{"id":4392,"date":"2026-06-16T20:36:32","date_gmt":"2026-06-16T20:36:32","guid":{"rendered":"https:\/\/orlandorelocationreport.com\/?p=4392"},"modified":"2026-06-16T20:36:32","modified_gmt":"2026-06-16T20:36:32","slug":"property-tax-cuts-could-hurt-local-government-credit-ratings","status":"publish","type":"post","link":"https:\/\/orlandorelocationreport.com\/?p=4392","title":{"rendered":"Property tax cuts could hurt local government credit ratings"},"content":{"rendered":"
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A massive overhaul of the state\u2019s property tax structure being pushed by Gov. Ron DeSantis would have a sweeping impact on the financial stability of local governments across Florida and place devastating constraints on their ability to borrow money, according to three of the nation\u2019s biggest credit rating agencies.<\/p>\n

Read more Another rescue from Sloth World dies during rehabilitation, Central Florida Zoo says<\/a><\/p>\n

If approved by 60% of voters in November, the property tax amendment would take effect Jan. 1. It would incrementally raise the tax exemption on homesteaded properties, adding $100,000 to the current $50,000 exemption next year, raising it to $250,000 in two years, and increasing it in line with inflation until homestead taxes are nearly eliminated.<\/p>\n

Ultimately, the measure would slash a quarter of what local governments currently collect to pay for necessary services and pay off bond debt, an amount Florida\u2019s Revenue Estimating Conference estimates could eventually total nearly $12 billion annually.<\/p>\n

\u201cIf enacted, the expanded exemptions would constrain city and county revenue, increase taxpayer concentration, and reduce financial flexibility,\u201d Moody\u2019s Ratings, one of the largest government credit ratings agencies in the country, wrote in a report released Friday.<\/p>\n

The three ratings agencies, which also include Standard & Poor\u2019s and Fitch, reviewed the proposed tax plan as approved by the Republican-controlled legislature earlier this month.<\/p>\n

That version is far less sweeping than DeSantis\u2019 original plan, as it takes school taxes out of the mix and eliminates a proposed state trust fund to help cities and counties more dependent on property tax revenues which would be hit hardest by the cuts.<\/p>\n

The rating agencies\u2019 warnings echo a number of other criticisms of the plan, including a recent Wall Street Journal report saying it was \u201ca shame that Gov. Ron DeSantis is using his final months in office to push a poorly designed measure on the November ballot that would put his state on the slippery slope of a progressive property tax regime.\u201d<\/p>\n

In response, DeSantis accused the conservative news outlet of \u201cdefending bloated local budgets and opposing property tax relief for Florida homeowners.\u201d<\/p>\n

<\/p>\n

The nonprofit group Florida TaxWatch called the plan poorly-thought out and rushed through the Legislature with little time for debate or analysis. The group also said any property tax cuts would be better suited to a state tax commission scheduled to meet next year.<\/p>\n

Local governments have warned for months that the proposal would break their economies and force hard decisions to either cut services or raise other taxes and fees.<\/p>\n

Former Republican state Sen. Jeff Brandes, a libertarian from St. Petersburg and founder of his own think tank who is critical of the governor\u2019s plan, said he is not surprised by the dire reports issued by the credit ratings agencies.<\/p>\n

\u201cIf you look at these local budgets\u2026 you realize they are playing a dangerous game,\u201d Brandes said. \u201cWe\u2019ve already seen local tax collectors come out and say they are going to have to adjust their millage upward just to cover existing debt.\u201d<\/p>\n

<\/p>\n

Millage is a term used to describe the tax rate local governments charge on properties. One mill equals $1 of tax for every $1,000 of assessed value, which is equivalent to .1%. Orange County\u2019s current rate is 4.437 mills. State law would allow cities and counties to raise their millage rates all the way to 10 mills.<\/p>\n

\u201cThe world will still go on, but it will just be taxed differently,\u201d Brandes said.<\/p>\n

Local governments would also be able to tag on other fees for services without approval from the Legislature.<\/p>\n

Read more Orange expects no school closures next year, despite financial crisis<\/a><\/p>\n

Cities and counties would lose about $5 billion the first year, more than $8 billion the second year, up to about $12 billion by the sixth year, state economists said in a report released Friday \u2013 more than a week after the resolution to place the amendment on the ballot was approved.<\/p>\n

The ratings agencies placed particular focus on the likely erosion in local governments\u2019 ability to issue bonded indebtedness, which is commonly used to finance infrastructure like roads and sewers. Those agencies are regularly called on to assess the stability of such debt and help set the interest rates that should be offered to attract purchasers.<\/p>\n

\u201cIf it passes, local governments could face a substantial reduction in tax revenues without identifying a replacement source, limit annual growth in taxable assessed value, and restrict use of property tax revenue for core services\u201d wrote Michael Parker, the chief analyst for Florida for Standard & Poors Global Ratings.<\/p>\n

They could face other factors, as well, Standard & Poors said, \u201cincluding uncertainty about the macroeconomic environment, declining enrollment for schools, and hurricane risks, compounded by cost-sharing ambiguity from the Federal Emergency Management Agency.\u201d<\/p>\n

Moody\u2019s analysts said the impact of the tax cuts will depend on what policy choices city and county officials make to make up for the losses.<\/p>\n

\u201cAn aggregate tax base decline of about 25% \u2026 would affect issuers differently depending on how reliant they are on property taxes,\u201d Moody\u2019s said.<\/p>\n

About 43% of municipal funds on average come from property taxes, meaning they would lose an aggregate 11% of their revenue, Moody\u2019s said.<\/p>\n

Counties would lose about 7.2 % of the $70 billion in annual revenue collected, based on an estimated loss of $5 billion in the first year, as calculated by the Florida Association of Counties, Moody\u2019s analysts reported.<\/p>\n

That puts many Florida cities and counties \u201cin a decent position to absorb a moderate shock to their tax bases because those bases have more than doubled over the past decade,\u201d the Moody\u2019s report said. \u201cIf this reform were to shrink tax bases by 25%, it would set taxable values back to where they were just three years ago.\u201d<\/p>\n

Fitch Ratings largely echoed the findings of the other two credit rating agencies, saying the tax exemptions \u201cwill increase fiscal uncertainty unless policymakers take offsetting action.\u201d That would likely come in form of fees or shifting the tax burden on businesses, commercial properties, apartments and other non-homesteaded properties.<\/p>\n

A lot of what local governments can do depends on how much flexibility they have in raising the tax rates. The closer they are to the maximum tax rate they are allowed to impose under state law, the more likely they will be able to absorb the loss, Fitch said.<\/p>\n

Some governments \u201cmay offset lower recurring property tax revenues with expenditure cuts, service reductions, or reserve use,\u201d the report from Fitch said. \u201cA sustained decline in available reserves could lead to downward adjustment of an issuer\u2019s financial resilience assessment, depending on the magnitude.\u201d<\/p>\n

\u201cIncreasing other revenue streams could increase exposure to economically sensitive revenue or concentrate the tax burden among certain non-homestead taxpayers, including commercial property owners,\u201d the Fitch report said.<\/p>\n

The governor\u2019s office did not return a request for comment on the agencies\u2019 reviews.<\/p>\n

Read more Circus catch dooms Winter Park as Eau Gallie wins UCF 7-on-7 tournament<\/a><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

A massive overhaul of the state\u2019s property tax structure being pushed by Gov. Ron DeSantis would have a sweeping impact on the financial stability of local governments across Florida and place devastating constraints on their ability to borrow money, according to three of the nation\u2019s biggest credit rating agencies.<\/p>\n","protected":false},"author":1,"featured_media":3668,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13,27],"tags":[],"class_list":["post-4392","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","category-politics"],"yoast_head":"\nProperty tax cuts could hurt local government credit ratings - Orlando Relocation Report<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/orlandorelocationreport.com\/?p=4392\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Property tax cuts could hurt local government credit ratings - Orlando Relocation Report\" \/>\n<meta property=\"og:description\" content=\"A massive overhaul of the state\u2019s property tax structure being pushed by Gov. 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