An increase in the homestead tax exemption from $50,000 to $250,000 under a proposed state referendum on the November ballot would likely mean higher county taxes and fees, as well as widespread cuts to county departments, under budget projections county commissioners are being faced with.
Lee County District 1 Commissioner Kevin Ruane does not believe residents are prepared for the impacts to services they could face. He said the effects could impact every department from county roads and transportation to public safety, parks, conservation, libraries, and EMS.
After meeting with staff this past week to go over ways they could hike fees to address an estimated loss of more than $120 million in tax revenue in the first year, and more than $240 million in the second year, if Florida's Amendment 3 passes, county commissioners were left facing a bleak set of scenarios.
Commissioners discussed scenarios that could mean increases in taxes and fees. Ruane believes the outcome could potentially lead to hundreds of job losses.
Voters across the state are being asked in Amendment 3 whether they want to increase the amount residential homestead properties are exempted from local taxes — not counting school taxes — from the current rate of up to $50,000 of a property's value to $125,000 next year, and up to $250,000 the year after. Properties that are not homesteaded and commercial properties — including apartment complexes and many condo buildings — would not be subject to the homestead exemption.
The change would be revolutionary in nature, bringing an upheaval to local government spending, which critics say would threaten tens of thousands of jobs statewide and impact services from public health to public works, land conservation, libraries, and parks.
In an interview with Breeze Newspapers, Ruane said he sees a devastating scenario he does not believe the public is prepared for.
"In year one, Lee County is looking at a loss of about $126 million in property tax revenue," he said. "In year two, it would be looking at approximately [a loss of] $240 million in revenue."
The county has an operating budget of $1.3 billion, about $825 million of which are departments the county commissioners directly control. About $475 million of the operating budget is departments which commissioners oversee, but which are constitutionally protected, including the Lee County Sheriff's Office (LCSO) — which accounted for approximately $342 million of last year's budget.
"We could make cuts, but we would have to cut muscle, and we would have to cut into the vital services the county offers," Ruane said.
Ruane said he believes the county would be faced with making cuts of approximately 40% over what the commissioners directly control.
"There is no way to eliminate 40% from anyone's budget. You tell me what household in Lee County can eliminate 40% of their budget and not change anything substantially. Cutting cable and the lawn that you cut, and the pool, or getting manicures, and going out to dinner. Those are things in this economy that people are already starting not to do," he said.
Ruane said that of the more than 4,000 workers in the county, many could be facing the loss of their jobs due to Amendment 3.
"I can't cut my way out of this, there is no way to do that without significantly reducing staff," he said. Just how many people could lose their jobs would be based on how much taxes and fees are raised and which departments are cut.
Ruane said the commissioners would have to go through all 28 departments and determine what services would survive.
"Do I close parks, do I close 20/20 lands (conservation purchases), do I close libraries? There are so many. Do I close solid waste? Do I do garbage but not recycling? Do I cut utilities, portable water, sewer? You are talking about every aspect of what we do," he said.
Last month, the county commission passed its budget with a flat millage rate of 3.76 per thousand dollars of assessed property value, and now has to adjust its projections.
"I believe there are things we can do to trim our budget. I don't know a household in America that can cut 20% in one year, and 20% more the following year. I don't know anyone who could," Ruane said. "The biggest expense you have are people. I don't know how to cut 40% of my budget without cutting staff."
One of Ruane's criticisms of the legislative process is that the increase in the homestead exemption was not spread out more modestly over a longer period of time.
"You are asking me to do [all of this] in less than 12 months," he said. Ruane said some projects could be delayed and some overhead costs could be cut, but ultimately there would have to be job cuts. "The Legislature basically gave us this situation in June, when we are in the middle of our budget cycle. In 24 hours, the Legislature came up with the perfect plan for 3,000 entities."
During a workshop last week between the commission and county staff, the commissioners saw some projections for revenue if electric franchise fees were increased, which could generate $9 million. An increase in EMS fees could add $4 million to revenues. Staff said they could increase the parking rate at county parks from $2 to $3 or charge parking on the Sanibel Causeway. The county could increase the cost of summer camps, animal services, permitting.
All of the proposals would bring the county about another $17 million, which would only be about 7% of the amount of lost property tax revenue once the exemption goes up to $250,000 in year two.
"You are not going to charge your way out of this through user fees," Lee County District 3 Commissioner David Mulicka said. "Even if the county raised its tolls for its bridges, that would only go to the department of transportation."
In an interview with Breeze Newspapers, Mulicka said he opposes Amendment 3.
"I am opposed to the strategy of it. I support lower taxes, I would be happy if they were lower," he said, adding "everybody in Lee County is willing to pay fair pricing for the services they want". "It does concern me quite a bit. Every department would suffer. Everything would have to be downsized. How many people could take a 40% pay cut and still pay their bills?"
Mulicka expects roads and infrastructure to be impacted. Ruane said the county is already about 10% behind the previous year's property tax values, which he believes is contributing to an economic slowdown coupled with the increase in the price of fuel.
"These massive cuts could accelerate that slowdown and potentially cause a minor recession," he said. Ruane said he does not think any department would be spared by the cuts, with less people on the workforce.
"When you make that 911 call where your dad is having a heart attack, and we normally would get there in two minutes, are you OK in six minutes? As an elected official, I don't want it on my conscience that a person didn't make it to the hospital on time, and they passed because a constituent wanted to save $200 or $300. I am not trying to count anyone's money. I understand their situation," he said.
"There is not a budget in America that could cut 40% instantaneously without cutting into the core values," Ruane, who runs several financial services companies, added.
Ruane, who has been a commissioner since being elected in 2020, said the county has kept its millage rate down over the years, even lowering the rate in some years. He is also fearful that in order for municipalities to cover the loss of funding, taxes will have to be raised, which will disproportionately fall on those who are not homesteaded, working residents who rent their apartments, and businesses.
"Remember, we are discriminating. We are only giving the homestead people a break. All non-homesteaded, all commercial, anyone that is not under the homestead (property owners who declare a property as their primary residence) is not receiving any break under this," he said. "The commercial people are going to pick up the burden."
The consumers will feel the impact at local businesses, Ruane said.
He said the average homeowner would save between $300 to $400 on their annual bills in all of their bills from county to fire department, mosquito control, water management districts, library, and town or city government bills.
"How many people would be happy in Lee County if we shut down all the libraries?" Ruane asked.
He said he does not stand to gain anything personally one way or the other, however the referendum comes out. He donates his $122,426 annual salary to charity.
"I give it to Community Cooperative, I give it to the food banks. I was on welfare at 18, I was on food stamps at 18," Ruane, who now runs five companies, said. "I don't need a paycheck."
He said he is most fearful of the cut in services. "People came up with a quick solution, and didn't realize the services they would be without," Ruane said.
"If you are a fire station, mosquito control, city, the county, over 3,000 entities have to abide by this. There is not one solution for the entire state of Florida," he said. "I shouldn't be punished for Miami-Dade and Broward [Counties]."
The referendum will not touch local school budgets. The School District of Lee County has the largest budget of any entity on a county property tax bill, with a budget of more than $3 billion.
Ruane said the fallout could cause a "minor recession in Lee County". He said there are approximately 4,400 people who work for Lee County.
"Let's just say, hypothetically, I have to lay 1,000 people off. There are six cities (and towns) in Lee County," Ruane said. "Whether you are at Bonita, Estero, Fort Myers, Sanibel, and Cape Coral (and Fort Myers Beach). They are all going to have to do something similar, right?"
He envisions a scenario where it is not unlikely that 2,000 people working in government across the county lose their jobs as a result of Amendment 3.
"What do you think is going to happen to their house? They are going to have to put it on the market, right? The inventory levels are saturated as it is. There is too much inventory, that is why the economy is slowing down. Prices have gotten out of control," Ruane said. "We don't have the capacity to absorb another 500, 600 homes on the market."
"At the end of the day, what may be a short-term gain could be long-term pain," he said. Ruane said that if Amendment 3 passes, there may need to be emergency meetings. "The math doesn’t add up."
Lee County District 2 Commissioner Cecil Pendergrass also spoke to Breeze Newspapers.
"Our community after five years would be ghetto-looking. If you take away all the beautification projects, how it affects the people in human services, the millions of dollars we put into human services," he said, adding that "people would suffer", and would be "worse off than they are today".
The lower tax revenue would mean higher borrowing costs for the county to do major road and bridge projects. Pendergrass said public safety would be affected.
"Parks and recreation would be gone, 20/20 (conservation land acquisitions) would be gone, libraries would probably be cut in half, animal services, non-essential services. To me those are essential services," he said. Pendergrass called Amendment 3 "political theater", and an attempt by the state to "take away local power".
Lee County District 4 Commissioner Brian Hamman said the county may end up going back to a higher millage rate that the county previously had, and which the county had lowered over the years. Ruane said the effect would be like "playing Robin Hood".
"You’re taking money out of the homestead people and giving them a tax break, and you are moving it, and shifting it to a commercial and non-homestead," he said.
Ruane said that commercial property owners would pay a disproportionate amount of the increased taxes after the burden is shifted. "Ultimately, the consumers are going to have to carry that burden," he said.
Lee County Manager Dave Harner said staff would present new scenarios to commissioners if Amendment 3 passes. "The average person here deserves a tax cut," Ruane said. "At the end of the day, we are going to have to raise the millage rate."
