By Coral Gables Gazette staff

Florida Governor Ron DeSantis unveiled his property tax reform plan earlier this week, and with it the City of Coral Gables can finally start to calculate what the impact would be on city coffers if the plan is endorsed by the Florida Legislature and approved during a statewide referendum in November.

DeSantis’ plan would triple the current $50,000 Homestead Exemption for residential property owners in the first year, moving it up to $250,000 in year two and eventually to $500,000. That would spell massive revenue hits for the City Beautiful.

The city’s Communications Director Martha Pantin said the city was closely monitoring the issue with its legislative partners, although she was not ready to share any valuations on the impact. 

“Property tax revenue supports many of the core municipal services our residents rely on every day, including public safety, infrastructure, parks, code enforcement and general city operations,” Pantin wrote, in a statement to the Gazette. “Any significant change to property tax revenues would require the city to carefully evaluate service levels, capital projects and long-term financial planning.”

Finance Director Diana Gomez did not answer questions regarding the effect on city revenue as of publication of this article, but she had already sounded the alarm in March when she said the city could lose roughly $6 million in revenue from a $100,000 exemption increase.

The $30 million question

Based on the city’s current taxable value and millage rate, the losses under DeSantis’ proposal could quickly escalate beyond that figure. Estimates based on the city’s FY 2025-2026 adopted budget indicate Coral Gables could lose approximately $6.1 million annually if the homestead exemption rises to $150,000, more than $12.2 million if it rises to $250,000 in year two, and close to $30 million or more annually if the exemption eventually reaches $500,000.

For a city that relies heavily on property taxes to fund day-to-day operations, the impact could be dramatic. Coral Gables currently receives about $137.5 million annually in ad valorem tax revenue, meaning the governor’s ultimate proposal could wipe out roughly one-fifth of the city’s property tax base.

What cuts could follow

During a March 18 meeting of the Budget Audit Advisory Board, Gomez outlined what such revenue losses could mean in practice.

“The exercise that we would do from a budget perspective is we would start to look at programmatic cuts – (reducing) hours of parks, stopping some services… some cost savings across the board,” Gomez said at the time.

Under DeSantis’ proposal, remaining local property tax revenue would largely be restricted to what he described as “core services” such as police, fire rescue and schools. While public safety services could be protected, quality-of-life services that define Coral Gables such as parks programming, recreational amenities, beautification efforts and cultural initiatives, could face major reductions.

Gomez previously warned that fees currently subsidized by general property tax revenue could eventually shift directly onto residents. Park fees, for example, currently do not fully cover the cost of operating city recreational services because the city considers those amenities a public benefit.

“Right now, our park fees don’t fully cover park services because we consider it a public benefit… but if we had to, those fees would have to go up to cover costs,” Gomez said.

The shift from taxes to fees

The city has already moved recently to increase garbage collection fees, and under a reduced property tax structure residents could bear a larger share of sanitation and other service costs directly through user fees and assessments.

DeSantis’ proposal would also reduce annual assessment increases on small businesses from 10% to 5%, further shrinking future taxable value growth for municipalities. The governor argues the proposal would provide significant relief to homeowners squeezed by rising insurance premiums, inflation and housing costs.

“This is the one thing that we can do that is gonna make a really big difference in the lives of people,” DeSantis said during a press conference in Tampa.

According to the governor, a $250,000 exemption would eliminate property taxes entirely for roughly 60% of Florida homeowners, while a future $500,000 exemption could eliminate taxes for approximately 92% of homesteaded properties statewide.

Critics, however, warn the proposal could destabilize local governments across Florida. Municipal officials and statewide organizations have warned that smaller cities could face existential threats if large portions of their tax base disappear.

Miami Shores Village has projected budget reductions approaching 61% under some exemption scenarios, while independent studies commissioned by the Florida League of Cities found dozens of municipalities could see essential services threatened.

A state debate with local consequences

The proposal also raises concerns about long-term fiscal stability for counties, hospitals and infrastructure systems. Jackson Health System alone could face a funding gap estimated at more than $100 million under broad property tax reductions.

Some economists and policy analysts also argue the proposal could become regressive, shifting more costs onto renters and lower-income residents through increased fees, sales taxes and higher housing costs.

The Coral Gables Commission did not have a scheduled discussion item regarding property tax reform on its June 2 agenda. But with budget season approaching and the governor calling lawmakers back to Tallahassee for a special legislative session next week, the issue is likely to become a central topic of discussion at City Hall in the months ahead.