Palm Beach County officials warn that savings reaped by residents via an Amendment 3 property tax cut might be partially offset by increased fees to to replace lost revenue.
Fire Rescue is already exploring
the possibility of collecting its revenue through fees placed on homeowners. It expects to hire a consultant to help advise it on instituting a fee-based system.
Utilizing fees is one way to cushion the impact of the loss of property tax revenue should the referendum pass. The Solid Waste Authority relies on fees as opposed to property tax levies to fund its operations..
Fire Chief Patrick Kennedy said the department could lose about $100 million in revenue in the first year and $130 million in the second year under some projections.
Budget officials said at a Sept. 29 commission meeting that the proposed constitutional amendmentcould force significant cuts to local government services and trigger layoffs.
County leaders, including the Administrator Joe Abruzzo and budget director, said the financial impact would grow over time as property values continue to rise while local governments would be limited in their ability to capture additional tax revenue.
Voters will decide in November whether to approve a referendum that would increase the homestead exemption to $150,000 in 2028 and then to $250,000 in 2029 from its current level of $50,000. It would not impact school taxes.
Analysts view Amendment 3 as one of the most consequential policy questions facing Florida voters, with effects that could last for years. Approval will require 60% of voters to vote yes.
Gov. Ron DeSantis, who supports Amendment 3, has criticized local governments for rarely rolling back rates. Instead, he has noted that they keep the rate constant and that is enough to raise millions more in revenue due to the increase in property values.
During a workshop on the proposal, county staff outlined what they said would be a growing financial strain on local governments. County officials estimate Palm Beach County government alone could face a $138 million annual revenue shortfall. Some of that gap could be closed by raising the millage rate.
In Florida, the millage rate is the property tax rate used by local governments, school districts, and special taxing districts to calculate property taxes. One mill equals $1 of tax for every $1,000 of taxable property value.
With the loss of so much property tax revenue, Sherry Brown, Director of the Office of Financial Management & Budget, said the millage rate would likely increase to 4.95 in fiscal year 2029, a 10% rise. That is the rate that would be needed to produce the same revenue generated this year. It is known as the rollback rate.
County Administrator Joe Abruzzo reiterated his position that Amendment 3, if approved, is a tax shift. It would, he said, force higher taxes onto commercial properties and apartment complexes.
He predicted that eight towns in the county will become insolvent, placing another financial burden on the county to provide them with services.
“There are some very difficult decisions we will have to make,” Abruzzo said, noting the public outcry when the county tried to impose parking fees at beachfront county parks. As a result, the county backed off the plan.
Abruzzo said the county would consider every option if Amendment 3 passes.
Brown, the budget director, said the countywide millage rate would likely need to increase to 4.95 mills in fiscal year 2029 to generate the same amount of revenue currently produced under the existing tax structure.
Brown's analysis assumed county departments would receive budget increases of 1%, while constitutional officers would receive 5% increases. Commissioner Joel Flores questioned the disparity.
"The cuts have to be across the board," Flores said.
County explores fees as property tax revenue declines
Commissioner Gregg Weiss said voters should recognize that approval would likely lead to service cuts.
"If it passes, voters are saying they don't want to pay for it," Weiss said. "There will be cuts. We need to be prepared."
County Mayor Sara Baxter and Commissioner Marci Woodward, both Republicans seeking reelection, said that if voters approve Amendment 3, it would be wrong to find ways to circumvent the voters' intent.
“They would be telling us to cut spending,” said Baxter, noting she would be against funding Fire Rescue through special fees imposed on county residents.
The Republican Party of Florida has endorsed Amendment 3.
Officials repeatedly stressed that fewer resources would likely translate into slower emergency response times and reduced public services.
"People will die because they will not get the service they are getting now," Weiss said, arguing that longer response times could have life-threatening consequences.
Several commissioners said residents are frustrated by rising costs but should understand the tradeoffs. Woodward said voters have a right to decide, but governments would need to adjust service levels if revenues decline.
Flores said cuts by the county, municipalities and the school district could increase unemployment and weaken public services across Palm Beach County. He also noted that layoffs, pay freezes and reduced hiring could hurt the local economy.
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: Amendment 3 tax slash could require county fee hike
