Eliminating or slashing property taxes would deeply undermine city services in Florida

A new study from the Florida League of Cities details how eliminating or sharply reducing homestead property taxes would create sweeping fiscal disruptions and weaken essential services.

The analysis found that stripping away homestead property taxes — as is being proposed by Gov. Ron DeSantis and through potential ballot measures now advancing in the House — would intensify structural gaps, threaten bond ratings and push municipalities toward steep cuts.

Property taxes account for roughly 43% of municipal general revenue across all Florida cities. Because Florida has no income tax, the report notes, property taxes “function as the stabilizing base that offsets volatility in consumption-based revenues,” such as sales taxes, where the tax burden would shift.

Nowhere is the strain more apparent than in public safety spending, which consumes more than 56% of municipal general fund dollars statewide. In fact, the analysis found that cities of all sizes spend more on public safety than they receive in property tax revenues, meaning even modest losses can lead to noticeable issues.

In small cities with fewer than 5,000 residents, annual spending on police and fire equals about 90% of yearly property tax collections. Mid-size cities spend 150-175% of their property tax revenue on public safety, while large cities with more than 100,000 residents spend about 140%.

That imbalance means cities of all sizes are already reliant on sales taxes, state-shared revenues, utility funds and fees to maintain baseline policing and fire protection, even before any additional tax cuts.

Other core functions also strain the tax base. General government operations — legislative and executive functions, legal counsel, financial management, planning and administrative services — consume large chunks of property tax revenue. In coastal, urban and infrastructure-heavy municipalities, public works and quality-of-life services like transit often exceed total property tax collections, underscoring how stretched some cities already are.

A microsimulation conducted for the League found that eliminating homestead property taxes outright would trigger a 38% loss in ad valorem revenue and a 14% drop in overall general fund revenue, forcing millage rates to nearly double to avoid service cuts.

Proposals to impose high fixed-dollar property tax exemptions, $250,000 to $500,000, would also produce steep losses of 25-32%, requiring cities to raise millage rates by 20-70% on still-taxable properties to break even.

Not all potential reforms carry the same risk. So-called “clean-slate” reforms that would remove Save Our Homes caps and current exemptions before applying relief would behave differently, the study found. A 32% discount or $100,000 just-value exemption would actually produce net revenue gains for cities, unlike expansions of existing exemptions.

The downstream consequences of large-scale tax cuts, the report warns, would be severe. There would be greater fiscal instability that could weaken bond ratings, capital investments and municipal debt capacity.

City leaders predict likely cuts to police, fire, public works and parks funding unless the state provides replacement revenue. Notably, the House’s eight constitutional amendment proposals include carve-outs for police and school funding, but for nothing else.

Local officials have also raised concerns about state-driven tax policy, arguing that Tallahassee’s push to cap or reduce municipal revenue without providing replacement funding undermines local autonomy and shifts blame to cities as services decline.

Researchers at Wichita State University used a microsimulation model to estimate how various homestead property tax reform proposals would affect municipal revenues across Florida.

After establishing a baseline of each city’s fiscal structure from 2018–2024, they applied reforms — including complete elimination, tiered exemptions and a 32% discount — to parcel-level values under just, assessed and taxable valuation bases.

They then calculated the resulting revenue losses and the millage rate increases needed to keep budgets whole before then breaking the results down by region, population size, housing values and income to show which communities would be most impacted.

The study comes months after DeSantis vetoed a $1 million earmark in Florida’s budget that would have funded a study on the potential impacts of eliminating property taxes. A Florida Policy Institute study released in February found that Florida would need to double its sales tax to 12% to offset the local revenue losses that ending homestead taxes would cause.