Amendment 3 passes statewide, putting $3.3 million in Fernandina Beach tax revenue at risk

FERNANDINA BEACH — Florida voters approved a constitutional amendment Tuesday that could cost Fernandina Beach an estimated $3.3 million annually in property tax revenue, more than twice the $1.5 million financial cushion city commissioners built into their newly adopted budget.

Amendment 3 passed statewide with 62% of the vote, clearing the 60% threshold required to amend Florida's Constitution. With 99% of votes counted, 4,917,482 voters supported the measure and 3,015,840 opposed it.

Nassau County voters rejected the amendment. With all 18 precincts reporting, 26,874 voters, or 55.82%, opposed the measure, while 21,267, or 44.18%, supported it.

City Manager Sarah Campbell warned commissioners in June that expanding Florida's homestead exemption to $250,000 could reduce Fernandina Beach's annual property tax collections from approximately $21.2 million to $17.9 million, a 15.6% decline.

Based on 2025 property values, Campbell estimated the exemption would remove $821.6 million from the city's taxable property value.

The amendment increases the homestead exemption to $150,000 in 2027 and $250,000 in 2028. Campbell estimated the first increase would cost the city approximately $1.98 million annually, rising to $3.3 million with the larger exemption.

Those estimates predate the city's adoption of a higher property tax rate and updated property assessments. Actual losses will depend on future property values, exemptions and tax rates.

The expanded exemption applies to property taxes other than school district taxes. The amendment also reduces the annual cap on assessment increases for non-homesteaded properties from 10% to 5% for non-school taxes, potentially reducing city revenue further.

Property taxes fund police and fire protection, emergency services, parks, street maintenance and capital improvements. Campbell said in June that property taxes accounted for approximately 47% of the city's $45.2 million General Fund budget at that time.

In September, city commissioners voted 4-1 to approve a $228 million budget for fiscal year 2026-27 and a property tax rate of 4.8530 mills, 9.24% above the rollback rate. Vice Mayor Darron Ayscue opposed the budget.

The higher rate generates approximately $1.5 million more than Campbell's original proposal. Commissioners placed the additional revenue in contingency, increasing the General Fund contingency budget to $2.04 million.

Commissioners adopted the higher rate amid concerns over the loss of paid parking revenue, waterfront redevelopment costs and the possibility that voters would approve the homestead exemption.

The $228 million citywide budget includes approximately $93 million in reserves, much of it in pension and fiduciary funds unavailable for routine operations.

The potential $3.3 million annual tax loss exceeds the additional revenue commissioners set aside and could force another review of city spending and capital projects.

City officials could respond by reducing spending, delaying projects, finding other revenue sources or adjusting future property tax rates. No specific cuts have been adopted in response to Tuesday's vote.

Supporters of Amendment 3 argued that homeowners needed relief from rising housing costs, insurance premiums and property taxes. Local governments warned that expanding exemptions without replacing lost revenue could jeopardize services and infrastructure spending.

Qualifying homeowners will pay taxes on less of their property's assessed value, although individual savings will depend on assessments and local tax rates.

Campbell urged commissioners in June to begin preparing for the potential revenue losses.

"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.

She said the changes would not affect the city's 2026-27 budget.

The city will need updated revenue projections reflecting current property values, the adopted 4.8530-mill tax rate and the amendment's provisions.

The first exemption increase takes effect for the 2027 tax year, leaving commissioners to address the potential revenue loss during the next budget cycle.

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