County administrator warns referendum could cut Okaloosa County general fund by up to $24 million

At a meeting of Okaloosa County commissioners, Mr. Hofstad, the county administrator, presented an informational update on House Joint Resolution 1F, the "Save Our Homes" proposal, and outlined potential effects on the county budget if the measure wins voter approval.

"Our property tax collection accounts for about 112 million of our $686 million budget," Mr. Hofstad said, adding that the county budgets at 95% collection (about $107 million) as a conservative estimate. He told commissioners the county has already assembled staff to model impacts ahead of July budget workshops.

Mr. Hofstad walked commissioners through the county's major general-fund obligations, saying the Sheriff's budget (excluding contracts) represents roughly $62 million and that corrections is about $23 million. He said the county also contributes nearly $800,000 to $1 million in general-fund support for EMS.

"If the homestead exemption jumps to 150,000, that is a reduction in our general fund revenue of about 14 and 1/2 million. In year two, that number jumps to about 24 million in reduced revenue," Mr. Hofstad said, quantifying the shortfall that would constrain discretionary spending.

He explained that many state-shared revenues are earmarked and that the county typically uses state sales tax to meet debt obligations, leaving a relatively small discretionary general-fund balance. He also warned that a trust fund discussed during legislative drafting was removed from the final bill, meaning there is no state-level backstop in the enacted language.

As an interim response, Mr. Hofstad said he has asked staff to freeze hiring for general-fund positions except by approval of his office and to hold off on new general-fund capital projects until the board gives direction during July budget workshops. "I'd rather make those decisions on the front end and anticipation versus having to a year down the road make some very tough decisions as far as elimination of services, reduction of personnel," he said.

Commissioner Mr. Palmer thanked the administration for preparing the analysis and emphasized the value of informing voters. In response to a question from another commissioner about timing, Mr. Hofstad clarified that a successful November referendum would take effect the following January and appear on tax bills for the 2027 calendar year; it would not change the budget the board is preparing now.

Mr. Hofstad also noted the referendum requires a 60% approval to pass and cautioned that, if enacted, the county could face service eliminations and personnel reductions on a scale comparable to cuts during the 2007-2008 economic downturn.

The county administrator said further details and updated modeling will be provided at the July budget workshops and that the administration will continue monitoring developments so the board can set priorities in light of possible revenue losses.