Following Florida voters’ approval of Amendment 3’s drastic property tax cuts, communities across Central Florida are bracing for upheaval in their municipal budgets.
A new analysis from the Orlando Sentinel quantifies the possible pain.
The small town of Howey-in-the-Hills, for example — nestled in central Lake County, mostly rural and with a police department staffed by seven full-time officers — will see $936,752 in lost property tax revenue in 2028, when Amendment 3 is fully implemented, according to the nonprofit Florida TaxWatch. That equates to 22.5% of its general fund of about $4.2 million, Sentinel calculated.
The general fund funds the city’s police, library, parks and special events, including its popular Christmas festival.
In an interview Friday, Howey Mayor Graham Wells was quick to assure residents that there was no danger the town would lose its police department or its festivals. But he acknowledged the city will have to take money out of its reserve funds in 2027, when Amendment 3 cuts begin to take effect Oct. 1. And he is well aware that the tax loss will be even greater in 2028.
“It’s not going to stop us from paying the bills,” Wells said. “But sophomore year is a completely different ball game.”
While every local government in the state must grapple in some way with Amendment 3, it is expected to be particularly taxing for rural and bedroom communities whose higher percentages of their tax base are made up of residential properties that pay property taxes.
Amendment 3 only reduces these taxes, imposing a $150,000 property tax exemption in 2027, which will increase to $250,000 the following year. This does not apply to property taxes that fund schools.
But a city like Orlando collects property taxes on downtown buildings as well as commercial and industrial properties that don’t qualify for Amendment 3 tax benefits. It also receives significant sales tax and other business-related tax relief. Compare that to Belle Isle, its smaller southern neighbor, with a population of about 7,500 on the Conway Chain of Lakes.
Orlando is expected to lose about $60 million in property taxes, about six times more than Belle Isle’s entire general fund. That represents about 7.6 percent of Orlando’s general revenue, the Sentinel calculated.
Belle Isle stands to forgo about $2 million in tax revenue, but that represents 19 percent of its general fund.
Mayor Jason Carson said the city has implemented a spending freeze while it assesses the consequences. One expense Belle Isle would like to reduce is the cost it pays to receive Orange County fire protection. In about five years, he said, fees have increased more than 80 percent, while service calls have not increased at the same rate. Of course, Orange County firefighters will now also look to increase revenue and reduce costs thanks to Amendment 3.
“Our budget isn’t that big to begin with,” Carson said. “We’re not going to press the panic button.”
Head directly east, through central Florida, to upper-middle-class Oviedo, where just over 66 percent of the city’s taxable properties are homestead plots.
Mayor Megan Sladek said Oviedo will have to make tough choices, given that the city will see a revenue loss of more than $10.4 million in its general fund in 2028, or nearly 23% of its current budget of about $46 million.
As a prime example, she pointed out that each of Seminole’s seven towns has its own police department, while the county has the Seminole County Sheriff’s Office.
“We need to have a thorough, in-depth discussion about whether it makes sense to have eight law enforcement agencies,” she said. “Can we collaborate? Can we consolidate? Why aren’t we having this discussion? It seems scary. I understand why there is hesitation. But we have to do the math.”
In its analysis, Sentinel collected general fund values from city and county budgets for the current fiscal year and compared them to revenue losses projected by Florida TaxWatch.
Once Amendment 3 is fully implemented in 2028, the revenue loss ranges from 4% of Eatonville’s general fund to 32% of Lake County’s general fund. Eatonville is relatively unaffected because a large portion of its population is renters.
As Election Day approached, most cities and counties had not publicly stated how they anticipated the outcome. But some predict difficulties to come. In Orlando, Mayor Buddy Dyer froze hiring and transferred last year’s budget savings into a “stabilization fund” to help limit future costs. Seminole County Sheriff Dennis Lemma said he would likely have to cut 300 positions because the county had less money to fund his agency.
More recently, at least some officials are trying to project optimism. Howey Mayor Wells, for example, hopes that future residential and commercial growth will offset his town’s losses.
“I look at it from the perspective that we will have 2,600 new housing units within five or 10 years,” Wells said. He added that a new shopping center anchored by a Publix will be completed in the coming years and will add to the city’s coffers.
But officials are more optimistic in Winter Springs, an upper-middle-class community in Seminole, where more than 70 percent of its taxable properties are tracts of land, according to the Seminole Property Appraiser’s Office.
According to the Sentinel analysis, the city would experience an estimated $4.5 million revenue loss in 2028, or just over 16% of its current general fund budget of $26.3 million.
Winter Springs Mayor Kevin McCann touted that his city has one of the lowest property tax rates in the region, as well as the fewest number of employees per capita. But that doesn’t go any further.
“We are very fiscally responsible, so there are very few cuts,” he said. “But we’re going to have to replace that revenue. Everything is on the table…And it’s going to affect employee morale. And (employee) retention is already difficult for municipal governments.”
In the worst case scenario: some small towns – which no longer have the means to offer basic services – could be threatened with extinction and end up being absorbed by their counties.
“I will fight this forever,” McCann said on whether Winter Springs would face disincorporation. “I will do everything I can to prevent this. I will fight this as long as I can.”
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