Florida's $9.6 billion tax-cut plan could cost you money

By Aaron Deslatte and John Kennedy | Tallahassee Bureau
March 19, 2008

TALLAHASSEE - If Florida voters pass the sweeping property tax cut headed for the November ballot, it could cost you more to hire a lawyer, get a haircut or go to the opera or race track.

The constitutional amendment — if 60 percent of voters agree — would slash the average property owner's tax bill by 25 per cent in 2011, by eliminating $9.6 billion that school districts are required to levy to qualify for state aid.

The proposed amendment would force the Legislature to recoup that lost education funding by approving a package of spending cuts, a 1-cent higher sales tax and-or new taxes on a wide array of products and services that aren't taxed.

Future legislators would have to piece together those details. But just about any solution wouldn't be pretty or easy.

"This really is going to pit lots of ideologies against each other," said House Democratic Leader Dan Gelber of Miami Beach, a nonvoting member of the Taxation and Budget Reform Commission that approved the proposed amendment Monday.

Few expect Florida's stagnant economy to rebound sufficiently to generate billions in new revenue. And raising the 6-cent sales tax the maximum one penny allowed would bring in $3.9 billion at most.

Raising the sales tax, which disproportionately impacts the poor, would cause heartburn for Democratic lawmakers.

"Many of us would campaign against increasing the sales tax, but would support more of a services tax," said incoming Senate Minority Leader Al Lawson, D-Tallahassee.

The proposed amendment also prevents lawmakers from repealing any of Florida's current sales-tax exemptions for food, medicine, health care, rent and electricity, taking off the table $8 billion of the entire $12 billion universe of statutory tax exemptions.

The remaining $4 billion are tax breaks lawmakers have carved out over the years for animal feed, cell phone towers, theater, opera or ballet tickets, pari-mutuel admissions, Super Bowl tickets and the like. Even repealing larger, industry-specific breaks, like the $124 million exemption for "sale or use of satellites or other space vehicles," wouldn't be enough.

So business and industry lobbyists argue that lawmakers would have little choice but to impose new taxes on services such as legal and real estate work, haircuts, dry cleaning and pet care.

"You're going to have every cockamamie idea possible being proposed. But here's the bottom line: We're still going to be paying the same amount of taxes," said Barney Bishop, president of the powerful Associated Industries of Florida, a business lobbying organization that opposes the plan.

Rep. Dean Cannon, the Winter Park Republican slated to become House speaker in 2010, said Tuesday he wouldn't support a service tax of any shape.

"That's just bad policy, particularly in a time when we're trying to revitalize and reinvigorate our economy," Cannon said.

That could prompt a budget-cutting knife fight that makes this year's austere belt-tightening exercise seem sedate.

Under the proposed amendment, school funding would be maintained near current levels. If lawmakers chose to trim the budget to offset the loss of property-tax revenue, scores of social service programs could face dramatic cutbacks.

With close to $3 billion in budget cuts already possible in the 2008-09 budget year, state lawmakers are looking at tightening eligibility standards to eliminate thousands of low-income pregnant women and children from state-financed health coverage — a potential $61.3 million savings.

Another cost-cutting proposal on the table would eliminate a Medicaid program that provides health benefits for 125,000 aged and disabled Floridians, which could save $355 million.

State analysts already have put together a broad menu of potential Medicaid cost savings that span cutting funding for county health departments, reducing nursing home and hospital payments and eliminating the state's Medically Needy program, which serves thousands of recent transplant patients and other critically ill Floridians.

"We're hitting the same people this year with the budget cuts being considered," said Karen Woodall, who lobbies for social service programs at the state Capitol. "If this amendment passes, talk about double jeopardy."

Aaron Deslatte can be reached at adeslatte@orlandosentinel.com or
850-222-5564.

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