NB eyes cuts ahead of property tax vote

Neptune Beach officials are studying how to manage the city's budget and protect local services if Florida voters eliminate the homestead property tax in the November 2026 election.

There is no way to predict the outcome, Mayor Cori Bylund said, but it falls to the City Council to understand the process and what is potentially at stake.

"It's a complicated exercise that we do every year when we work on the budget. I feel very good about our situation. We have a finance committee that is looking at everything. We are all looking at everything," she said. "At the end of the day, we're going to have to find where to cut $2.5 million to $2.6 million from our budget. That is definitely concerning. I don't think it is a situation that we can't survive, but things will definitely not be the same."

City Manager Richard Pike delivered a presentation focused primarily on the potential impact of the property tax referendum. Comparing millage rates among neighboring cities, Pike said Neptune Beach's rate is 3.3656 mills, below the state average of 4.82 mills. Atlantic Beach's rate is 2.7499 mills, and Jacksonville Beach's rate is 3.9947 mills.

"Obviously, Neptune Beach is not abusing the millage rate and abusing the citizens to pay for it. We have one of the lowest millage rates in the state," he said. "I don't want to see Neptune Beach punished by this ad valorem tax when we're actually responsible with our money and our spending, and we have been for a long time."

Ad valorem tax revenue can be used only to fund public safety, education, infrastructure and certain natural resource projects, such as drilling a new freshwater well if needed, Pike said.

In 2026, Neptune Beach received $2.5 million in ad valorem homestead property taxes and about $2.2 million from non-homestead properties, accounting for 41.3% of the city's general fund revenue.

"Within four years, we will lose that $2.5 million. If this went into effect today, that's what we would lose," Pike said. "We're used to a lot of services here in Neptune Beach from the city of Jacksonville, but they are going to be in the exact same position that we are. What cuts are coming from the COJ that Neptune Beach enjoys?"

Public library services and the tax collector's office on Atlantic Boulevard could also see reduced hours or availability.

"If the Beaches want [them] open, then you're going to have to fund it because we don't have the money to do it anymore," Pike said. "That's going to be very, very difficult."

To offset the revenue loss, Neptune Beach could reduce or eliminate shifts for essential services, impose new or higher fees, raise the city's millage rate, or adopt a combination of those measures. State law limits any reduction in police services to 5%. In 2020, the City Council voted to require a supermajority to raise the millage rate.

The fiscal impact could also force reductions in parks and recreation, public works, and planning and development. Pike said Neptune Beach currently has 908 active permits, ranging from fence installations to full construction projects, including 17 single-family homes under construction and eight under review. Ocean rescue, the city manager's office, the city clerk's office, community development and the City Council itself could also face cuts.

Pike provided a breakdown of how the city's property tax revenue is distributed. The City of Jacksonville, the Duval County School Board and the St. Johns River Water Management District each receive a portion of a home's taxable value. On a median home assessed at $322,480, Neptune Beach receives 18.2% of an estimated $918 property tax bill.

"The annual budget is more than just property taxes," Pike said. "It also draws from enterprise funds that include our freshwater, wastewater and stormwater systems. When you pay your water bill, that money goes to these enterprise funds, and it can't be used for anything else."

The city's annual budget also includes capital and operating expenses, as well as revenue generated from all city operations. The Capital Improvement Program identifies projects planned over multiple years.

For fiscal year 2026, Pike said the city's $11.7 million general fund represents 42.1% of the total city budget of $27,886,660. In Neptune Beach, 46% of general fund expenditures support the police department.

"We do have money that we invest from reserves and such. However, the state is very strict on how we can invest the taxpayers' money," Pike said. "It's very well-regulated, and we have to follow those laws to the letter. We cannot put the taxpayers' money at unnecessary risk."

If voters approve the ballot initiative in November, the homestead exemption would increase by $150,000 in the first year, effective Jan. 1, 2027, followed by an additional $250,000 increase in the second year, effective Jan. 1, 2028. The third-year increase would be tied to the Consumer Price Index, effective Jan. 1, 2029.

Pike said the amendment requires setting a schedule to fully eliminate homestead property taxes by the fourth year, and that residents with only five years of residency in Neptune Beach would qualify for only a $50,000 homestead exemption. Someone who has lived in the city three years, he said, would need to wait two more before qualifying.

The maximum annual assessment increase for non-homestead properties would drop from 10% to 5% if the initiative is approved. Neptune Beach currently has 2,030 homestead properties and 960 non-homestead properties. Of those, 79 receive the $50,000 homestead exemption.

"It's going to be very difficult for Neptune Beach or any other city to make up for that loss," Pike said. "People who live at the beaches in Jacksonville, Neptune and Atlantic Beach are used to and expect a certain level of service. They pick up the phone, and the police are there in two or three minutes. If something happens with the water system at night, they are out there working on it. That's going to change."