Florida’s Amendment 5 could cost Orange County over $21 million in revenue for programs, services over first five years, analysts say

Florida voters have six statewide ballot amendments on the ballot this General Election. And as voters head to the polls — or their mailboxes — some analysts are warning that one of the proposed constitutional amendments could hurt local communities.

Florida’s Amendment 5, concerning homestead tax exemptions, could cost local governments roughly $406 million in revenue over the first five years of the amendment’s implementation, which could consequently affect programs and services such as fire rescue and law enforcement, as well as local parks, libraries and public infrastructure projects (like road improvements). Orange County would be one of the hardest-hit, according to a new interactive resource from the independent Florida Policy Institute, with an estimated impact of $21 million in lost revenue over the first five years.

Unlike some citizen-led initiatives on the ballot this year, Amendment 5 was placed on the ballot by Florida’s GOP-controlled Legislature, pitched as a tax cut for Florida homeowners who are struggling to make ends meet. If approved by voters, Amendment 5 would adjust Florida’s homestead tax exemption annually for inflation, effective Jan. 1, 2025, which could reduce property taxes for properties that qualify.

Currently, that homestead exemption, which allows homeowners to reduce the assessed value of their homes by a certain amount, is fixed. Essentially, under Amendment 5, if inflation goes up, property taxes on a primary residence will go down. The amendment would not apply to taxes that help pay for school districts.

But there are a couple of catches. Property tax relief might sound nice for the average 4.3 million households this amendment could impact each year, but experts predict the actual cost savings for your average individual or family won’t be much.

Palm Beach County’s property appraiser, for instance, estimated about $40 in savings for a homeowner in the first year of implementation. Analysts with the Florida Policy Institute estimate an average savings of about $20 for Florida homeowners over the first five years. Florida renters, who make up about one-third of total households, wouldn’t benefit at all from the tax cut, and could actually end up shouldering some of the burden.

Aubrey Jewett, a professor of political science at the University of Central Florida, told WPBF that “if you own your own house and you live there, you get this exemption. But people who rent in an apartment complex, they don’t get that exemption, and their landlord is going to have to pay higher taxes and they are probably going to push it along to the tenants in the form of higher rent.”

Rising rent is something Orange County renters are already used to. But, thanks to the powerful real estate lobby, caps on rent hikes aren’t coming to Florida or Orange County any time soon — despite a strong show of support for idea from local voters in 2022.

Analysts with the Florida Policy Institute say Amendment 5 could also place local governments, like Orange County, in a position where they’ll have to either cut funding for basic programs and services, or raise taxes to make up for the loss in property tax revenue.

In the first year of alone, the county’s Office of Budget and Management estimates a total impact of $1.7 million, including a $880,000 decrease in tax revenue for countywide services, a $520,000 decrease for Fire Rescue and a $330,000 decrease for the Sheriff’s Office (I guess that’s one way to try and defund the police).

Based on factors such as year-to-year changes in inflation, the state Office of Economic and Demographic Research anticipates a greater annual impact with each year that passes, altogether totaling $21,019, 569 over the first five years — and that was based on an estimated total impact of $1.18 in the first year.

“The impact may not be felt immediately, but over time, this reduction in revenue as prices increase could lead to the need to raise taxes or reduce expenditures to cover the lower revenue,” Kurt Petersen, director of the Orange County Office of Budget and Management, told Orlando Weekly through a county spokesperson.

Such news isn’t exactly promising for those who might have been excited about some potential tax relief. But it’s not just Orange County that will have to grapple with the impact of this change, and how to make up for the loss. Other local governments would have to face that challenge, too.

According to the Florida Policy Institute, counties other than Orange that are likely to see the greatest impact from Amendment 5, if passed, include Pinellas, Hillsborough, Miami-Dade, and Palm Beach counties.

Like all of the other statewide ballot measures this year, Amendment 5 needs a “yes” vote from at least 60% of Florida voters in order to pass.

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This article appears in Oct 30 – Nov 5, 2024.