Governor DeSantis Property Tax Initiative

A few weeks ago, Governor DeSantis announced an initiative to eliminate property taxes for Florida homeowners. In doing so, he made a profound announcement that we don't really own our homes outright, but rent them from the government on an annual basis with payment made to county governments in the form of property taxes. If the taxes aren't paid, the local government can evict us from our home even though we are the legal owners of the property. If the governor's initiative succeeds, foreclosure for failure to pay property taxes will disappear, and homeowners will finally be safe from an unexpected financial calamity which would allow the government to dispossess us from our homes.

The big question for me is how will the State of Florida make up the lost property tax revenues which provide basic services like roads, parks, police, fire, ems, utilities etc... without raising sales taxes which the governor has pledged not to do. It is not an easy question to answer, and I wish he had been more specific about how he was going to pay for it.

One suggestion is for the governor to take 50% of the last two year's Florida surplus (fiscal '22 and '23) which amounts to 15.6 billion and apply it as a property tax credit toward the $56.0 billion in property tax payments made in 2023. If enacted this would reduce property taxes by 27.8% for 2025 – a substantial savings for Florida homeowners. Under this scheme, Florida counties would receive 15.6 billion from the State of Florida surplus to offset the revenue loss from the property tax credit.

Additionally, if a Florida county has reserves in excess of the 30% allowed by Florida statutes 129.01 c1,c2, then those funds can also be accessed to expand the property tax credit further. For example, according to the latest Popular Report prepared by the Clerk, Manatee County has unrestricted reserves of $843.3 million versus a Florida statutory limit of $390.0 million. Therefore, since Manatee County is over-reserved by $453.3 million, this money can also be refunded to homeowners in the form of an additional property tax credit. Since the combination of Florida surplus and excess Manatee County reserves exceed the $399.6 million colllected in property taxes for 2024, there would be no property taxes due in 2025.

In subsequent years, 50% of the Florida surplus plus 50% of any county surplus and excess reserves can form the basis for an ongoing variable property tax credit solution which will help to keep Florida's property taxpayers on a sounder financial footing.

In closing, I have spent the last several years attempting to convince several different Manatee County Commissions that where 55% of our citizens are living “paycheck to paycheck”, property taxes are just too high, and the governor's initiative is a welcome step toward addressing this problem.

Mike Meehan, CFA, MBA

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