Gainesville City Commission discusses budget impact of property tax reform and rules governing advocacy for or against ballot measures

BY JENNIFER CABRERA

GAINESVILLE, Fla. – At a General Policy Committee meeting on June 11, the Gainesville City Commission heard an update on the effects of property tax reform on the City’s budget and discussed the rules governing advocacy for or against ballot measures.

Effects of property tax reform on the City’s future budgets

Executive Chief of Staff Cintya Ramos reviewed the resolution passed by the legislature, which must get 60% of votes on the November General Election ballot before it is added to Florida’s constitution.

Ramos said, “What is certain is that,… if the ballot measure passes, this will reduce the City’s single largest revenue source significantly.”

The resolution initially increases the homestead exemption for non-school levies from $50,000 to $150,000 for 2027 and then to $250,000 for 2028, with increases tied to inflation after 2028. School levies will still have a $25,000 exemption.

The cap on property value increases for non-homesteaded properties (including commercial and multifamily residential properties) would decrease from 10% per year to 5% per year; homesteaded properties would still have a cap of 3% per year.

New residents would qualify for the increased exemption after five years.

The resolution also directs the legislature to set a schedule for the full elimination of homestead property taxes. 

The implementing bill does not restrict how local governments can spend revenue from property taxes, although the proposal initially limited expenditures to “core services.”

Ramos said the change in the homestead exemption would result in an estimated revenue loss of about $9 million for 2027 (reflected in the FY28 budget) and about $12.6 million for 2028 (reflected in the FY29 budget), about 5.5% to 7.8% of the current General Fund revenue. Full elimination of property taxes on homesteaded properties would result in a loss of about $14 million, based on current property values and millage rates.

Property tax revenues currently account for about 48% of the General Fund.

Millage increases over the rolled-back rate would require a supermajority

Ramos said cities currently have “a lever in their toolbox” to make up for budget gaps, “and that’s the millage, and they can pull that lever if needed” by increasing the millage. The new bill bases the City’s maximum-millage calculation on the rolled-back rate (the rate that would bring in the same amount of property tax revenue as the previous fiscal year): if the City Commission wants to increase the millage by more than 10%, they would need a two-thirds or supermajority vote, and increasing it by more than that would require a unanimous vote of the City Commission. The rolled-back rate is typically much lower than the current property tax rate because new construction adds revenue.

Ramos said there is an “open legal question” because the enacting bill permits Cities to use property tax revenues for anything approved by Commissioners, but the ballot summary (composed before the legislative session) limits the use of these funds to “core public needs.” She said the City is waiting on guidance on that question, but for now, they’re assuming there will not be any restrictions on how the funds can be used.

Ramos added that slowing the rate of property tax growth could put pressure on the City’s borrowing costs and credit rating over time. 

Public dollars can’t be used to push messages out to voters

Ramos also cautioned Commissioners that the City “can make information available and answer questions, but it can’t spend public dollars pushing messages out to voters, even if they’re factual.” She said the City can post verifiable, factual information on its website and unboosted social media posts, can answer questions, can report fairly on official actions, and can make printed material available for pickup. However, the City may not use public funds to send anything out to voters, send mailers, send paid email blasts, or make boosted social media posts. 

City Attorney Daniel Nee said that Commissioners, using their personal resources, “may express opinions on a ballot question at any time, provided no public funds are used to send those opinions directly to voters or to divert them into a paid political advertisement. You’re not limited when you act in your personal capacity without expending the resources of the public.”

Nee cautioned Commissioners about expressing opinions in public meetings that are streamed using City funds: “Even if it’s something that you can do, you may not want to be in a position where we’re trying to defend that.” He also cautioned them against advocating for or against the ballot measure using their City email accounts, although he said they could provide “fact-based” responses.

Mayor Harvey Ward asked if he could respond and say he couldn’t answer the question from his City email address, but he would contact them from his personal email address, and Nee said he thought that would be “appropriately transparent.” He urged Commissioners to be “extra careful” to not accidentally use the wrong account when responding to an email.

Nee said he wasn’t sure whether the Florida League of Cities of Florida Association of Counties could lobby against the ballot measure because “all of their funds, I presume, are public funds.”

Cuts to Library District and Children’s Trust budgets

Since two of the Commissioners are on the Library District Board, Ward asked how big the cut to the Library District’s budget would be. With a $250,000 homestead exemption, the Library District would lose about $6 million a year, and Commissioner Casey Willits said that is about 22% of the budget. Ward said the $2.9 million the Children’s Trust would lose in that scenario would be about 25% of the current budget.

Willits said, “I’m concerned, and I want us to fight for our libraries that are in the city… I just want to start that conversation now.”

Commissioner Desmon Duncan-Walker said a worst-case scenario would be cutting back library hours, “so you may have a situation where we now have libraries that are not operating seven days a week, but just a couple of days a week that libraries would be accessible to the public.” She suggested bringing a representative from the Library District to a City Commission meeting for a conversation, and Nee said he thought that would be fine, except that it would have to be noticed as a Library District Board meeting. Ward suggested doing that at the July 23 General Policy Committee meeting.