Report: Local tax revenue in Florida’s coastal communities is vulnerable to rising sea levels

Much focus is placed on the environmental and health impacts of a changing climate. Not as much attention has been given to the potentially devastating fiscal toll it could take on municipal revenues. A joint report published recently by researchers from Cornell University and Florida State University analyzes the potential financial consequences sea level rise could have on cities and towns in Florida.

By 2100, “We found that more than half of Florida’s 410 municipalities will be affected by sea level rise, exposing on average almost 30% of local revenues,” reads an abstract to the research paper “Can Florida’s Coast Survive Its Reliance on Development?,” which was published in the Journal of the American Planning Association. “Yet, though climate impacts will significantly stress local fiscal health, we found no relationship between cities’ prioritization of climate adaptation and their fiscal exposure.”

The researchers estimate that $619 billion of Florida’s real estate could be impacted—in regions that are mostly wealthy and white. Combined, these properties generate $2.36 billion in annual property taxes for local governments. The affected coastal communities—like those in Pinellas County, including Treasure Island, South Pasadena, and Belleair, and others on the Florida panhandle—are and will continue to be ‘squeezed’ between the rising ocean and the hard jurisdictional borders of neighboring communities, according to a website dedicated to the project.

Without land to retreat to, populations will shrink and local governments will contract due to abandoned properties, government buyouts and declining property value. This will erode the ability of local governments to maintain infrastructure and protect their local tax base through public services. The researchers note that impacted local governments will “need to draw on municipal, state, and federal funds to finance adaptation projects across infrastructure, services to reduce social vulnerability, and risk management instruments.”

Adjacent, lower income communities could be impacted by gentrification, too. Already, the report notes that developers in Miami are buying up properties on higher ground in historically Black and minority neighborhoods.

In the short term, there are already signs that things are getting more unstable, and that corresponding financial risks are ramping up. Devastating natural disasters are increasingly becoming a norm rather than an exception, prompting property insurance companies to pull out from the most vulnerable states—like Florida. And the valuation of property is “slowly starting to account for climate risks and insurance costs,” the brief says.

But even with the writing on the wall and the private market beginning to adapt, an explainer opinion piece about the findings published in The Conversation notes that few long-term adaptation measures are being taken by local governments.

“We see our findings as a wake-up call for state and local governments. Without urgent action to adapt to climate change, dozens of municipalities could end up fiscally underwater,” the brief says. “Instead, many Florida cities are pursuing continued growth through infrastructure expansion. Even after devastating events like Hurricane Ian, administrative boundaries, service obligations and budgetary responsibilities make it hard for municipal leaders to make room for water or retreat onto higher ground.”

There are a number of steps communities can take, like by taking assessments to better understand how revenue will be impacted by sea level rise, and by considering regional land and tax sharing agreements (New Hampshire passed a bill in 2019 that allows coastal communities to merge if necessary).

“A regional approach would pool small small coastal communities (such as Pinellas County’s barrier municipalities shown in the map above) with larger, less vulnerable cities,” the website reads. “Inland communities must recognize that they will likely be receiving climate refugees, and strategies such as densification and affordable housing development must be implemented today. Conversely, coastal communities must acknowledge future vulnerabilities to chronic inundation and sea level rise, and begin to pledge resources to inland resettlement projects.”