Okaloosa County Administrator John Hofstad updated commissioners Tuesday on the potential local impact of House Joint Resolution 1F, a proposed constitutional amendment headed to Florida voters in November that would expand the homestead exemption.

• If approved by the required 60% of voters, the amendment would reduce Okaloosa County’s general fund revenue by approximately $14.5 million in its first year and about $24 million in year two, Hofstad said. He said the second-year impact would leave about $2.5 million to fund a range of county services after core obligations are met.

“I certainly appreciate the governor and the legislature and their attempt to lessen the burden for those of us that call Florida home and those of us that own property here in the state of Florida,” Hofstad said. “But I’m also your county administrator, and I have a duty and responsibility to you and these citizens to let you know what the potential impacts are of that legislation should that referendum be successful in November.”

What the amendment would do

Titled “Save Our Homes from Excessive Property Taxes,” HJR 1F would raise the homestead exemption for all levies other than school district levies to $150,000 beginning Jan. 1, 2027, and to $250,000 beginning Jan. 1, 2028. The amendment also requires the legislature to provide, through general law, a schedule for full elimination of property taxes on homesteads.

People who establish Florida residency after Jan. 1, 2027, would receive a $50,000 exemption initially and would not qualify for the full exemption amount until their fifth year, unless a county or municipal governing body votes by a two-thirds majority that a shorter period is warranted for a critical local need.

• The amendment would also lower the cap on annual assessment increases for non-homestead residential property of nine units or fewer, and for other non-homestead real property, from 10% to 5% starting Jan. 1, 2027.

The amendment also restricts how counties and municipalities may use ad valorem tax revenue, limiting it to public safety, education, infrastructure, natural resources, debt service, retirement obligations for local government employees, and operations of county officers and governing bodies.

The local math

Hofstad walked commissioners through the numbers. Property tax collections account for about $112 million of the county’s $686 million budget, he said. The county budgets at a 95% collection rate, equating to roughly $107 million.

Of that amount, the sheriff’s budget, absent contracts, accounts for about $62 million. The sheriff is requesting a roughly 3% increase for next year, Hofstad said. The county’s statutory corrections budget is $23 million, and the general fund contribution to emergency medical services is just under $1 million at about $800,000.

That leaves approximately $26 million to fund everything else supported by the general fund, Hofstad said. A $24 million reduction in year two would leave about $2.5 million to cover those remaining obligations.

Hofstad listed a number of general fund-supported functions: 

• Information Technology at $6.2 million
• Parks and facilities at $6.8 million
• Library cooperative at about $1 million
• Mosquito control at $1 million
• Planning at $1.4 million
• County administration at $1.4 million
• AG Extension at $700,000
• County parks under the MSTU at a little over $500,000
• Code enforcement at $500,000
• Veterans services at $400,000
• Transit at $100,000

“There is a lot of funding that happens within that general fund component of your budget, which are your discretionary dollars to use to fund a host of different functions and activities,” Hofstad said.

He said tourism dollars and state-shared revenues are largely restricted to specific uses and cannot fill the gap.

“We get the comments all the time – ‘you’re ripe with tourism dollars, why don’t you fund some of these functions?’” Hofstad said. “You can’t. Legally, you cannot do it.”

Current millage rate and fee structure

Okaloosa County’s aggregate millage rate stands at 3.8308 mills, which Hofstad said places it among a small number of Florida counties with an aggregate millage below four. He credited the board’s leadership for keeping the tax burden low and noted the county does not implement franchise fees or impact fees.

The MSTU, which supports county parks and the Stormwater Division of Public Works, would also be affected by the legislation if approved. The county went to the rollback rate on the MSTU in the last budget cycle, Hofstad said. He referenced an earlier pay-to-park presentation as part of that effort to develop revenue alternatives that are not a tax burden on residents.

Hofstad said the county would need to consider new revenue sources if the amendment passes, but noted Okaloosa has historically avoided fees commonly used elsewhere.

“There’s going to have to be additional revenue generation alternatives that we come up with, but that goes against the grain on what we’ve attempted to do over the last decade, which is keeping that tax burden low,” Hofstad said. “In this county, we do not implement franchise fees. We do not implement impact fees. Those are a lot of different fees in other communities and other counties that we simply don’t do here in Okaloosa County because I believe we make wise use of the tax dollars that come in, and we support a wide range of services, quality-of-life services that are necessary to our citizens.”

Steps already underway

Hofstad said he has directed staff to temporarily freeze hiring on general fund positions, with exceptions requiring approval from his office. He has also asked that capital projects contemplating the use of general fund dollars be held off until commissioners provide direction during budget workshops in July.

“I would rather make those decisions on the front end in anticipation versus having to, a year down the road, make some very tough decisions as far as elimination of services, reduction of personnel, because that’s what it’ll take to meet this burden going forward,” Hofstad said.

He compared the potential impact to the 2007-2008 economic downturn, when the county eliminated more than 100 positions. “This is on par with that and more in order to meet that reduction in general fund revenue,” he said.

Timing of the impact

Chairman Trey Goodwin asked Hofstad to clarify when the amendment would take effect if approved. Hofstad said it would not affect the budget currently being prepared.

“If this is successful in November, that increase in homestead exemption would take effect in January of next year,” Hofstad said. “So you would see that on your tax bill for the ’27 calendar year, which impacts the following year’s budget.”

Goodwin said voters expecting immediate relief on their April 1 tax bills would not see changes that quickly.

• “I suspect that if it passes, there’ll be people that are expecting to see a new tax bill come out the next month with a lower number on it, and it’s just not happening,” Goodwin said. “Not the way that it’s structured.”

A statewide issue

Hofstad said the legislation affects all 67 Florida counties and the roughly 468 municipalities in the state. City managers from Niceville and Destin were in the audience and are conducting similar exercises in their jurisdictions, he said. A trust fund that had been considered in earlier versions of the legislation was removed from the final approved measure, Hofstad added.

Commissioner Drew Palmer thanked Hofstad for the work.

“An informed electorate makes wise decisions, right?” Palmer said. “So I thank you for that. I thank you for doing the work on this. I look forward to these exercises and seeing where we can save revenue and where we can generate new revenue.”

Hofstad said additional information would be presented during the board’s budget workshops in July.

“More to come as we keep a close eye on this, and I appreciate you and your staff being proactive on how we address it,” Goodwin said.