County weighs cuts as tax plan uncertain
County Administrator John Hofstad outlined projected property tax revenues and raised concerns about potential changes tied to possible state legislation at the 2027 budget policy workshop.
Hofstad told commissioners that property tax growth in the county is expected to remain modest, with an estimated 2.6% increase generating approximately $3 million in additional revenue.
But, the central focus of the workshop was the potential impact of a state bill, known as Joint Resolution 203, which would fully exempt homesteaded properties from ad valorem taxes, not including school taxes.
The Florida House of Representatives passed the resolution in February, however the Senate failed to act on the resolution. The Governor has called legislators back for a special session the week of April 28. The item does not yet appear on the agenda, although it could be added.
If ultimately approved by the Legislature, the proposal would require at least 60% voter approval on the Nov. 3, 2026 ballot to amend the state constitution.
Hofstad warned that if implemented, the proposal could significantly impact county finances. Okaloosa County could face a $35 million reduction in revenues from ad valorem taxes beginning in fiscal year 2028, with losses increasing as the phaseout is completed.
During the workshop, Hofstad emphasized that more than three-fourths of the county’s property tax revenue is already allocated to mandated services. Homesteaded properties account for 23 percent of the county’s general revenue base.
Mandated expenditures funded through property taxes include public safety services such as the sheriff’s office and emergency management, as well as courts and juvenile justice systems, health and human services programs, and administrative costs.
Of the approximately $82.5 million collected in property tax revenue, about 76 percent is already committed, leaving roughly $26.8 million available for discretionary board services and capital projects.
Hofstad cautioned thatshould voters approve the resolution, the county may be forced to reduce “parks and non-essential services,” as well as consider payroll and staffing reductions. Even with such measures, the county could still face a projected $8 million deficit that would need to be addressed.
To offset potential losses, Hofstad discussed several revenue options, including increasing millage rates on non-homesteaded properties, implementing new franchise or stormwater utility fees, raising existing user fees, and identifying cost-saving measures across county services.
Commissioner Paul Mixon described the situation as placing the county in a “unique spot,” noting uncertainty about which fiscal scenario officials should be planning for amid the possibility of significant state action affecting local government revenues.
Commissioner Trey Goodwin urged caution, reminding the board that “the economy out there is still fragile” and emphasized the need to approach budgeting on a year-by-year basis.
Hofstad said that while Okaloosa County “is growing from an employee perspective (and) also from a fiscal (and) capital perspective,” it remains “sensitive to budgetary impacts.”
The county’s current ad valorem property tax rate is 3.8308 mills and has remained flat for nearly a decade.
The commission will continue its budget process in the coming months, with department budget workshops scheduled for May and June. Public hearings on the FY2027 budget are expected to begin in September.