Anticipating voters may slash property tax collections at the ballot box in November, Orlando Mayor Buddy Dyer said the city has imposed a hiring freeze and plans to budget savings from this year to soften the blow of any potential lost revenue in years to come.
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Heading into 2027, the city also plans to keep its property tax rate at $6.65 per $1,000 for the 13th year in a row.
At the city council’s Monday budget workshop meeting, city officials discussed a proposed $1.88 billion spending plan for next fiscal year, which would grant employees a 4% raise and add 46 new positions in the police and fire departments, 36 of which would be to staff a new fire station. Besides those added public safety positions, the budget calls for ninefewer employees paid for with property tax funds than the current fiscal year, which ends Sept. 30.
The city is anticipating roughly 6% growth in property tax revenues, accounting for new construction coming online as well as growth in property values.
But much of the discussion centered on how the city is planning for the potential impacts of Amendment 3, which was sent to the November ballot by the Florida Legislature last month.
If approved by 60% of voters, the amendment would create a $150,000 tax exemption on primary, “homesteaded” homes in 2027, rising to a $250,000 exemption in 2028.
According to an analysis by the Orlando Sentinel, a homeowner in Orlando could expect to see tax savings of roughly $2,300 if the plan is realized.
But the consequence of that savings, local officials have warned, will be cuts to local services which are funded by those taxes.
The amendment would restrict what cities and counties can spend tax revenue on, only allowing for expenditures on core services such as public safety, education, infrastructure, flood control, and retirement benefits for local government employees.
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Orlando officials estimate the city would see about a $35 million revenue hit in 2027, growing to about $50 million the following year.
All told, state economists expect Florida cities and counties to lose $5 billion in 2027, a figure that is projected to balloon to about $12 billion in six years.
Orlando would be in a better spot than many other local governments, however. Just 19% of the city’s property tax collections come from primary homes – by percentage, far smaller than many other cities and counties that lack a commercial tax base.
The city also plans to create what’s calling a Property Tax Reform Stabilization Fund by rolling its budget savings throughout the year into a separate account to “smooth” potential lost revenue.
“So rather than absorb a $35 million hit totally, if we have some excess funds that we save by managing our funds well during the course of this year, we can offset a part of that and flow through it over a number of years,” Dyer said.
He expects the city to have around $20 million left over this year to put into the fund, which typically is used at the end of the year on one-time capital costs.
“Essentially it’s stuff that the departments ask for that we didn’t give them,” Dyer said.
Under the city’s spending plan, which will need to be approved by city commissioners at two budget hearings in September, taxpayers will continue to be assessed $6.65 per $1,000 in taxable value. But due to increases in property values, most will see a higher tax bill year-over-year.
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