TALLAHASSEE — Gov. Rick Scott's proposed cut to Florida's corporate income tax was declared dead Sunday by the Senate president, who said cutting spending is more important.
The decision is a significant setback for the Republican governor, who has aggressively promoted the corporate tax cut, including as a candidate last year.
But Senate President Mike Haridopolos said that as senators slash spending by nearly $4 billion, they are also patching together a package of tax and fee reductions, including a three-day back-to-school sales tax holiday and a possible rollback of steep car and truck registration fee increases enacted two years ago. They're also calling for a water management district property tax cut.
"But it won't be on the corporate side," Haridopolos emphasized as the 2011 legislative session moves into its final week.
Haridopolos' stance might make good financial sense, but it's politically risky.
The Merritt Island college professor is in a crowded Republican primary for the U.S. Senate seat held by Democrat Bill Nelson and can expect to be forced to explain to GOP voters why he rejected a business-friendly tax cut in Florida.
"As I've talked to so many members and, more importantly, business leaders across the state, they feel that stability is more important than reducing a 51/2 percent corporate tax rate," Haridopolos said Sunday. "My stance has been and will continue to be that the most important thing is to show budget discipline by spending less."
Sounding like a candidate, Haridopolos said fiscal conservatives are more concerned with runaway government spending than cutting taxes.
"I'm trying to be pragmatic," he said. "Where we've lacked discipline as Republicans either here or in Washington has been on spending. … I want to reduce spending. That's always the Achilles' heel of every conservative."
Cutting the corporate tax rate was a centerpiece of Scott's campaign for governor last year, and he recently suggested he might veto the entire state budget if the cut wasn't included.
"I will not compromise on these principles," Scott said in an April 18 statewide radio address.
Appearing on Fox & Friends on Sunday, Scott cited tax cuts as a priority as the session enters its final days.
"Right now, my focus, with five days left in session, is to reduce taxes — reduce the business taxes and reduce property taxes," he said.
A property tax cut emerged Sunday evening as Senate and House negotiators continued to hammer out agreements on a wide range of spending issues, aiming for a final budget by Tuesday to allow for a required 72-hour "cooling off" period.
Florida's five water management district boards, whose members are appointed by Scott, will face limits on how much revenue they can raise next year, which would equate to an estimated savings to taxpayers of $210.5 million.
Among the other agreements legislators reached Sunday:
• No increase in health insurance premiums for state employees, who are already getting their pay cut by 3 percent due to retirement-plan changes.
• A ban on contingency risk multipliers in calculating attorney's fees in personal injury protection lawsuits, a change supported by insurers and opposed by personal injury lawyers. The proposal previously died in a House committee. Lawmakers say the change would help reduce fraud in Florida's no-fault system.
• A ban on using tax dollars for lobbying by two statewide associations that represent state attorneys and public defenders, an issue sought by House Speaker Dean Cannon, R-Winter Park.
• A mandate that the Department of Corrections seek proposals from multiple for-profit prison operators to run dozens of prisons in an 18-county region from Bradenton to the Keys. The contracts awarded to private prison companies require approval by the Legislative Budget Commission, a 14-member oversight panel of lawmakers.
The privatization venture, at the Senate's insistence, is the most aggressive expansion of outsourcing ever undertaken in the nation's third-largest prison system. Senate Budget Chairman J.D. Alexander, R-Lake Wales, said the agency could award the contract to a single company or hire more than one company, but it's subject to Legislative Budget Commission review.
"It affects a lot of state employees and we want to make sure it's well done," Alexander said.
Steve Bousquet can be reached at [email protected] or (850) 224-7263.