Critics challenge tax-cut proposal

By Alex Leary, Times Staff Writer
In print: Thursday, March 20, 2008

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TALLAHASSEE — Opponents of a measure aimed at cutting property taxes 25 percent have launched a quiet campaign hoping to thwart its placement on the November ballot.

Odds are long on reversing the 21-4 vote by the Taxation and Budget Reform Commission. The group agreed Monday to ask voters to replace most school property taxes with a higher sales tax and other revenue sources.

But critics see a glint of hope because the plan must come back for a final vote in April.

Opponents would need to persuade five commissioners to reverse their support for the plan. Among the critics are a powerful state senator, business and local government leaders and the education lobby, which worries that promises to replace the $9.3-billion in school funding won't be kept.

"We're going to continue to encourage them to take another look at this," said David Daniel, chief lobbyist for the Florida Chamber of Commerce.

"This is such a major change in tax policy, and it needs some more debate," said Randy Miller, a commission member who voted against the plan and represents the Florida Retail Federation.

Former House Speaker Allan Bense, who chairs the tax commission and voted for the plan, said he expects the same vote when the plan comes back from being tweaked by a style and drafting committee.

"You're not morally bound but you already voted for it to be on the ballot," he said Wednesday. "Let's let the people decide."

Gov. Charlie Crist suggested mild support for it Wednesday, saying he would "probably" campaign for it.

Even if opponents do not succeed in altering or killing the proposal, some business critics said they are considering a legal challenge.

Under the state Constitution, any new tax needs 66 percent, or two-thirds, approval — not the usual 60 percent. To put that in perspective, the Amendment 1 property tax cuts, which were aggressively sold by Crist, passed by 64 percent in January in the face of relatively weak opposition.

It is an open question whether increasing the sales tax triggers the constitutional provision. Many argue it's just a broadening of an existing tax.

"It doesn't mandate a new tax; it gives the Legislature the option of levying another penny," said commission member John McKay, a former Republican state senator from Bradenton who sponsored the so-called tax swap.

The plan, which passed in part due to intense lobbying by House Speaker Marco Rubio, represents the biggest change in Florida's tax system since 1987. That year lawmakers approved a tax on services, such as lawyers and barbers, only to repeal it eight months later amid a backlash.

The new plan calls for eliminating the $9.3-billion "required local effort" for schools starting in 2011 and replacing it with a 1 cent sales tax increase, spending cuts or some other unspecified revenue. A penny sales tax would generate between $3.3-billion and $3.9-billion at current estimates, leaving more than $5-billion that lawmakers would have to find to pay for education.

Sen. Mike Haridopolos, a Melbourne Republican who is a nonvoting member of the tax commission, suggested Wednesday that the funding gap will probably be even higher by 2011. Like many in the Legislature, Haridopolos is eager to reduce property taxes but abhors increasing the sales tax. That's why Rubio could not advance a similar proposal in the Legislature last year.

Education officials, meanwhile, are concerned about a little-discussed component of the McKay plan that would decrease the current 10 percent assessment cap on nonhomestead property to 5 percent.

"We don't like that at all," said Wayne Blanton, executive director for the Florida School Boards Association. "The most stable source of revenue we've had is property assessments, and when you cap it, it's a real problem for schools."

Though most property taxes for schools would go away, a smaller portion that goes for construction and discretionary spending would remain. Also deeply affected would be local governments, which already are slated to absorb more than $9-billion in cuts in the next five years under Amendment 1.

Mark Pudlow, spokesman for the teachers union, said there needs to be a better guarantee that the state will fully fund schools. "There's just so many unanswered questions."

Staff writers Steve Bousquet and Shannon Colavecchio-Van Sickler contributed to this report.