S&P: Florida property tax proposal could hurt credit ratings

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(The Center Square) – Local government credit ratings may be impacted if Florida voters pass the proposed property tax reform amendment in November, according to S&P Global Ratings.

The credit rating company said Wednesday the increased homestead exemptions laid out in Amendment 3 would constrain taxable property values and reduce available revenue for cities and counties, which could impact their ratings over time.

“Given its implementation timeline, the full impact of Amendment 3 will take several years to manifest, but issuers with weaker credit quality that are already struggling to maintain budgetary balance may feel this pressure sooner,” said S&P Global Ratings credit analyst Jane Ridley.

The company said the passage of Amendment 3 could create a “mismatch” between revenue and expenditure growth over time, leading to long-term deterioration in credit quality across Florida.

The fight over property tax relief is mounting with supporters including Gov. Ron DeSantis, the Florida GOP and others like Miami-Dade County Sheriff Rosie Cordero-Stutz telling voters not to listen to fearmongering over Amendment 3.

That hasn’t stopped a myriad of local government officials, law enforcement officals and business leaders from warning against the impacts that such sweeping change could bring.

“We heard from many members who are significantly concerned about their economic future if this passes,” said Rebekah Arthur, president and CEO of the Seminole County Chamber of Commerce. “While our membership includes many large employers, those with the most concerns were the small businesses and nonprofit organizations that simply could not withstand such a dramatic change in our tax structure. Of course, our chamber wants tax relief for our businesses and residents, and we certainly hope the Florida Legislature will revisit this issue carefully and diligently to provide relief.”

Arthur called Amendment 3 “too drastic and too sudden.”

The board of directors for the Miramar-Pembroke Pines Regional Chamber of Commerce echoed the sentiment that it was not the idea of property tax relief they were against, but the way Amendment 3 would pave the way forward.

“The Chamber recognizes that Amendment 3 would offer meaningful relief to Florida homeowners. We do not oppose the goal of reducing the property tax burden on Florida residents. Our opposition is rooted in a structural deficiency in the amendment, which proposes a major reduction in local government revenue without establishing a mechanism to account for that loss,” the board said. “Without a defined path to replace lost revenue, the financial burden falls directly on our local governments, which fund fire protection, emergency services, road maintenance, permitting, code enforcement, and economic development programs through the very property tax revenue this amendment would eliminate.”