Amendment 3 passes, leaving government leaders scrambling to make up lost revenue

For those hoping Amendment 3 will reduce their tax burden, Tuesday’s vote was the easy part. With 62% of voters in favor of the homestead exemption increase, homesteaded property owners will now be exempt from paying local government taxes for up to $150,000 of their property’s value next year and up to $250,000 of their property’s assessed value in 2028. The increased exemption will not cover school taxes.

Now, the hard part will begin for government leaders who will be forced to either slash services and personnel, or to actually raise taxes that may disproportionately fall on non-homesteaded property owners, or to look at more increased fees.

Lee County officials are projecting that the county will lose more than $120 million in tax revenue in the first year, and more than $240 million in property tax revenue in 2028.

Lee County District 3 Commissioner David Mulicka, who is the incoming chair of the Lee County Board of County Commissioners, sees a lot of difficult choices ahead. Mulicka had expressed concern for the impact Amendment 3 could have on county services ahead of Tuesday’s vote.

“The voters have spoken and we will heed our call. That’s what they asked us to do and we are going to have to live on less money,” Mulicka said. “There are going to be some ungrowing pains along the way to make some hard decisions and certain priorities will have to change.”

Mulicka said “there are going to be some tough choices to make.”

His top concerns he is worried about currently are the impacts to parks, boat ramps, hurricane rebuilding projects and funding for the care of beaches that he said “benefit from investments the county makes.”

Mulicka is concerned that the county may have to make personnel cuts. “I have really done all I can for people and families to keep their jobs,” he said.

Mulicka said the county may have to introduced new or increased fees. The county commissioners and staff held a worksession in September to go over potential revenue from increased fees, which would add potentially another $20 million in new revenue to make up for the lost tax dollars.

“Nothing is going to be for free,” Mulicka said. “I am a conservative businessperson and I take the facts as they come and I make informed decisions as we go to do the best we can.”

Mulicka, who owns HONC Destruction and HONC Recycling, compared the changes that will need to be made to how he would have to run his business with less revenue.

Mulicka said the county’s procurement services and subcontracting processes will need to change. He thinks the county will have to cut the amount of projects that are subcontracted out and do the work with staff.

“I, as a business owner, wouldn’t know how to give $10 worth of service for $6 two years from now,” Mulicka said. “There are going to have to be some give and take on what the priorities for services are.”

Mulicka said he is looking to see what happens at a special session of the state legislature which was recently announced, to see what potential impacts there could be on the county as related to the new exemption.

Mulicka said that county roads, although largely funded by gas tax revenue, tolls and other sources, could be impacted though “not as drastically” as other departments.

“There is somewhere around $30-40 million a year from the general fund we used to enhance the Department of Transportation’s budget to accelerate projects. That sort of latitude is probably going to be constrained as part of this overall discussion,” Mulicka said.

Lee County District 2 Commissioner Cecil Pendergrass, who opposed Amendment 3, said he thinks voters were misled by the campaign in support of Amendment 3.

“I think people were misled into thinking they won’t get a tax bill next year,” Pendergrass said. “Their tax bill won’t really go down that much.”

Pendergrass said the impacts will be deep to local programs. He expects the county’s Conservation 20/20 program, which directs county funds to protecting ecologically sensitive lands, could be depleted.

“There will be big changes to how we do our budget,” Pendergrass said. He said funding for parks and recreation and human services will be “drastically cut.” He thinks there could even be new tax increases either at the local or state level.

The Town of Fort Myers Beach, at the moment is one of the luckier municipalities relatively speaking, as the large majority of properties in the town are not homesteaded. Still, the town is forecasting approximately $294,000 in lost property tax revenue in the second year of the homestead property exemption increase. That was enough of amount of missing tax revenue the town needed that caused the Town Council to raise its parking meter rates from $6 an hour to $7 an hour.

For the Fort Myers Beach Fire Control District, the revenue loss would cause a millage rate hike in order for the department to continue its current level of services, Chief Scott Wirth said.

Approximately 18% of the district’s revenue is from homestead property, Wirth said. The district currently has a millage rate of 2.65 mills per thousand dollars of property value. In the first year of the exemption increase next year, Wirth said the millage rate would need to go up to 2.85 mills per thousand dollars of property value to maintain the same level of services based on current property values. The rate would go up to 2.95 mills per thousand dollars of property value in 2028 based on the current level of property values to maintain the same level of services.

The fire district has actually been cutting its millage rate the last several years. “Four years ago, we were at 2.9851 (mills per thousand), then we came down to 2.8, last year was 2.76, this year is 2.65,” Wirth said the new construction in town since Hurricane Ian and increased property values has helped lower the millage rate. The district also was able to get a revenue replacement grant from the state after Hurricane Ian to nullify the amount of tax revenue lost.

If the fire district does in fact raise its millage rate to maintain services, the rate would still be below where it was four years ago.

“The other thing to keep in mind is, as we continue to build out the island, and new growth comes on to the tax roll, that will minimize how much I need to raise the millage rate,” Wirth said.

Town of Fort Myers Beach Councilmember Rebecca Link said she will be requesting confirmation from town staff of the projected revenue losses, the assumptions used in those projections, and whether those anticipated losses were incorporated into the adopted budget.

“The voters have spoken, and their voices have been heard. Our responsibility now is to understand the financial implications and plan accordingly,” Link said.

“I believe the Town should develop a five-year financial plan that identifies revenue projections, establishes spending priorities, explores opportunities for efficiencies, and protects essential services. Our community also deserves a clear roadmap of the Town’s priorities, including what we plan to accomplish, the anticipated costs, and realistic timelines,” Link said. “Residents should be able to see not only where their tax dollars are going, but what progress is being made.”

Link said her priority is to ensure “Fort Myers Beach remains financially sound while continuing our recovery and preserving the quality of life our residents value.”

Tom Brady, who was just elected to the Town Council on Tuesday, said he believes the first year of the homestead exemption increase will be manageable, though the second year may require more work on the part of the town government.

“Due to the mix of homes on our island, in the first year, the impact is manageable,” Brady said. “Since (Hurricane) Ian we have even more investor properties that don’t qualify.”

Brady said is larger concern is the impact to Lee County’s budget. “The town is heavily leveraged to the county (Estero Blvd, Pier, Parks, Law enforcement, utilities) and until we know where the county will cut (or increase other revenues) we have a pretty big unknown,” Brady said.

Town of Fort Myers Beach Manager Will McKannay has previously expressed concern for how the passage of the homestead exemption could impact the town’s budget. After the state legislature’s referendum bill passed, McKannay said the changes to the homestead exemption “could significantly reduce a town’s most stable and locally controlled revenue source. Because property taxes fund essential services like public safety, infrastructure, cultural programs, and parks and recreation, any major shift without a sustainable replacement could affect service levels and long-term financial stability.”

Mulicka compared the current situation to making sacrifices during the Great Recession. “You eat peanut butter and jelly instead of steak,” Mulicka said. “That’s what you do for your family.”

Mulicka said he didn’t want to “over-speculate” on what kind of cuts may be needed to make up for the large revenue shortfall the county will be experiencing in order not to create a false sense of crisis but said “we will serve the will of the people the way we have been instructed.”

Fort Myers Beach Mayor Dan Allers couldn’t be reached for comment.