Fitch: Cities, Counties Likely Challenged by Amendment 4 Cuts
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Tags: Amendment 4, Fitch, Fitch Rating Agency, property taxes, Today
Fitch Rating agency said Wednesday that passage of Amendment 4 would not reduce local governments’ credit worthiness but will pose challenges to cities and counties that rely on property taxes to keep the lights on.
The New York-based company, one of three major U.S. rating agencies, said that revenue lost due to the proposed constitutional amendment would not by itself prompt the agency to lower its credit rating, which determines how much it costs local governments to borrow money.
“When taken in the context of local governments’ entire revenue structure, the potential slower growth or even declines in property taxes from Amendment Four will be relatively manageable,” Fitch said in its review. “The Florida Revenue Estimating Conference projects that statewide taxable values will begin a period of expansion next fiscal year, and Fitch believes the major impact of Amendment Four will be to temper but not derail that growth,” the agency concluded.
Passed by lawmakers last year, the proposed constitutional amendment would place tighter caps on property tax increases for commercial property while proving added incentives to first-time homebuyers. The proposal also prevents property assessments from rising when the market value of the property falls.
Going forward, however, the company said that caps on commercial property assessment growth will result in increasing disparities as time goes on between what governments would have raised if the amendment fails this fall.