City Hall is keeping a close watch on its neighbors across the street as several bills this legislative session threaten to deplete Tallahassee’s breadwinning source of revenue.
Commissioners and staff are scheduled to meet for a budget hearing this week, and on the docket to discuss are five bills that could limit “the local government’s ability to generate revenue to fund critical services.”
With Gov. Ron DeSantis focused on eliminating property taxes in the state of Florida, the City of Tallahassee could be facing a budget overhaul in the years to come, as property taxes account for $72 million in revenue in the capital city’s budget. By comparison, the fiscal year 2025 budget for TPD is $75.9 million, according to a city staff analysis.
“While not one-to-one, the city’s property tax is entirely devoted to funding the police department,” city staffers wrote in the agenda item ahead of Wednesday’s budget workshop at City Hall at 1 p.m. “Eliminating property tax would significantly change the tax structure of the state and all local governments, which rely on property taxes to fund critical services.”
Ad valorem property taxes fund 95% of the Tallahassee Police Department — the department the city says would primarily be affected by the proposed legislation — and other revenues fund services like parks and recreation and public works.
“Any reduction in the city’s ability to collect ad valorem property taxes would result in the reduction or elimination of core municipal services,” agenda materials say.
If the bill (SB 852) passes, the city will have to conduct a study to figure out a way to phase out the revenues brought in by property taxes.
Already the city is adjusting for a $3 million to $5 million hit caused by a constitutional amendment that increases residential property tax breaks by tying homestead exemptions to the consumer price index.
The legislature would ultimately define “the mechanics and timeframe for eliminating property taxes,” but additional homestead exemptions that would require voters’ approval this fall could also impact the city’s budget, according to agenda materials.
The agenda materials note the city saw a “clear trend” during last year’s legislative session, and years prior, that targeted local government’s revenue sources, and this year is no different.
“Staff will continue to monitor legislative action and develop funding strategies in response.”
Other bills that could impact city revenues
In addition to SB 852, the city agenda materials explain the effects of four other bills the city is closely monitoring.
- HB 787/SB 996 – Revenues from Ad Valorem Taxes: Bills would regulate ad valorem tax revenues by modifying how the rolled-back rate is calculated and limiting the maximum millage rate that local governments can levy. Millage rates would be limited to a 2% increase above the previous year’s rate, adjusted for per capita Florida personal income changes. With the current projection of a 5.7% increase for FY26, the city would see a $2.4 million decrease in taxable revenue compared to the adopted FY25 budget.
- HJR 773 – Revising How Homestead Property is Assessed: This bill would eliminate the annual assessment based on the property’s current just value and instead assess properties at their most recent purchase price or, if new construction, the construction cost.
- SB 1018 – Homestead Exemptions: This bill would increase the homestead exemption from $25,000 to $75,000, adjusted annually based on positive changes in the Consumer Price Index. Based on the projected FY26 budget, this would reduce Tallahassee’s property tax revenue by $3.4 million.
- HJR 357 – Property Tax Exemption: This bill would increase the homestead exemption from $25,000 to $100,000. Based on the projected FY26 budget, this would reduce Tallahassee’s property tax revenue by $6.5 million.
Local government watchdog reporter Elena Barrera can be reached at ebarrera@tallahassee.com. Follow her on X: @elenabarreraaa.