Local Government / Taxes

Wall Street’s Warning: Property Tax Amendment Could Hit Pensacola Hard

All three major credit rating agencies are sounding the alarm on the Property Tax Amendment, and Florida voters should be paying attention before November.

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When Moody’s, S&P, and Fitch agree on anything, it’s worth listening. The three independent credit rating agencies determine how much it costs every city and county in America to borrow money for roads, fire stations and water systems. They have published analyses of the proposed constitutional amendment on the November ballot, and their conclusions are strikingly consistent.

Background: The proposed amendment, CS/HJR 1-F, would expand homestead exemptions statewide. Backers pitch it as property tax relief for Florida homeowners. But the agencies that track whether local governments can pay their bills see the same picture: significant revenue losses, no replacement funding identified, and potential credit consequences for local governments.

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What the Agencies Found

Moody’s Ratings estimated the amendment would produce an approximate 9% reduction in property tax revenues statewide, assuming millage rates hold steady. The agency warned that cities and counties would be forced to choose between cutting services, drawing down reserves, or shifting the tax burden to commercial and non-homestead property owners. Moody’s noted that depleting reserves “is not sustainable for extended periods” and could weaken local financial positions heading into the next economic downturn.

Fitch Ratings flagged that the ballot measure includes no direct fiscal relief or backfill funding for local governments—meaning the revenue reduction comes with no plan to replace what’s lost. Fitch warned that governments near the statutory 10-mill operating cap with heavily residential, homestead-heavy tax bases would face the most pressure. If reserves decline as a result, Fitch said a sustained drop “could lead to downward adjustment of an issuer’s financial resilience assessment.” In plain terms: potential credit downgrades.

S&P Global Ratings called it a “substantial reduction in tax revenues without identifying a replacement source.” S&P analyst Michael Parker, the firm’s primary Florida analyst, wrote that the amendment would also limit annual growth in taxable assessed value and restrict the use of property tax revenue for core services like public safety and education.

“No direct fiscal relief or backfill funding for local governments appears in the final ballot measure.”
— Fitch Ratings

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Why This Matters

Escambia County and the City of Pensacola borrow money for capital projects—infrastructure, public safety facilities, water and sewer systems—at interest rates tied directly to their credit ratings. A downgrade doesn’t just affect a line in a budget. It means every future bond issue costs more, and that cost gets passed to local taxpayers.

The agencies identified several likely consequences if the amendment passes:

• Property tax revenue drops with no identified replacement.
• Services face cuts as local governments balance budgets with less.
• New fees would likely emerge to fill the gap.
• The tax burden shifts toward commercial property owners and non-homestead properties—including landlords, who may pass costs along to renters.
• Reserves get drawn down, weakening the financial cushion ahead of future downturns.
• Credit rating adjustments become possible, raising borrowing costs for years to come.

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