Fernandina Beach Could Lose $3.3 Million Annually Under Proposed Property Tax Exemption

By Mike Lednovich/Editor

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 city and county managers across Florida have already discussed how local governments might respond if voters approve the measure at the group's annual meeting.

"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.

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.