Monday, May 21, 2018
Politics

Bousquet: Gov. Rick Scott's $1B in tax cuts met with skepticism

A billion dollars. That's a lot of money.

That's Gov. Rick Scott's goal for cutting taxes in 2016. But with each passing day, it looks more obvious that Scott is headed for defeat because the Legislature is not sold on the idea.

It all comes down to one word: recurring.

Simply put, Scott wants most of $1 billion in tax relief to be recurring, or permanent, as in forever. That would take that tax money out of the treasury for good, because future lawmakers could not repeal a tax cut without being accused of raising taxes, and that's not going to happen.

The three big pieces in Scott's tax cut package are a permanent repeal of corporate income taxes on retailers and manufacturers, worth $770 million a year; reducing by 1 percent the sales tax on commercial rents, for a two-year savings of $339 million; and repealing the sales tax on manufacturing equipment at $77 million a year.

"The more taxes we cut, the more small businesses in Florida grow," Scott says.

One of the perks of being a powerful chairman in Tallahassee is having the last word, and near the end of a meeting of the Senate Appropriations Committee on Dec. 2, Sen. Tom Lee, R-Brandon, had some things to say.

"We need to be cautious," Lee told senators. "Frankly, our economy isn't growing fast enough in this state to sustain the levels of tax cuts that we've had an appetite for."

In an overlooked but remarkable statement for any Republican to make, Lee said there has been too little effort at "growing the top-line revenue in our state."

Legislators do not accept Scott's math that the state has a surplus of $3.4 billion. Their figure is about half that.

Lee, who pioneered a long-range fiscal outlook as Senate president a decade ago, says his successor as budget chairman, Sen. Jack Latvala of Clearwater, could be forced to make $2 billion in budget cuts to make up for the loss of future revenue in addition to setting aside sufficient reserves.

"We want to do all we can do to help the governor get to his objectives," Lee said. "We're going to try to take a long-term view of how our decisions affect future Legislatures."

More skepticism arrived a week before Christmas on the other side of the Capitol.

House Speaker Steve Crisafulli, R-Merritt Island, at first called $1 billion in tax cuts "doable," before elaborating at the end of a 40-minute session with Capitol reporters that too much of the tax cuts would come from recurring revenue.

"It's just not possible, based on the funding commitments that we see," Crisafulli said.

He then rattled off a list of spending priorities that Scott shares, like record per-pupil spending in public schools, and others that Scott hasn't prioritized, such as pay raises for workers in areas with the highest turnover rates, such as in state prisons.

"We have to sit down and do the math," Crisafulli said.

Another hurdle Scott faces is that most of the tax relief he wants is targeted to help businesses and not individuals.

That provides plenty of political support from business groups, but it makes his selling job a lot harder in the Senate.

The 2016 session begins in two weeks, so Scott has plenty of time to fine-tune his tax cut strategy.

A wiser approach for the governor would be to reduce the recurring tax cuts by, say, half, then make the one-time-only cuts bigger and targeted to the pockets of average working people. But that's very hard to do politically.

Scott wants to extend for one year the sales tax exemption on college textbooks, saving an estimated $46 million, and continue two popular sales tax holidays for back-to-school items and storm supplies at an estimated savings to the state of $73 million.

Those are non-recurring tax cuts, meaning for one year only, making them an easy sell in the Capitol. But they amount to nickels and dimes compared with those business-friendly tax cuts dominating Scott's agenda.

Scott has proven to be a highly disciplined pitchman at attracting jobs to Florida. He'll need that same super-salesmanship to get his tax cuts through.

Contact Steve Bousquet at [email protected] or (850) 224-7263 or follow him @stevebousquet.

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