St. Pete officials prepare for millions in lost tax revenue

St. Petersburg is preparing for a financial problem city leaders hope never arrives.

Months before Florida voters decide whether to approve Amendment 3, city administrators are preparing to hire a consultant to develop a fire assessment, one of the few legal ways the city could replace lost property tax revenue if the constitutional amendment passes.

The move would not immediately create a new fee. Instead, it would allow the city to begin the work needed if voters approve a measure administrators estimate could reduce St. Petersburg’s General Fund revenue by $33 million in fiscal year 2028 and another $21 million the following year.

Council Chair Lisset Hanewicz said she requested the discussion because officials needed to begin planning before voters decide the measure’s fate.

“This was an item that I brought forward because of the referendum, because of the need to start having these conversations and the reality of what it presents to us,” Hanewicz said.

If approved in November, Amendment 3 would expand Florida’s homestead exemption, allowing homeowners to exempt more of their home’s value from property taxes. For many homeowners, that could mean a lower tax bill. For St. Petersburg, it could also mean collecting millions less in property tax revenue.

For St. Petersburg, those property taxes fund much of the city’s day-to-day operations. According to last week’s budget presentation, nearly all of the city’s property tax revenue already goes toward police and fire services. Roughly $174 million supports the police department, while another $29 million helps fund Fire Rescue, which also relies on other city revenue to cover its full operating costs.

One of the few remaining options is a fire assessment.

Unlike a traditional property tax, a fire assessment is a separate charge used to help fund fire protection. It is based on the benefit fire service provides to a property rather than the property’s taxable value.

Christopher Roe, an attorney with Bryant Miller Olive who specializes in local government finance, said that distinction is exactly why Florida courts have consistently upheld fire assessments. Fire protection provides a direct benefit to property, he told council, while police services primarily protect people, making police assessments much more difficult to support under existing case law.

Hanewicz said the discussion reflected the reality that property taxes currently pay for much of the city’s police and fire services, leaving officials with difficult choices if that revenue declines.

“So what we’re going to be losing, obviously, is having the ability to cover our cost for police and fire,” Hanewicz said. “We have to figure out how we are going to manage that.”

Administrators stressed that no one is asking the council to adopt a fire assessment. The immediate goal is to begin developing the methodology for a fire assessment, a process officials said takes months and must begin well before any assessment could ever appear on a tax bill.

The discussion came during a broader review of the city’s proposed fiscal year 2027 budget. Earlier in the meeting, administrators said departments had already eliminated vacant positions where possible rather than reducing existing staff. Stronger-than-expected property values also generated about $5.6 million in additional revenue, allowing the city to restore planned reductions and accelerate projects including new police K-9 and fire training facilities.

No votes were taken, and no new fees were proposed. But city officials made clear they don’t intend to wait until after the November election to begin preparing for the possibility that Amendment 3 passes.

“I don’t know what’s going to happen in November,” Hanewicz said. “But I don’t want us to get flat-footed.”