Potential property tax reform hangs like a shadow as Wildwood and other municipalities craft their budgets.

It won’t affect next year’s budgets, but the possibility of a statewide referendum next year to eliminate property taxes on homestead property could push cities and counties into financial distress.

Wildwood City Manager Jason McHugh addressed the issue in a letter to commissioners, who met Monday for their third budget workshop. Adoption of the proposed $280-million budget for 2025-26 is expected next month after two public hearings. The next fiscal year begins Oct. 1.

Gov. Ron DeSantis has advocated for a property tax reform initiative, possibly eliminating some taxes. The state also has created its own Department of Government Efficiency (DOGE) to analyze local government spending.

“If property taxes were eliminated, the impact on the city of Wildwood would be severe and far-reaching,” McHugh wrote. “The city would face immediate budget deficits, forcing deep service cuts, elimination of positions and the need to pursue alternative funding sources.”

Wildwood expects to collect about $21.9 million in property taxes next year, which funds nearly half of the city’s operating budget, paying for police protection and other services.

The tax rate of $2.83 per $1,000 assessed valuation would be the same as last year. It is considered a tax increase because it is higher than the rolled-back amount of $2.70, which is the rate needed to collect the same revenue as the prior year except new construction.

Home construction in the Villages of Southern Oaks, apartment projects and commercial areas have boosted Wildwood’s estimated tax base next year to $8.1 billion.

Growth has spawned the need to expand the city’s wastewater treatment plant. Revenue bonds issued this fall will cover most of the $150-million cost of a new plant and upgrades to the current plant.

When both projects are complete, Wildwood will have daily wastewater capacity of 5.5 million gallons.

Facing the potential elimination of some property taxes, Commissioner Joe Elliott said local officials will need to campaign hard against a referendum.

“I think it’s going to be a long, uphill battle, but I like to think we will prevail,” he said.