Local governments in Florida will face "greater credit pressure" if voters approve a plan to largely eliminate property taxes on more than half of homes in the state, according to analysts at S&P Global Ratings.
The proposal would introduce financial uncertainty and, if passed, could leave some local government bond issuers facing "material" revenue and spending challenges, according to a new report by S&P analysts, including Michael Parker, the rating company's primary Florida analyst. The rating company grades more than 100 Florida credits, including 22 counties, 67 municipalities and 22 school districts.
Florida Governor Ron DeSantis unveiled the
The plan would require a constitutional amendment, which would need approval from 60% of voters in the November 2026 election.
If it passes, local governments could face a "substantial reduction in tax revenues without identifying a replacement source, limit annual growth in taxable assessed value, and restrict use of property tax revenue for core services" such as public safety and education, Parker wrote.
Schools have been carved out of the proposal and would still be able to collect property taxes under current terms.
Some local leaders say they may have to impose fees for services such as parks and transportation to offset budget shortfalls. Others worry borrowing costs could rise. Florida issuers have more than $175 billion in municipal debt outstanding, according to data compiled by Bloomberg.
"How the heck are we going to pay these bonds? We have dedicated revenue to these bonds, and now that revenue is shrinking," said Jeff Brandes, a former Republican state senator who runs the Florida Policy Project, a non-profit research institute. "Our credit rating is going to take a hit, because we have radically less revenue now and we can't show where the stable revenue source is, so our bond ratings may take a hit."
The potential elimination of property taxes is only one of several risks that could affect credit quality for Florida issuers, according to S&P. Analysts also pointed to declining public-school enrollment, hurricane risk and "ambiguity" around cost-sharing from the Federal Emergency Management Agency.
S&P also cited slowing population growth from migration, which has been "a key engine" for Florida. In 2025, domestic and international migration together brought 140,000 newcomers to the state, nearly half the 264,000 arrivals recorded a year earlier.
Parker called the decline a "normalization" from the recent boom, but said "we will watch if sustained pressures from federal policies and elevated cost-of-living considerations lead to meaningful compression in Florida's economic base."
