TEMPLE TERRACE — Temple Terrace’s preliminary fiscal year 2027 budget keeps property taxes flat for a 10th straight year, funds employee raises, maintains investments in police, fire and parks and avoids a garbage rate increase.
But city officials say that stability could be short-lived.
As City Manager Carlos Baia presented the budget during a July 6 workshop, the discussion repeatedly returned to what could become the biggest threat to the city’s finances in decades — a proposed constitutional amendment backed by Tallahassee lawmakers that would expand Florida’s homestead exemption and sharply reduce the city’s primary source of revenue.
The gap between what homeowners pay taxes on and what their homes are actually worth illustrates the city’s problem. According to Baia, 69% of Temple Terrace homes have a taxable value of $200,000 or less, even though the average market value of a single-family home exceeds $420,000. That gap, created by years of homestead protections, is exactly what the proposed amendment would widen further, cutting deeper into the city’s tax base.
Baia did not mince words during the two-part, more than 2-hour budget workshop.
If the amendment passes, in FY 2028 the city would see a reduction of $2.6 million based on today’s ad valorem revenue, Baia said. In FY 2029, when the homestead exemption would jump to $250,000, “that change would increase the reduction to $4 million which would be 21% of our current ad valorem,” he added. “Those are very, very significant numbers.”
Since the budget will pass before the election, the outcome of the homestead vote could require immediate attention from the city. Mayor Andy Ross said if the homestead amendment passes, the council will have to meet and quickly reassess not just the capital plan, but the entire shape of the government.
“We’re facing a 25% reduction in our general fund,” he said. “You don’t do some of the same stuff if it passes.”
Compounding the concern: the city’s tax base is already growing at its slowest pace in a decade. Taxable values increased a mere 1.71%, generating $337,762 in new ad valorem revenue, down from $825,338 last year, a 59% decline.
The proposed general fund totals $41.4 million for FY 2027, with 79% dedicated to personnel costs, including wages, benefits and insurance. With those costs largely fixed, Baia said department directors had to “sharpen their pencils” to find savings in the remaining 21% of the budget.
Despite the challenges, the city remains committed to its workforce. The proposed budget includes a 4% cost-of-living adjustment (COLA) and 2% merit increases for general employees, to help remain competitive with neighboring jurisdictions and avoid the turnover that once plagued the city.
Public safety remains the city’s largest investment. Personnel costs for police and fire alone represent 127% of the entire ad valorem revenue the city expects to collect. Mandatory pension contributions and other contractual obligations make up part of a $1.6 million increase in public safety personnel costs.
While there will be no rate increase for sanitation services, the city is proposing a 10% water and sewer rate increase for 2027 to begin funding major infrastructure projects, including the Water Treatment Plant Master Plan, expected to cost more than $8 million.
A Water and Sewer Fund workshop is scheduled for Aug. 11, when city officials will discuss the proposed rate increase and treatment plant upgrades in more detail.
To maintain the city’s 10-year streak without a millage increase, the city is relying on several “one-time” strategies, including carrying over unspent funds, charging the Community Redevelopment Agency for administrative overhead, moving interest earnings from the Community Investment Tax and Tax Increment Fund into the general fund and assuming FEMA reimbursements from previous storms.
While the budget is leaner, there are still plans for several capital improvements.
The Family Recreation Center is slated to get $300,000 for new air conditioning units and more than $200,000 for pool, playground and tennis court improvements. City Hall will receive $75,000 for ongoing improvements and installation of new permitting software, while several streets — including portions of Belmont Avenue, Grandview Drive, Shirley Drive, Chilkoot Street and Pinehurst Avenue — are scheduled for resurfacing.
“We are not proposing any tax rate increases for the FY 27 budget,” Baia said. “The budget meets as many council priorities as we could within the limits of the financial constraints we’re working under.”
Those financial pressures could expand if voters approve the homestead amendment.
If the projected losses reach $2.6 million in 2028 and $4 million in 2029, Baia said the city could leave vacant positions unfilled, reduce hours at the library, senior center and Family Recreation Complex, and, if necessary, eliminate jobs.
“I really struggled whether to include (layoffs) here or not,” Baia said. “I don’t want to panic our team, but we just want to be realistic. If we had to lose $4 million it is very, very likely that we could be looking at layoffs as well. That would be the very last thing that we’d want to do as a staff.”
City officials may also have to contemplate revenue options the city has long avoided, including a fire assessment fee, stormwater utility fee, special park assessments and higher Family Recreation Center fees.
“It’s a great value, it’s a wonderful value, but we don’t compete,” Baia said. “We are not even in the same universe as the YMCA in terms of what we charge. So maybe that’s something to look at as well.”
For now, residents won’t feel the effects of a financial pinch. Any changes would come after the November election.
“We all feel comfortable that, barring any change in state law at this point, where we are today, based on the laws that we have in place today, that we are good for at least two or three more years,” Baia said. “If state law changes, all of this has to be changed.”
The first public hearing for the 2027 budget is tentatively set for Sept. 3, with a final adoption hearing scheduled for Sept. 15.