The Palm Beach County municipalities that can least afford cuts to their tax bases will be the most affected by Gov. Ron DeSantis’ plan to slash property taxes on Floridians’ primary homes, Property Tax Appraiser Dorothy Jacks told the county commission this week. She said the cuts could force some of them into insolvency.
South Bay, home to about 4,000 people near the southern bank of Lake Okeechobee, could be one of them.
The 3.7-square-mile town is mostly residential land with low property values. It would lose 99.4% of its taxable value in 2028 if the homestead exemption for property taxes increases to $250,000 from its current level of $50,000, according to an analysis done by the Florida League of Cities.
“There would be no one left to tax,” Leondrae Camel, its city manager, said June 3. “I do not know how we would be expected to operate. This is an impossible gap to close. We are already on a barebones budget.”
The state Legislature on June 2 approved placing DeSantis’ proposed constitutional amendment on the November ballot. It calls for raising the exemption on nonschool taxes from $50,000 to $150,000 in 2027 and to $250,000 in 2028. Sixty percent of voters must vote yes for the referendum to pass.
Midsized communities that might not go insolvent also are bracing for changes if tax revenues are substantially cut.
Ray Liggins, the village manager of Royal Palm Beach, said he would have to nearly double his current millage rate of $1.92 to provide the same amount of services to the community’s 43,000 residents. The village has held that rate steady for 15 years.
The League of Cities estimates Royal Palm Beach would lose about a third of its tax base if the referendum becomes law.
“There would be a huge tax shift to the commercial sector and to owners whose properties are not homesteaded,” Liggins said. “It is not fair to call this a tax cut. It is a tax shift.”
Liggins said he anticipated that some type of referendum would be placed on the ballot and inserted a clause into contracts with vendors that gives the village the right either to renegotiate or void contracts if the measure passes.
“What this is doing is pulling the rug out from under us,” Liggins said. “It is mind-boggling and insulting.”
Lake Clarke Shores, a bedroom community of about 3,500 residents bordering West Palm Beach, is more than 90% residential land. The League of Cities estimates that it would lose 44% of its taxable value in 2028.
Other towns that would be strongly affected include:
“We are in uncharted waters,” said County Commissioner Joel Flores, who was Greenacres’ mayor from 2017 to 2014.
“It is clear that towns with little commercial tax base will be hit especially hard. If they raise millage rates to offset the lost revenue, they could lose what little commercial base they have left. As the property appraiser warned, some could face insolvency.”
County commissioners say they are prepared to inform voters about the effects of the ballot question becoming law.
“We cannot advocate but can inform, and we intend to do that,” Flores said. City administrators, such as Jim Barnes in Wellington, said they also plan to tell their residents about the effect the cuts could have on services, call them a major recalibration.
“It is the most significant restructuring of Florida’s local government finance system since the adoption of Save Our Homes in 1992,” said Barnes, referring to the law that limits annual assessment increases on homsteaded properties to 3% or the Consumer Price Index, whichever is lower.
“While the proposal would provide substantial property tax relief to many homeowners, particularly long-term residents, important questions remain regarding revenue replacement and long-term fiscal sustainability.”
DeSantis has been calling for property tax relief for owner-occupied homes over the past year. He has argued that county and local governments have adopted “inflated” budgets, taking advantage of increasing property values. Liggins noted that the referendum was placed on the ballot without a detailed study being done to determine its effect on local and county governments.
League of Cities calls the amendment a game changer
In a letter to legislative leaders, the League said the proposal would alter the financial foundation upon which Florida’s cities operate and questioned why no comprehensive fiscal analysis had been undertaken.
It called the proposal a generational change to Florida’s system of local government finance without knowing its true impact on public safety, infrastructure investments, quality-of-life services or the long-term fiscal health of individual communities.
The push to cut property taxes in Florida could deliver significant relief to homeowners, but the message delivered throughout the state by local officials is the same: It will come at the expense of services residents have come to expect.
In addition, critics of the plan, like Liggins of Royal Palm Beach, argue that it will shift much of the cost of government funding onto renters and businesses.
There are, though, some wealthy municipalities that will be barely affected if the amendment becomes law.
The coastal towns of Manalapan and Gulf Stream would sustain taxable value losses of just 1% and 4%, respectively. Manalapan has a taxable value of $2.4 billion; a home there is currently listed for sale for $85 million. Gulfstream has a taxable value of $1.9 billion; a home is listed for sale there at $42 million.
“The people who can least afford it are the ones that are going to be hit the hardest,” Liggins said.
Mike Diamond is a journalist at The Palm Beach Post, part of the USA TODAY Florida Network. He covers Palm Beach County government. You can reach him at mdiamond@pbpost.com. Help support local journalism. Subscribe today.
This article originally appeared on Palm Beach Post: ‘Mind-boggling and insulting’ tax cut plan has towns bracing for worst
Reporting by Mike Diamond, Palm Beach Post / Palm Beach Post
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By Mike Diamond, Palm Beach Post | USA TODAY Network
