Florida cities, counties brace for hit from proposed homestead tax break

St. Petersburg stands to lose about $75 million annually should voters approve Gov. Ron DeSantis' proposed property tax break on the primary residences of Florida homeowners, city officials said Thursday.

Pinellas County would take a hit of $940 million, according to Property Appraiser Mike Twitty.

The projections come as cities and counties across the state assess what DeSantis' plan could mean to their bottom lines and services they may need to cut. That could include services like permitting, code enforcement, parks and major redevelopment projects. The proposal to build a stadium for the Tampa Bay Rays on Hillsborough College's main campus currently relies on property tax reserves county officials may need to balance the books if DeSantis' plan wins support.

"It's certainly potentially in jeopardy because all of the sudden they're worried about where those future dollars are going to come from and all of the sudden, they don't have those excess funds," Twitty said.

A Florida League of Cities analysis released Thursday found smaller cities could be particularly hard hit. It identified 85 cities that would not be able to fund public safety at the same level, even if they eliminated every other service funded by property taxes. Those municipalities include Largo, Gulfport, Temple Terrace, Seminole and Tarpon Springs.

DeSantis has been promising property tax relief for owner-occupied homes over the past year . His administration has been traveling the state pointing out what it deems are inflated budgets and misspending in local governments, including in St. Petersburg .

Florida exempts $50,000 of a homesteaded property's value from being used to calculate its annual property tax bill. It also caps how much a primary residence's assessed value for tax purposes can grow each year at 3%.

DeSantis proposes expanding the exemption to $150,000 by Jan 1, 2027, then $250,000 the following year. The St. Petersburg and Pinellas projections are based on the latter number.

He has asked lawmakers to convene a special session next week to approve a ballot measure on the proposal that would go to voters in November. He is also asking lawmakers to come up with a plan to expand the homestead exemption to $500,000, which his office estimates would eliminate property taxes on 92% of the state's primary residences.

The St. Petersburg City Council unanimously approved a resolution Thursday urging lawmakers to "carefully consider the practical and financial impacts of any proposed property tax reform on local governments and the communities they serve before advancing any constitutional amendment or related legislation."

"I don't know where they think we come up with 70-something million dollars because they're not providing it," said City Council chairperson Lisset Hanewicz. "The reality is a shifting of costs and maybe there is a separate fire fee and a police fee out there to cover these costs."

Earlier this month, the city of Dunedin floated the possibility of creating a fire protection fee to offset potential property tax revenue reductions.

Tampa Mayor Jane Castor, speaking at a news conference on affordable housing in East Tampa on Wednesday, said that "everything could be at risk" if there are dramatic changes to property taxes. She said the price to pay police and firefighters already exceeds what the city collects in property taxes.

"While we're still evaluating the fiscal impacts of this proposed amendment, every dollar of property tax revenue in Tampa goes to police and fire," Castor said in a statement Thursday. "While some in the Legislature have suggested monthly trash pickup or selling city parks to cover public safety costs, we will fight to defend the services and amenities important to our quality of life."

Clearwater Mayor Bruce Rector said that while he supports the idea of lessening the financial burden of real property taxes — as the cost of living has continued to rise but income levels haven't kept up — he wonders if the state could shift the burden onto visitors coming into Florida by increasing the sales tax.

"If it's too aggressive, I think there's a very strong chance that it would not pass," Rector said of a potential ballot referendum. "I think a lot of the Legislature understands that."

He said like other cities, Clearwater will feel the financial effects of losing property tax revenue and that "may necessitate a reduction in services in some ways." While Clearwater has the benefit of having many commercial properties like hotels and restaurants that wouldn't be impacted by the tax proposal, smaller governments, he said, don't have that option.

"Folks welcome real property tax relief," Rector said. "But not at the expense of our quality of life."

Times staff writers Colbi Edmonds and Nina Moske contributed to this report.