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Gov. Crist considers tax on smokes

TALLAHASSEE — Florida's worsening economy and grim fiscal outlook are forcing Gov. Charlie Crist to consider two bold moves: a 50-cent-a-pack increase in the cigarette tax and a temporary statewide moratorium on housing foreclosures.

"I think it would be a good thing to be able to do," Crist said Monday of a freeze on foreclosures. "We want to stop the foreclosures, especially during the holidays."

Crist did not say what power he had to impose such a moratorium — "Stay tuned," he said — but that he wants to pursue it in a way that does not hurt banks. The banking industry had no immediate reaction.

Crist's willingness to consider a cigarette tax increase, despite calling it a "user fee" to avoid the T(axes)-word, is another sign of just how desperate the state's finances have become.

Crist, a Republican, ran for governor in 2006 on a platform of lowering taxes and remains reluctant to support a higher cigarette tax. But he added: "I don't want to be dogmatic on anything. I understand that we're in challenging times."

Florida has the nation's second-highest foreclosure rate behind California, and Fort Myers ranked second highest of all metropolitan areas in the country in October, according to the firm RealtyTrac. There were 54,324 foreclosure filings in Florida last month, including 7,553 in the Tampa Bay area.

Banking consultant Ken Thomas said Crist's moratorium proposal has a nice, fuzzy ring for the holidays but lacks business sense.

The federal government has the power to compel banks to ease up on foreclosures — after all, the Feds took large ownership stakes in banks this year. That's not the case with the state.

"The state doesn't own any banks, as far as I know," Thomas said.

Banks would expect the state to assume part of the risk, but Thomas said Florida is in no financial shape to cover bad loans.

Crist is following the lead of California Gov. Arnold Schwarzenegger, who earlier this month called on lawmakers to enact a three-month foreclosure moratorium during a special session that runs through Sunday. So far no bill has passed. Last week, federally run mortgage giants Fannie Mae and Freddie Mac temporarily suspended foreclosures from Wednesday until Jan. 9.

Crist, who is heading to St. Petersburg this week for the Thanksgiving holiday, said the idea of a moratorium has been under discussion for several days, but offered few details. However, he did address the growing likelihood of a special legislative session on the ballooning $2.14-billion budget shortfall. Lawmakers say they are considering the weeks of Jan. 5 or Jan. 12.

"I'm trying to get the temperature of both the House and the Senate," Crist said. "I don't think it would be a bad idea, but I do think it would be a bad idea to come here without agreement."

Florida's cigarette tax of 34 cents a pack has not increased since 1990. The average cigarette tax nationwide is $1.19, making Florida's 46th-lowest among states. New York's tax of $2.75 a pack is the nation's highest. Nationwide, the average price for a pack of cigarettes is $4.32.

Legislation to raise the tax by $1 a pack went nowhere in the 2008 session, and legislators and lobbyists say the state's deep budget deficit has prompted the tobacco industry to be prepared to accept a 50-cent increase. That would generate about $500-million in new tax revenue beginning next year and tie Florida with Colorado as the 31st-lowest cigarette tax at 84 cents per pack.

Raising the tax has been a priority of health advocates such as the American Cancer Society and public hospitals, who say that higher taxes would discourage young people from smoking.

"Clearly the state is dealing with a very, very difficult fiscal environment," said lobbyist Tony Carvalho of the Safety Net Hospital Alliance of Florida. "We certainly can use the extra funds to deal with this fiscal crisis."

A higher cigarette tax could face strong resistance in the House, where many Republicans ran on a theme of opposing taxes and where the GOP holds a commanding 76-44 advantage.

Rep. Ellyn Bogdanoff of Fort Lauderdale, a ranking Republican, said a cigarette tax hike could "backfire" by driving people to buy tax-free cigarettes at Indian reservations or in other states. She said others could quit, which is a positive thing from a health standpoint but would mean less revenue from a higher cigarette tax.

"Raising taxes in any fashion is not part of an economic stimulus package," Bogdanoff said. "I think we owe it to the public to do some more research before proposing something like this."

Another House leader, Rep. Dean Cannon, R-Winter Park, said: "There's never a good time to raise taxes, but it's a particularly dangerous thing to do when you are in an economic recession and you're trying to get the economy moving again. It's definitely a tax increase, but it's our duty to examine it."

Senate President Jeff Atwater, reacting to the latest revenue shortfall last Friday, was quoted by the Palm Beach Post as saying "everything is on the table."

Times staff writer James Thorner and researcher Emily Rieman contributed to this report. Steve Bousquet can be reached at bousquet@sptimes.com or (850) 224-7263.

Gov. Crist considers tax on smokes 11/24/08 [Last modified: Thursday, November 27, 2008 1:14pm]
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