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Florida lawmakers seek tax breaks and fee cuts despite a budget shortfall

TALLAHASSEE — After raising $2.2 billion in new taxes and fees last year, Florida legislators want to erase that memory this election year with proposals to roll back auto registration fees and steer up to $100 million to businesses in tax incentives.

The problem: how to pay for it. The House plans to budget about $88 million in tax incentives, the Senate plan includes $135 million in tax cuts, and both chambers plan to push a $44 million sales tax holiday for back-to-school supplies. All of it must come out of a budget that already has a shortfall of $3.2 billion.

Critics of the tax and fee cuts say competition already is fierce among programs that have been slashed in recent years. Republican legislators argue that tax breaks will spur economic development, and that many of the tax incentives would not take effect until future budget years.

"I would argue that we should be putting in as much as we can because, at a time of economic downturn, we need to be investing in more economic development than even in good times when you have the money," said Rep. Will Weatherford, R-Wesley Chapel.

Of the higher taxes and fees passed last year, $797 million came from fee increases for new and renewed auto tags and driver's licenses. Senate President Jeff Atwater wants to reassess some of those fees to see if the increases were too high.

Among the proposals is a $6 rollback of the vehicle registration fee, which last year rose from $36 to $57 for mid size cars. The fee review is "a high priority for us," Atwater said this week.

The second-guessing doesn't surprise Sen. Jeremy Ring, D-Margate, who said: "It's a contradiction but it's an election year. And I think they're responding to a backlash against some of the increases that were too draconian."

Sen. Don Gaetz, R-Niceville, has proposed a tax credit package that would cost $74 million next year and $100 million the following year. He and other Republicans say enacting the tax incentives will mean cuts to next year's budget, though Gaetz said specific cuts have not been identified. He noted that the tax credits would be awarded only after a new job has been created, so the money is like "seed corn'' that will pay future dividends.

Even though the focus is on long-term job creation, Gaetz said there are immediate benefits to some incentives, such as a $1,000 tax credit for businesses that hire workers laid off last year. Many re-hired workers would leave the state's Medicaid rolls, which have swelled during the recession, he said.

In the House, the Economic Development Policy Committee on Wednesday approved 10 bills that would create tax incentives for everything from manufacturers of gas turbines for airplanes to training for workers who lose jobs because of the dismantling of Florida's space program.

Rep. Ellyn Bogdanoff, who leads the House Finance and Tax Council, said House and Senate leaders have broad agreement on tax incentives to help the manufacturing, space, ports and the film industries.

She emphasized that the proposals are not giveaways but job generators because, "the focus is on long-term job growth."

But some lawmakers warn there is no guarantee the programs will generate jobs. Last year, lawmakers passed $10 million in low-interest loans to small companies under an "economic gardening'' program and Florida's unemployment ranks continued to swell.

"State governments just do not have the tools to move employment rates in a giant way," said Rep. Keith Fitzgerald, a Sarasota Democrat and political science professor at New College.

He sponsored the back-to-school sales tax holiday bill because he believes it encourages spending and increases revenue. But he questions whether legislative leaders are effectively evaluating whether the proposals will produce jobs.

"They're going to pass all these things, but they're going to do it on the basis of sort of an ideological assumption that tax incentives always increase economic activity," he said. "Sometimes they do. Sometimes they don't."

The debate comes amid hand-wringing by lawmakers over budget cuts. Sen. Nan Rich, D-Weston, said she supports economic development but "you need to find a way to pay for it." She worries the money will come from the health care budget.

Sen. Durell Peaden, R-Crestview, the head of the Senate's health care budget, has proposed a so-called "sick tax'' on hospital revenues of a half percent to offset some of the deep budget cuts to elderly and disabled programs.

The measure would raise about $55 million, but Atwater said he opposes the tax increase, so it is not likely to remain in the Senate budget.

Another revenue-raising plan could gain traction: Removing an exemption to a $400 fee charged to businesses that are late in filing their annual reports. It could bring in almost $52 million next year and about $30 million in subsequent years.

Rich and Fitzgerald say some kind of tax incentive bill is likely to pass. Gaetz, the Senate bill's sponsor, went further: "If we don't pass a bill that makes it easier for Floridians to get work, then this Legislature will have failed miserably."

Staff writers Marc Caputo and Steve Bousquet contributed to this report.


In agreement

House and Senate leaders agree on some tax incentives, according to Rep. Ellyn Bogdanoff, who leads the House Finance and Tax Council. Among them:

. $100 million in incentives to upgrade Florida's 14 ports in preparation for the widening of the Panama Canal in 2015. The incentives would cost $10 million per year, starting in the 2011-12 budget year.

. $67 million in sales tax breaks for certain manufacturing equipment.

. Up to $20 million annually in tax credits to movie and television productions, starting in 2011.

. About $25 million to encourage new space-related businesses.

Florida lawmakers seek tax breaks and fee cuts despite a budget shortfall 03/17/10 [Last modified: Wednesday, March 17, 2010 11:30pm]
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