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After waiting nearly two years, Floridians finally had the opportunity to vote on a formal property tax proposal from Gov. Ron DeSantis. This is certainly ambitious and has two major benefits. Inflation reduces the current homestead exemption amount and increases it to $150,000 in 2027, completely offsetting the loss in dollar value. Commercial property owners will also benefit as the cap on assessed value increases will be reduced from 10% to 5%. These are major changes and will be central to consideration of the proposal.
Unfortunately, this amendment still leaves a lot to be desired, especially the promise to “elimate property taxes.” Neither the expanded homestead nor the 5% cap applies to school taxes. Homesteaders will be shocked to see they are still owed thousands of dollars in school taxes in 2027, but commercial properties, which already pay more than 60% of their taxes in school taxes alone, will see that percentage increase even more as the homestead exemption expands.
Efforts were also made to allow local governments to limit property tax expenditures to only essential goods. The list has been expanded to include important legal obligations such as constitutional duties, controls, and permits, but underneath lies the problem of undefined terms that could ultimately leave courts, rather than lawmakers, determining their meaning.
Most notable is the plan to expand the homestead exemption to $250,000 in 2028. First, if the goal is to restore the effects of the original 1934 exemption amount, it would need to exceed $400,000. But the real problem is speed. Going from $50,000 to $250,000 in just two years is a big jump. Without a clear plan to offset city and county revenue losses with mostly residential land, the proposal could fall short of the required 60% voter approval. Remember, in 2018, voters didn’t even approve a $100,000 exemption.
The proposal also requires new homesteaders to wait five years before receiving expanded benefits. Unfortunately, these types of provisions have repeatedly been found to be unconstitutional under equal protection claims. It should be severable, including ensuring that the amendment will not go to court and risk throwing out the baby with the bathwater.
But the most obvious problem is what this proposal does not address, and it could spark a taxpayer revolt in 2027. A non-ad valorem assessment is a flat rate property tax that is not based on the value of the property. There are no restrictions on them. Therefore, if a local government loses 20 to 30% of the base amount of its millet property tax, it is likely that these flat fees will be used to make up the difference. Ironically, many homeowners could end up paying even more in taxes in 2027 because of this. To make matters worse, these ratings do not include the usual exemptions for churches, schools, the blind, widows, or disabled veterans. Voters will have to trust that lawmakers will close this loophole in future Congresses.
The amendments are quite complex, and while some taxpayers could potentially save money, others are likely to feel the pinch of a tax shift. I am confident that no matter what voters choose in November, the unfinished business will require Tallahassee to dig deeper into this issue in the coming years.
Matt Caldwell is a Lee County real estate appraiser.
