Florida is about to perform open-heart surgery on its tax system amid a housing market already under stress. That should make everyone a little nervous.
Over the next few weeks, lawmakers will consider some of the most sweeping property tax changes in modern Florida history. Maybe those reforms will work brilliantly. Maybe they will provide meaningful relief to homeowners squeezed by rising insurance costs, inflation, and housing prices.
Or maybe they will create a completely different set of problems we cannot yet see. That is why every major property tax proposal moving through the Legislature this year should contain one simple safeguard: a sunset clause. Not because reform is wrong. Because humility matters.
Florida’s economy is changing in real time. The great migration boom that defined the pandemic era has slowed. Condo markets are under pressure from reserve requirements and insurance costs. Housing inventory is rising in parts of the state. Interest rates remain elevated. Local governments are still managing infrastructure demands created by years of explosive growth. And in the middle of all that uncertainty, Florida is debating major structural changes to the primary funding source for cities and counties. That is a huge gamble.
A recent statewide analysis commissioned by the Florida League of Cities found that property taxes account for roughly 43% of municipal general fund revenues and nearly 79% of all municipal tax revenue.
The report called property taxes the “fiscal anchor” of local government because Florida lacks a state income tax and relies heavily on property taxes and volatile sales tax revenues to fund basic services. That phrase matters: fiscal anchor. Because once you pull up an anchor, things drift.
Florida already operates on a fiscal two-legged stool. Most states rely on three major revenue sources: income taxes, sales taxes, and property taxes. Florida abandoned one leg long ago when it chose not to levy a state income tax, a decision that helped fuel the state’s growth, attract businesses, retirees, entrepreneurs, and investment, and become one of the defining features of Florida’s economic identity.
But that choice also created a trade-off.
Without a state income tax, Florida became far more dependent on two remaining revenue sources: sales taxes, which rise and fall with the economy, and property taxes, which provide the stable local foundation supporting police, fire protection, roads, drainage systems, parks, and infrastructure.
That stability is precisely why property taxes became the fiscal anchor for local government in Florida.
The challenge is that once you weaken one of the remaining legs too aggressively, the entire system becomes more vulnerable to economic swings, migration changes, housing slowdowns, and revenue shocks.
But here is where this debate gets more complicated: Florida is not one housing market. A fast-growing coastal city with billion-dollar infrastructure obligations is not the same as a small inland town struggling to keep one fire station staffed. South Florida cities managing dense urban service demands operate differently from rural Panhandle communities covering enormous geographic areas with limited tax bases.
Yet statewide property tax proposals often treat them as interchangeable. They are not.
The report found that many municipalities already spend more on public safety alone than they collect in property taxes. That means police, fire protection, emergency response, roads, drainage systems, and parks are already being subsidized through a fragile combination of sales taxes, fees, utility revenues, and state transfers.
Many local governments are already operating close to the edge.
Many cities and counties have also already issued long-term bonds backed in part by expected property tax revenues to finance roads, drainage systems, public safety facilities, and other infrastructure projects. Those obligations do not disappear simply because the revenue structure changes. If investors begin questioning the long-term stability of local revenues, borrowing costs for local governments could rise as well … creating another unintended consequence taxpayers may ultimately absorb.
And when governments lose stable revenue, the costs do not disappear. They migrate. Maybe into higher utility fees. Maybe into transportation assessments. Maybe into higher permit costs for small businesses. Maybe into rent increases as landlords pass local costs through to tenants.
One of the report’s most important findings is that large homestead exemptions can unintentionally shift costs onto renters and commercial properties. The homeowner may feel relief immediately. The renter often feels it six months later.
That is the thing about major economic systems. The first effect is usually obvious. The second and third effects are where things get interesting. And potentially dangerous.
Whatever proposal ultimately emerges from the Legislature will not be perfect. That is not a criticism. It is reality. A sunset clause is simply an acknowledgment that we do not have a crystal ball. What we do have is the ability to measure outcomes honestly.
If these reforms work exactly as supporters hope, lowering costs without destabilizing local budgets or shifting burdens elsewhere, then voters and lawmakers should have no problem extending them later.
Successful reforms survive scrutiny. But if the policy creates budget instability, hidden taxes, service cuts, or unintended housing distortions, Florida should not trap itself indefinitely inside a system designed during a moment of political urgency.
Sunsets force accountability. They force lawmakers to revisit assumptions with actual data rather than campaign rhetoric. They create a pressure-release valve in case the real-world results differ from the political sales pitch. And frankly, in a state changing as quickly as Florida, that is just common sense.
Good policy should be strong enough to survive review. If lawmakers truly believe these reforms will strengthen Florida, then adding a sunset clause should not weaken the proposal.
It should strengthen confidence in it.
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Former Florida Sen. Jeff Brandes is the founder and president of the Florida Policy Project (FPP). As Florida’s premier think tank, the FPP focuses on “doing” best-practice research across four pillars: housing affordability, insurance, transportation, and criminal justice reform. FPP convenes leaders and prepares policy recommendations to improve the quality of life for Florida’s citizens.