State economists say homestead exemption increase could cost local governments nearly $12 billion a year

The Governor didn’t want to wait for an economic estimate before compelling lawmakers to put a property tax break on the ballot, but a little more than a week after the measure sailed through the Senate and House, some numbers that could have informed the debate are finally here.

Friday’s Revenue Estimating Conference revealed that if Florida voters opt to increase homestead exemptions to $150,000 in 2027 and $250,000 in 2028, with further increases contemplated should the constitutional amendment HJR 1-F pass, hard choices will be foisted on the state’s 67 counties.

State economists estimate that a total of $11.86 billion eventually would be extracted from local budgets per year, money that likely would come out of services provided to residents.

The prospective hit to local governments increases over time as homesteaders derive further savings, according to the Office of Economic and Demographic Research analysis.

In FY 27-28, local governments could expect nearly $5 billion less revenue. That number is estimated to increase to $8.775B in FY 28-29, $9.7B in FY 29-30, and $10,751B in FY 30-31. By the sixth year of the forecast, the full hit could be realized.

Gov. Ron DeSantis has argued that local governments can handle the impact, which he has framed as a boon to cash-strapped working and middle class homeowners. He notes that local property tax revenue nearly doubled from roughly $32 billion in 2019 to about $60 billion today, and has said the increased revenue has facilitated bloat and excessive spending.

Under the amendment on November’s ballot, local governments would be limited in what they can fund to public safety, infrastructure, schools, debt service and pensions. County constitutional officers like Elections Supervisors, Clerks of Court, Property Appraisers, and County and City Commissions would also be funded.

Commuter counties with lower commercial development and more revenue derived from homestead property taxes would be most adversely affected in terms of proportion, according to some estimates. St. Lucie could be the hardest hit, with a 35% loss in revenue. Clay, Baker, Citrus, and Hernando Counties could all face losses of more than 30%.

Flagler County, Volusia County, Hernando County, and Sumter County all would see at least 2/3 of homes potentially impacted.

All of these growing counties would face hard choices as they attempt to ramp up infrastructure to accommodate population increases.

Larger urban counties would face the biggest hit in raw dollars, according to the Florida Association of Counties. Miami-Dade would be subject to a $445 million revenue decrease as soon as FY 28-29. Hillsborough could lose $353 million, Broward could be down roughly $326 million, Duval $277 million, and Orange $253 million by the same point.

The Governor says an increased homestead exemption is overdue given the appreciation in home values and aligns with previous best practice.

“Florida hasn‘t raised the homestead exemption outright since 1980 and the last partial exemption increase was enacted almost 20 years ago,” he said this week.

DeSantis has said “entrenched interests” would mobilize against the plan, even as he has argued the version approved by the Legislature dilutes what he framed as the “most transformational” property tax reduction ever contemplated.

Indeed, criticism has come in, including from seemingly unlikely sources on the right.

The Wall Street Journal balked at what it sees as a “progressive” pitch that could lead to a “graduated” property tax system.

Pasco County Tax Collector Mike Fasano said the homestead proposal could cause problems for outstanding bonds in that county, and it is reasonable to expect ratings agencies will sour on their forecast for county and municipal debt service with revenue in doubt.

Lee County Property Appraiser Matt Caldwell said phasing the tax break in over a decade would give him more comfort.

Florida TaxWatch and the Florida Policy Institute also balk at potential impacts.

“Florida’s property tax system already shifts billions in property taxes from homesteads to non-homestead property. This proposal would worsen this inequity, even with the reduction in the non-homestead cap,” the TaxWatch analysis said.

Beyond lifting homestead exemptions by the end of this year to $150,000 in 2027 and $250,000 in 2028, further increases in the exemption would be tied to the Consumer Price Index. The Revenue Estimating Conference says that the exemption could be more than $267,000 by the end of the five-year forecast.

School taxes would not be subject to the increased exemption limit, and would stay at $25,000, after legislators rallied to preserve K-12 funding in the amendment process over the Governor’s initial objections.

Newer residents would qualify for a $50,000 exemption to start. After five years, they would derive full benefit from the tax break.

The amendment would cap assessment increases for other property at 5% a year.

DeSantis has said an implementation session could include a “trust fund” to boost local budgets, and others have claimed that local governments could push for legislators to appropriate money for projects.

Neither of these theoretical solutions would allow for real-time liquidity or for meaningful planning in local budget processes, which unfold over a period of months before the final spending plans are ratified just ahead of the beginning of the new fiscal year.

An increasingly cloudy state budget picture likewise would hamper Tallahassee’s ability to fill gaps in local spending plans, even as overall state debt reduction has been a signature accomplishment of the DeSantis administration.

While EDR expected as of Fall 2025 a roughly $3.8 billion surplus in FY 26-27, deficits are expected in the next two years of roughly $1.5 billion and $6.6 billion, respectively.

DeSantis and legislators have passed leaner budgets in recent years, but how continued moves in that direction, coupled with the ongoing devaluation of the U.S. dollar, would affect Tallahassee’s ability to spackle over local budget holes is an open question.