city budget workshop scheduled for July 20, Abell said the city governing board will consider adjusting its numbers should the Save Our Homes amendment pass.
“I intend to present two budgets, one balanced for 2027 and another with six different options the council can look at for adjusting fees and taxes for non-homesteaded properties,” she said.
Under the Save Our Homes proposal, business assessments must be capped at 5%, whereas now those caps stand at 10%. Abell said that could mean that in hard economic times the city could struggle to keep pace with growth.
Within the CRA, Abell said, an approximate $100,000 reduction in revenues is anticipated, with a smaller number of residences and some small businesses primarily impacted.
But the city’s CRA had already been dealt a traumatic blow last year when Santa Rosa County reduced its millage rate by 2.07 mills.
“This is the second hit to a CRA set up to protect against blight, provide key infrastructure and support small businesses,” she said.
Milton focuses on employee impact
The Milton City Council didn’t specifically discuss the Save Our Homes resolution at a June 9 meeting, but its passage was top of mind in talks about employee insurance and cost of living raises for city staff.
Reid Torgersen of Torgersen Consulting summarized a report compiled for Milton by his company, focusing primarily on employee health insurance.
Rather than attempt to convince the governing body to accept a Florida Blue proposal that would actually have lowered the cost of insurance by 7.5 percent, Torgersen advised—and the council went along with—a recommendation to stick with a group known as Public Risk Management.
With PRM, the city is a member of a consortium.
“You’ve joined forces with governmental entities around the state to create a consortium to get the buying power you need to bring stability you need at renewal,” Torgersen explained.
He said the PRM proposal of a 6.5% increase seems doable for the city and renewal at a good rate the following year “very feasible.” The Florida Blue proposal offers no promise that rates couldn’t jump significantly at the time of renewal.
Ironically enough, PRM also offers coverage under Florida Blue.
Spears told the council it had the option to risk “major increases in the first year of proposed tax cuts” through Save Our Homes or “stay the course and ride the predictable amount.”
“I agree with staying the course with the understanding that we don’t know what’s gonna happen out there. We’re better off staying with what we’ve got,” McKee said.
Torgersen advised the council to absorb the approximately $3 per pay check, per employee, cost the increase offered by PRM would bring.
At the end of the insurance discussion, McKee asked Spears about employee cost of living raises. Spears told the board that he’d held conversations with several other municipal leaders and at least some were considering holding off on raises this year with Save Our Homes looming.
He said he and the city’s interim financial officer had been working on a proposal that would cap cost of living raises at 2.5% up to approximately $2,500 for employees making up to $50,000 and lower the percentage by degree for those making over $50,000. He said his salary, the city’s highest, would increase by 1.6% under the plan.
“It does impact the higher paid individuals, however, they’re higher paid individuals,” Spears said.
McKee said outside of the costs of insurance and personnel costs, Milton officials must also contend with the costs of things like police and fire services when working to balance a budget that could be impacted by Save Our Homes.
“We’ll need to figure out how to adjust by getting money from somewhere else, and deciding how much we need to balance the budget,” he said.
He said whatever happens in November, Milton city leaders can at least be grateful that they’ll have some lead time before preparing for the fiscal year 2027-28 budget.
“Even if everything comes through it would not have an impact until the 2027 budget, so we’ll have til then to figure out what we’re going to do,” he said.
Tom McLaughlin is an award winning journalist with 40 years newspaper experience, covers Santa Rosa County, environmental stories, development and investigative reporting.
This article originally appeared on Pensacola News Journal: ‘It’s a scared world out there’: Milton, Gulf Breeze brace for tax cuts
Reporting by Tom McLaughlin, Pensacola News Journal / Pensacola News Journal
USA TODAY Network via Reuters Connect
By Tom McLaughlin, Pensacola News Journal | USA TODAY Network
