TALLAHASSEE — With the clock ticking on the session, Gov. Rick Scott's pledge to cut corporate income taxes got a last-minute rescue Monday, but senators are still balking at the price tag.
Scott asked the Senate to take up a proposal to gradually reduce corporate income taxes over seven years, beginning with a $333 million cut in January 2012. The proposal would use a growth-based formula to cut the tax in the future, postponing the impact but giving the governor the legislation needed to make good on his campaign promise.
With two weeks left in the legislative session, Scott's staff presented the idea to the Senate on Friday. Senate leaders then ordered up a meeting of the Senate Commerce and Tourism Committee on Monday. But the cost of the plan, which balloons to $1 billion in 2013, came with too many questions for the committee.
"Aren't we jumping the gun?'' asked Sen. Nancy Detert, R-Venice, chairwoman of the committee. "Is this just kind of an odd time to start this formula during the worst of times instead of the best of times?"
Sen. Don Gaetz suggested that if the Senate moves toward any tax cuts this session, it should be to reduce the fees raised two years ago on drivers, auto tags and fishing permits, "which hit middle-class families, working families very, very hard."
Others asked what impact the cut would have on the existing budget, and on the school vouchers program, which depends on the corporate income tax for funding. In the midst of so many questions, Senate sponsor Garrett Richter, R-Naples, postponed the bill indefinitely. The committee is not scheduled to meet again.
Scott remained optimistic, however, that lawmakers will agree with him that tax cuts are the answer to job development in the state where unemployment is 11.1 percent. He has threatened to veto any budget that doesn't include the corporate income tax cuts or property tax cuts he has proposed. But no bills have moved forward — although the Senate has included $400 million for tax cuts in its budget.
"I'm confident with the most conservative House and Senate in history that we'll have a phaseout of the corporate tax," Scott said Monday.
As senators raised questions about the timing of the proposal, Scott got an earful four floors down from former Gov. Bob Graham, a Democrat.
Graham met with Scott for nearly an hour and, afterward, reported that he told him, based on his experience, tax cuts won't help job creation.
Florida loses about $4 billion every year from the tax cuts passed under Republican Legislatures and the Jeb Bush administration, Graham said. But the state created only about 600,000 jobs during that time, compared with 1.9 million jobs in the state in the 1980s and 1.6 million jobs in the 1990s, when taxes remained steady and education investment was high. Average wages in Florida have also dropped compared with the rest of the country, and the number and quality of jobs in the state have declined, Graham said.
"That doesn't seem to be a very strong recommendation that tax cuts are the way to even create jobs or enhance the value of jobs in terms of money in people's wallets," he said.
To offset revenue losses in the school voucher programs, Scott's proposal uses cigarette tax revenue, which currently funds health care programs. In future years, the tax cut would occur only if there was revenue growth, thereby avoiding cutting this year's budget deeper.
The corporate tax cut idea is not dead, said Senate President Mike Haridopolos, R-Merritt Island, who could revive the idea and attach it to another bill.
"It's definitely still alive,'' said Haridopolos, a Republican who is running in an increasingly crowded U.S. Senate primary. "We want to understand the specifics. I think the governor has a good idea of a formula."
Several senators, however, raised questions about the timing of giving the state's largest corporations a tax cut at a time when legislators must fill a $3.7 billion budget hole.
Finding the $333 million in the budget this year "is beyond difficult,'' Detert said. The money is "not there."
Skepticism is also deep in the House, where they have reserved only $30 million for tax cuts.
"We're optimistic we could do something, but right now we have nothing planned,'' said Rep. Denise Grimsley, R-Sebring, the House budget chief. "The challenge is just the budget, the economic environment that we find ourselves in."
Times/Herald staff writers Michael C. Bender and Marc Caputo contributed to this report. Mary Ellen Klas can be reached at meklas@MiamiHerald.com