City manager: HJR 203 could cut about 24% of Sebastian’s general fund and force service cuts

City Manager said the House-passed House Joint Resolution 203 (HJR 203) would, as amended on the floor, eliminate non‑school ad valorem property taxes effective Jan. 1, 2027 if the Legislature and voters enact the measure. The city estimates the change would cut Sebastian’s general fund by roughly $4,756,309 — about 24% of a roughly $19.9 million general fund — and eliminate about $4.76 million in homestead‑derived property‑tax revenue built into the fiscal 2026 budget.

Why it matters: Sebastian relies heavily on homestead property taxes. The manager told residents that ad valorem collections estimated for fiscal 2026 total $8,393,178, with homesteaded properties producing about $4,756,309 (57% of property tax revenue) and non‑homestead producing $3,636,869 (43%). "Homestead property tax elimination would cause us to see a 24% reduction in our entire general fund revenue," the City Manager said.

What would be protected and what would be hit: The House amendment includes a carve‑out to preserve funding for law enforcement, the manager said, but that protection leaves roughly $4.6M that must be cut or replaced from other departments. "I can't touch the $8,470,000," the manager said of police spending, which the city reported as about 45% of the general fund.

Where cuts would fall: The manager laid out the city's options and constraints: personnel costs account for roughly $15.3 million of the general fund, leaving little room for nonpersonnel savings. Restricted revenue sources such as discretionary sales tax and local option gas tax can fund capital and infrastructure but cannot pay staff; grants are project‑specific and city staff said they have seen delays and reductions in state and federal grant funding.

Potential responses and tradeoffs: The city described three broad responses if the HJR passes: shift more of the tax burden to non‑homestead/commercial properties (a cost likely passed to renters or customers), impose targeted special assessments (for example, road‑maintenance or street‑lighting districts limited to specific areas), or create new user fees (parking, program fees). The manager warned that many parks and recreation programs and free amenities would be candidates for user fees or cuts.

Timing and next steps: The manager emphasized the legislative and referendum timeline: the proposal must clear both chambers, the governor may sign or veto, and any constitutional change would then go to voters with specific ballot language. Because state law restricts municipal advocacy once ballot language is set, the city is providing factual information now and will hold statutorily required public hearings on the millage each September. The manager said staff (including the finance chief) will meet individually with residents and that the Florida League of Cities can provide further guidance.

Numbers cited: Sebastian’s millage rate is 3.4455; the general fund was reported at about $19,883,990; the city budgets to collect 96% of property tax revenue; assessed values average ~71.87% of market value due to Florida assessment caps. The manager said the city’s FY26 ad valorem estimate was $8,393,178 and that homestead exemptions provided up to $50,000 in exemption for qualifying residences.

What the city is not saying: The manager did not promise specific cuts; rather, he said staff will study options (reduced hours, furloughs, staffing reductions, fee increases) and report back. He also underscored that utilities and major sewer conversions are county responsibilities and that some major capital projects are funded separately from the general fund.

The next procedural step is informational: the city expects to continue outreach through summer workshops and to hold the two public hearings required each September for millage setting and budget adoption.