Thanks to the Florida Legislature, voters will decide in November 2018 whether to increase the homestead exemption by $25,000, which could save the average homeowner $200 to $300 a year.
If passed, homestead exemption increases would likely take a chunk out of city budgets in St. Augustine and St. Augustine Beach.
“I fully anticipate [it] passing,” said Mark Litzinger, director of financial services for St. Augustine.
City officials have already started looking at potential effects.
If successful, the exemption expansion would be in effect starting Jan. 1, 2019, and would be felt in the fiscal year budgets that begin Oct. 1, 2019, Litzinger said. The exact financial impact is unclear because property tax values and other factors change with time.
The St. Johns County Property Appraiser estimated the impact to the city’s property tax revenue, based on properties now eligible for homestead exemptions, would be $450,000 in lost revenue, according to Litzinger.
The city budget is about $50 million with adjustments made for transfers in the city, and the city expected to bring in about $9.7 million in ad valorem taxes this fiscal year, according to the city’s budget summary.
St. Augustine officials are also dealing with property value adjustments because of Hurricane Matthew damage.
The hurricane damage led to a loss in the city’s taxable value by about $11 million, which is a property tax revenue loss of about $82,500, according to Litzinger. Still, the city’s taxable value has increased by $25 million over the current fiscal year, and that the loss from the hurricane should be recovered as people repair damages.
As for the homestead exemption, Mayor Nancy Shaver said property tax revenue reduction would put local governments in “an extraordinarily difficult situation.” Florida’s cities and counties have few means to bring in revenue, and she said she hopes people understand it will affect quality of life if passed.
“Do you consider raising the millage rate? Do you reduce services? Those are our two choices,” Shaver said.
Meredith Breidenstein, city budget director, said city officials will consider revenues and the homestead exemption impact at a City Commission budget meeting in June.
In St. Johns County, officials are expecting the homestead exemptions change to make a more than $9 million dent in the county’s revenue.
St. Augustine Beach could see a 4 to 5 percent reduction in property tax revenue based on current data and property values, according to Melissa Burns, the city’s chief financial officer. Applied to the city’s current budget for property tax revenue, that would be about a $126,000 loss, according to Burns.
The ad valorem tax revenue expected this fiscal year was about $2.5 million, and the city’s expenses were expected to be about $9.4 million, according to the beach’s budget.
Also, the impact of added homestead exemption is expected to be tempered by property value increases, but it’s possible the city might have to make some adjustments, according to Burns.
“The city is experiencing growth at the current time, but this trend will diminish over the next couple of years. However, the demand for and cost of services provided will remain at an increased level,” according to Burns. “With the reduction in property tax revenue, the city might have to increase/implement user fees to meet the demand for services.”
St. Augustine Beach Mayor Rich O’Brien expressed a mixed opinion on the issue, and he said the city’s goal in general is to avoid increasing the millage rate and maintain the services people in the city want.
“I think any time we can give property taxpayers a relief, it’s a good thing,” he said. “The other side of the coin is that it will produce less tax revenue, which of course is the goal on one side. But it will give the city less resources to work with, and I think most people want the same quality of life or better that they enjoy today, and that involves revenue to accomplish.”