Orlando officials are making plans for the possible removal of part of its property tax revenue.
On Monday, Orlando officials discussed their options should voters pass an expansion of the homestead tax exemption. Doing so would remove a large portion of Orlando’s revenue.
“If substantial reductions in local revenues are enacted, cities like Orlando will be forced to make serious decisions,” said Orlando Mayor Buddy Dyer. “Current (and) future city leaders will have fewer resources available to maintain existing service levels. Projects to improve our neighborhoods may be delayed or may be eliminated.”
In November, voters will decide whether or not to expand the homestead exemption for homeowners from $50,000 to $150,000 by 2027, and $250,000 by 2028.
In May, Gov. Ron DeSantis called for a special session to be held in June, asking legislators to consider a constitutional amendment aimed at delivering broad property tax relief for Florida homeowners.
“Property tax revenue collected by local governments has nearly doubled in the past seven years and is expected to reach an astounding $83 billion by 2032,” DeSantis said in a press release. “Florida homeowners need relief. Now is the time to stand up for taxpayers, enact a historic reform, and save the home of every Floridian.”
In June, legislators passed the constitutional amendment for voters to decide on in November.
“Owning your own home has been the American dream since our nation was founded 250 years ago. What better way to celebrate America’s 250th anniversary than a massive property tax cut through a $250,000 homestead exemption for Floridians,” said Senate President Ben Albritton (R-Wauchula).
The proposal, known as Amendment 3, needs a supermajority, or 60% of the vote, to pass.
If it were to, Orlando is predicting a big hit on its services such as police and fire departments, parks and recreation, transportation, public housing, and amenities, Dyer said.
“That is not a prediction, not a wild alarmism. It is simply the reality of municipal finance, no different than your household budget,” he said.
The city could lose an estimated $30-35 million in the first year of the tax reform, according to Orlando Chief Financial Officer Jose Fernandez. That number could jump to a loss of $45-$50 million the next year, for a total of $75-$85 million over two years.
The council discussed options to help fill in the gaps, such as a hiring freeze.
“Our personnel costs are one of the highest costs that we have as a city, and the issue with personnel costs is once you bring somebody on board, it's a recurring cost, and that cost goes up,” Fernandez said.
The only hires that were proposed for next year’s budget are nine new Orlando police officers and 37 new hires for the Orlando Fire Department’s new fire station in the Lake Nona area.
A second strategy would be to create a property tax reform stabilization fund, using year-end budget surpluses.
“The fund will be used to help fill the funding gap caused by the implementation of property tax reform,” he said.
District 5 Commissioner Shan Rose proposed an education campaign designed to inform voters on how much their taxes support city services.
“I think collectively that needs to be what we really do. Every department needs to do it, from business development to public works to OPD to the fire department, start really saying, ‘These are your dollars at work,’” she said.
The city will take public comment on Sept. 14 during a City Council meeting ahead of implementing the budget in October.
