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Fernandina Beach could lose $3.3 million annually under proposed property tax exemption

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By Mike Lednovich

FERNANDINA BEACH — A proposed expansion of Florida's homestead property tax exemption headed to voters this November could reduce Fernandina Beach's annual revenue by millions of dollars, potentially forcing city leaders to make difficult decisions about funding essential services.

Following the June 2 City Commission meeting, City Manager Sarah Campbell spoke about the potential financial impact of a constitutional amendment approved by the Florida Legislature that would significantly expand property tax relief for homeowners.
 
According to Campbell, Fernandina Beach's General Fund is budgeted at $45.2 million this fiscal year. Property taxes generate approximately $21.2 million of that amount, accounting for 47% of the fund's revenue.
 

Those tax dollars support the city's police and fire departments, emergency medical services, ocean rescue operations, parks and recreation programs, street maintenance, fleet operations, facilities, information technology, human resources, legal services, planning functions, administration and capital construction projects.

Based on 2025 property values, Campbell said a proposed $250,000 homestead exemption would reduce the city's taxable property value by approximately $821.6 million, lowering the taxable value of homesteaded properties from about $1.6 billion to $741 million.
 

The result would be a projected $3.3 million reduction in annual property tax revenue, dropping collections from $21.2 million to approximately $17.9 million.

"That would represent a 15.6% reduction in our total property tax collection," Campbell said.
 

The proposed exemption would not take effect until the 2028 tax year if approved by voters.

Campbell, who stepped down as the president of Florida City and County Managers Association (FCCMA), said at the city commission meeting Tuesday that city and county managers across Florida have already discussed at the group's annual meeting how local governments might respond if voters approve the measure.
 

"It was a good venue to be in to discuss and collaborate with other city and county managers about what property tax reform in the state might look like," Campbell told city commissioners. "Because it passed later this afternoon, we now know there will be something on the ballot for voters to consider in November."

Campbell recommended that commissioners begin discussing the issue later this year so residents can understand the potential consequences for future city budgets.
 

"My recommendation is that our September 1 workshop discuss what our approach might look like for the '28 and '29 budgets so that the public has an understanding of the types of things that we will consider to adjust our budgets," Campbell said.

 
Fernandina Beach Could Lose $3.3 Million Annually Under Proposed Property Tax Exemption
City Manager Sarah Campbell
 
 
She emphasized that the city's upcoming budget cycle will not be affected by the proposed changes.
 
"Our budget for '26-'27 will not be affected, so we can proceed with our August workshops as usual," Campbell said. "But I think we should have that conversation September or October, maybe, just on what we think the subsequent years would look like."
 

The city is also evaluating the impact of a separate $150,000 homestead exemption expected to take effect in 2027. Campbell estimated that change alone could reduce city revenues by approximately $1.98 million annually, lowering property tax collections from $21.2 million to roughly $19.2 million.

Several unanswered questions remain, Campbell cautioned.
 

Among them is how annual Consumer Price Index adjustments built into the proposal would affect future revenues and how many homesteaded property owners would qualify under various eligibility requirements.

"We do not have calculations on what percentage of homesteaded property owners have lived in Florida at least five years," Campbell said. "That is another area to consider."
 

The city also has not calculated the effect of another proposal that would reduce the annual cap on assessed value increases for non-homesteaded properties from 10% to 5%.

 

According to preliminary figures from the Nassau County Property Appraiser, Fernandina Beach's total taxable values increased by 5.6% between 2025 and 2026. Campbell said the city does not yet know the financial impact of limiting future growth in non-homesteaded assessments.

An even more dramatic proposal being discussed at the state level would eventually eliminate property taxes on homesteaded properties altogether.
 

Campbell estimated that such a move would remove approximately 33% of the city's current taxable value base and reduce annual property tax revenue by nearly $7 million, from $21.2 million to about $14 million.

While state leaders promoting the tax relief measures argue that homeowners need protection from rising property taxes and escalating housing costs, local governments across Florida have warned that reduced property tax collections could affect their ability to fund essential services.
 

For Fernandina Beach, where nearly half of the General Fund depends on property tax revenue, the stakes are particularly significant.

A $3.3 million annual reduction would represent roughly 7.3% of the city's entire General Fund budget and could require city commissioners to consider service reductions, spending cuts, alternative revenue sources, or future tax increases elsewhere to offset the loss.
 

Campbell's recommendation to begin discussing the issue this fall signals that city officials could start evaluating service levels, capital spending plans and other budget adjustments well before the exemption would take effect in 2028.

Comments

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  • Mark Tomes

    Paying less property tax sounds desirable for most of us, because many people are struggling with low wages, high cost of living, expensive insurance premiums, job insecurity and lack of control in work schedules, expensive childcare, etc. But the real culprits are the Republican state legislators that give massive tax breaks to corporations and wealthy individuals, thereby reducing revenue by billions of dollars. Those tax breaks are often touted as freeing up money to produce jobs, reduce prices, and increase research and development and innovation. However, those things never are manifested, has the tax breaks are pocketed, turned into buy-back stock options, or invested in high-end real estate and fancy toys for the rich. Stop voting for people who have no interest in your interests!

    Thursday, June 4 Report this

  • GerryC43

    Yes, the increase in local and state education could result from our Governor's property tax exemptions proposal...just the current federal trend to get rid of the Federal Education Department.

    Thursday, June 4 Report this

  • dpwagner

    Doesn’t anyone care about the potential positive impact to the PEOPLE? It’s all about the city making money. Starting to look more and more like California. But fear not…. the city will find a way to make visitors and residents pay more somewhere. Paid parking at the beaches here we come.

    Thursday, June 4 Report this

  • DouglasM

    Won't this proposal make housing more affordable? I thought that was something people wanted......

    Thursday, June 4 Report this

  • Bob121

    Government needs to be cut back. Increased revenues due to more construction creates more spending for government and less for citizens; a great idea for socialists. How is it that taxes go up when more revenue is created from new construction? Weren't we all taught that growth lowered costs overall? It seems that government programs grow or are created new as more money comes in, rather than returning that money to the citizens. Government must be held in check by the voters, or it will bloat without ceasing. To think otherwise is foolish. Government is an entity that protects itself first, then you later. Be suspicious, be aware, and don't accept any reason for tax at face value.

    Thursday, June 4 Report this

  • DanGroth

    What is the anticipated impact on our local school budgets? The schools are already in bad shape… Teaching classes out of trailers. And so on. Reductions in school revenues damage future generations as well as the thousands of teachers, administrative staff and support personnel that depend on it.

    Thursday, June 4 Report this

  • DaveLott

    School board taxes are exempt from the legislation and they generally represent 35-50% of overall tax bill.

    Thursday, June 4 Report this

  • AcurtNA63

    Then cut the budget by 3.4 billion!

    Thursday, June 4 Report this

  • SAskey

    Just like most in private industry, government entities Wed to figure out how to “do more with less”. I had to figure that out all my working career. Welcome to the real world.

    Thursday, June 4 Report this

  • BeachEd

    Why don’t you merge the Police and Fire Departments into the county system. Taxes are already paid to support the county services.

    Thursday, June 4 Report this

  • LuvAmelia

    This is a great idea. Government is bloated and needs to cut back on many of the so called essential services.

    Friday, June 5 Report this

  • GDecker

    The obvious fix is to raise millage to cover any shortfall--cutting expenses is not something this Commission knows how to do--so tax away. Parking revenue is already as good as spent so no help there. Don't plan on actually saving anything on your tax bill anytime soon--maybe a future commission will do what needs done.

    Friday, June 5 Report this

  • FloridaMike

    A more appropriate headline would be “ Fernandina Beach residents could save $3.3 million annually under proposed property tax exemption”. Vote Yes!

    FWIW, this tax proposal doesn’t impact school funding.

    Friday, June 5 Report this

  • dpwagner

    Forget the planned 3.9 million for the proposed FB Seaside Park (which is not needed) and that’s your savings.

    Monday, June 8 Report this

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