Floridians will vote in November on a measure that would reduce the assessed value of their homes by $250,000, in effect lowering property taxes over the next two years. To pass, the proposal would need 60% of people who vote to be in favor of the change. The possible decline in funds used to pay for things like police and fire, libraries, and parks has local governments scrambling to figure out possible cuts as well as potential fee increases to plug predicted budgetary gaps.
Aside from immediate funding concerns, the reduction of property taxes will also impact the credit ratings of the counties and municipalities that issue bonds to fund projects.
Earlier this month, S&P Global predicted a negative impact on the credit ratings of county and city governments in Florida attributable to property tax reform, potential hurricane damage, and the national economic outlook. A lower credit rating means local governments would have to pay higher interest rates when borrowing money, which would mean less taxpayer revenue going directly to capital projects. It also affects the ability to issue bonds. Bonds issued under a lower rating are less attractive to investors.
Jennifer Garza, Director of S&P Global Finance Ratings, joins Engage to discuss how this reform is perceived by public ratings agencies.
Orange County Commissioner Kelly Martinez Semrad, who represents District 5, joins Engage to discuss her concerns over how the county’s ability to mitigate hurricane damage could be impacted with less money.
Orange County Commissioner Michael Scott, who represents District 6, joins Engage to discuss the tension between providing Central Floridians with economic relief the initiative could provide and concerns about the consequences of that relief.
Jeff Brandes is the founder and president of the Florida Policy Project, a nonprofit, non-partisan research institute. He shares one of his concerns about lower local government credit ratings is their potential effect on counties' and municipalities' ability to meet borrowing obligations.
