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Gov. Rick Scott's tax cut plans collide with state budget shortfall

TALLAHASSEE — Gov. Rick Scott's plan to deeply cut taxes hit its first snag Wednesday from an unlikely source: Senate President Mike Haridopolos.

The Merritt Island Republican, who once helped assemble a cadre of antitax lawmakers to fight spending increases, said budget writers in the Senate were "struggling" to account for a shortfall in tax collections now approaching $4 billion.

"Tax cuts are not part of our equation at this point," Haridopolos said.

His comments came just a day after Scott told his fellow Republicans in the Senate there was no difference between their agendas.

"I imagine everyone worries whether I'm really going to do what I believe in," Scott said. "And I always worry the same way about y'all. But no one has said anything to me that anyone has a different agenda."

Less than 24 hours later, Scott heard differently on his own tax cut plan. But Scott, in his tenth day as governor, would not be drawn into a political debate.

Instead, he increased the anticipation for his first budget recommendation, due Feb. 4, saying it would show how the state can pay for its shortfall plus $2.2 billion in property and corporate income tax cuts.

"We're going to deal with the deficit," Scott said Wednesday. "But the way to get the state back to work is reducing property taxes and phasing out the business tax."

Tax cuts are an integral piece of Scott's 7-7-7 plan, his campaign promise to create 700,000 jobs in seven years. Those jobs are in addition to the 1 million new jobs that state economists already expect to come to Florida during the same time.

Scott's plan calls for phasing out corporate income taxes. The 5.5 percent tax rate would be reduced to 3 percent in the first year at a cost to the state of about $835 million.

Scott also wants to cut property taxes by $1.4 billion this year and another $1.4 billion over the next six years.

Scott's plan did identify some ways to pay for those cuts. For example, he said the state could save $1.4 billion from state pension changes by measures such as requiring state workers to contribute to their retirement fund.

The 7-7-7 plan also identified $1.8 billion in savings from Medicaid reform and another $500 million by making state government more efficient.

But details of those changes are still vague, as Scott's campaign commercials have yet to be translated into specific legislative proposals.

"You'll see it in the budget that comes out Feb. 4," Scott said.

Haridopolos, however, signaled that the Senate is not waiting for Scott to start assembling the budget, which is the one bill state lawmakers are required to pass each year.

"We have a tremendous shortfall,'' Haridopolos said. "It's going to mean significant adjustments in education and health care, and it's going to mean some difficult decisions."

Lawmakers received more bad news Wednesday when state economists increased the potential shortfall to $3.62 billion from an earlier forecast of $3.5 billion, due largely to swelling Medicaid rolls. If lawmakers want to tuck money into savings, the budget gap would exceed $4 billion.

Haridopolos promised that the Senate would not approve any tax increases this year and downplayed any differences with Scott, saying the two were "arm in arm" on the goal of creating jobs.

"I'm a big proponent of tax cuts," he said. "This is not a year I can push them through."

Scott's planned tax cuts raise big questions for the public education budget, which relies on property taxes to operate public schools and uses corporate income taxes to pay for private school vouchers. But he has said the public school budget would not suffer from his changes.

"In my campaign for governor, I committed to make sure we have the right funding for education," Scott said. "And I'm still committed to that.''

Sen. David Simmons, chairman of the Senate K-12 budget committee, said he would push for legislative changes to the state's constitutional requirement to limit the number of students in each class. Constitutional changes require voter approval, and Florida voters rejected a constitutional amendment in November that would have loosened those caps.

"School superintendents are doing unreasonable if not insane things" to comply with class size laws, said Simmons, R-Maitland. "There is a legislative fix."

Simmons quizzed several school superintendents on Wednesday about how they would handle a 1 percent cut to their budget.

Miami-Dade superintendent Alberto Carvalho, who was praised by Republicans on the Senate school budget committee, said the effect would be dramatic. "All of us would be impacted with any type of decrease," he said.

Times/Herald reporters Marc Caputo and Mary Ellen Klas contributed to this story. Michael C. Bender can be reached at mbender@sptimes.com. Follow him on Twitter @MichaelCBender.

Scott tax cut promises

. "Reduce the statewide property tax [Required Local Effort] by $1.4 billion (from 5.29 mills to 4.29 mills, a 19 percent reduction). Savings from other key components in my 7-step plan will be used to replace those funds so that not $1 is shifted away from our schools."

. Reduce property tax by another 1 mill over next 7 years

. Eliminate Florida's corporate income tax over seven years

Florida's budget conundrum,

by the numbers:

$66.5 billion

State budget for fiscal year 2010-11

$3.62 billion

Latest estimated shortfall in tax collections

$4 billion

Shortfall estimate if state sets money aside in savings

5.5 percent

Current corporate tax rate

$835 million

Cost to state if Scott's plan to cut corporate rate to 3 percent in his first year is followed.

$1.4 billion

Impact of 19 percent property tax cut Scott planned for first year.

For more on these and other Rick Scott campaign promises, check out the Scott-O-Meter in PolitiFact Florida at PolitiFact.com.

Gov. Rick Scott's tax cut plans collide with state budget shortfall 01/12/11 [Last modified: Wednesday, January 12, 2011 11:33pm]

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