Holmes County approves 10-mill rate, adopts five-cent fuel tax

The Holmes County Board of County Commissioners finalized the county’s 2026-27 budget and 10.0000-mill property-tax rate before adopting Ordinance 26-08 on September 28, imposing the additional local option fuel tax commonly known as the “ELMS Nickel.”

While the two taxes work differently and fund different portions of county government, discussion surrounding their adoption centered on the challenge facing Holmes County: finding enough revenue to pay for county services while millions of dollars from the General Fund are needed to support transportation.

Amendment 3, which Florida voters will decide in November, was also part of the discussion. If approved, the measure could reduce property-tax revenue available to local governments.

Commissioner Clint Erickson cited that possibility while advocating for adoption of the ELMS Nickel, describing the additional fuel tax as a measure the county could put in place now in case Amendment 3 passes and affects General Fund revenue.

For property owners, the first change comes through the county’s millage rate. Commissioners approved a rate of 10.0000 mills for fiscal year 2026-27, up from 9.4916 mills the previous year. One mill represents $1 in tax for every $1,000 of taxable property value. At 10 mills, the county portion of the tax on $100,000 of taxable value would equal $1,000 before considering other taxing authorities or assessments appearing on a property owner’s total bill. Moving from 9.4916 to 10 mills represents an increase of approximately 5.36% in the millage rate itself.

Under Florida’s Truth in Millage process, however, the county also compares its adopted rate with the “rolled-back rate”, which is generally the rate calculated to generate approximately the same property-tax revenue as the prior year, excluding certain new construction.

Holmes County identified its rolled-back rate as 9.1697 mills. The 10-mill rate is 9.05% above that rolled-back rate. An individual homeowner’s tax bill does not necessarily increase by either percentage. The effect depends on taxable property value, exemptions, Save Our Homes protections, and other factors.

Property taxes aren’t the only place residents will see a change. Following the budget discussion Sept. 28, commissioners approved an additional five-cent-per-gallon local option fuel tax. Ordinance 26-08 imposed the additional fuel tax, commonly known as the ELMS Nickel.

For motorists, the additional tax would amount to 5 cents per gallon. For example, a 10-gallon purchase would carry an additional 50 cents in tax. The additional levy is expected to take effect Jan. 1, 2027

During the September 28 meeting, commissioners’ discussion focused less on the cost of an individual fill-up and more on what is happening inside the county budget. Erickson said Holmes County currently receives approximately $600,000 in Local Option Gas Tax funding, which is restricted to transportation purposes.

The county, however, does not keep all the money collected because local option fuel-tax revenue is also distributed to municipalities. According to Erickson, approximately $1.2 million to $1.5 million in general revenue is currently being used to help balance the Transportation Trust budget. That means transportation is relying not only on dedicated transportation revenue, but also on money from the county’s broader General Fund.

According to Erickson, the additional five cents could generate approximately $400,000 to $500,000 annually countywide.

“So, if we get 50% of that, which is $200-250K, because some of that will be paid into municipalities,” Erickson said during the meeting.

Erickson’s $400,000 to $500,000 figure was a projection provided during the commission meeting and not an independently verified Florida Department of Revenue estimate.

Erickson also cited Amendment 3 as a factor in supporting the additional fuel tax. The proposed constitutional amendment, which Florida voters will consider in November, could affect property-tax revenue available to local governments if approved.

Because property taxes provide revenue to Holmes County’s General Fund, a reduction in those collections could put additional pressure on a fund already helping subsidize transportation. Erickson said he recommended approving the ELMS Nickel “just in case” Amendment 3 passes and the county loses revenue currently available through the General Fund.

Florida law establishes deadlines for counties seeking to change local option fuel-tax rates. During the discussion, Erickson said approving the tax before the November election would allow the county to establish another dedicated source of transportation revenue now so the county has it available if property-tax changes later put additional pressure on the General Fund.

Although the new levy would bring additional money into the county, ELMS Nickel revenue is not interchangeable with General Fund dollars. Florida law restricts how the money can be spent. Revenue from the additional local option fuel tax can support qualifying transportation expenditures, including construction of new roads, reconstruction or resurfacing of existing paved roads and paving existing graded roads. The law specifically excludes routine road maintenance from allowable expenditures under this particular levy.

Revenue generated through the ELMS Nickel is restricted to qualifying transportation uses under Florida law and cannot be used for all of the same purposes as General Fund revenue.

The county also will not retain all revenue generated by the new tax. As Erickson noted during the meeting, local option fuel-tax proceeds are shared with eligible municipalities under Florida’s distribution system. Bonifay, Ponce de Leon, Esto, Noma, and Westville may receive portions of the revenue through that distribution process.

Erickson estimated the tax could generate approximately $400,000 to $500,000 annually countywide. He also noted that because those proceeds are shared with municipalities, the county’s share would be less than the total amount generated. The final amount will depend on taxable fuel sales and the applicable distribution of those proceeds.

Before the September 28 decision, Holmes County imposed two other local fuel taxes: the six-cent Local Option Gas Tax and the one-cent ninth-cent tax. The additional five-cent levy brings Holmes County to the full 12 cents available through those three categories of local option gasoline taxation.