After refusing for months to talk about raising revenue for Florida's government, House Speaker Ray Sansom and other key House Republican leaders have finally joined Senate Republicans in pledging to consider the options during the regular legislative session that begins March 3. Among the possibilities: repealing sales tax exemptions, raising cigarette taxes and pushing to collect sales tax on all Internet sales. The hint of new flexibility and the growing realization that Florida cannot support itself with its outdated tax structure offers some hope that legislators will rise to the challenges facing the state.
It's easy to understand the reason for the change of heart: The state faces a $3.5-billion budget deficit for 2009-10. The solution lawmakers employed earlier this month during a special session to cover this year's $2.4-billion budget deficit isn't sustainable. Lawmakers filled the bulk of the budget hole with state reserves, which are now dangerously low. Unless they raise revenue, the only option is more spending cuts that would do irreparable harm to education, social services and other programs.
Already, the Legislature's decision to cut some services will have costly long-term impacts on all Floridians. Consider, for example, the impact of the $3-million cut in drug treatment programs lawmakers recently approved. Among the agencies affected is PAR Village of Largo, a facility the Bush administration highlighted just five years ago as part of the solution to America's drug problem. Mothers can live with their children at the facility for up to 18 months while receiving intensive substance abuse treatment — a strategy that gives addicts a better chance of avoiding jail and keeping their children off drugs and out of foster care.
At PAR Village, the cuts will mean closing 35 of 160 beds — surely lengthening the facility's 45-woman waiting list and closing the option completely for some who desperately need help. What's more, taxpayers are likely to face steeper bills in the future if those women turn to crime or their children are turned over to foster care or enter the juvenile justice system. PAR executive director Nancy Hamilton rightly told the St. Petersburg Times/Miami Herald Tallahassee bureau, "It's the epitome of insanity."
That is especially evident when the cut is put in the context of the state's tax structure. The $3-million is roughly the same amount the state could raise if it repealed a sales tax exemption on airplane repairs or for non-Floridians buying goods to sell overseas. Other examples of the hundreds of exemptions that litter Florida's sales tax law: A combined $26-million for the movie industry; $42-million for bottled water.
Each exemption has its defender, and some have merit. But what is encouraging is that Sansom, a Destin Republican, told the Times/Herald Tallahassee bureau last week that he is open to reviewing some exemptions, joining Senate President Jeff Atwater, a Republican from North Palm Beach. Both leaders also have expressed support for joining a multistate effort to push Congress to allow states to enforce the collection of sales taxes on goods sold via the Internet — an effort that some believe could net Florida an additional $1-billion annually. And it appears likely the Legislature will raise the tax on cigarettes.
There are other revenue options lawmakers should consider: closing a loophole that allows some corporations to avoid documentary stamps on real estate transactions; raising the state's automobile tag fees, which have been stagnant for decades; closing corporate income tax loopholes; and settling on a gambling compact with the Seminole Indian Tribe.
When Florida's economy was booming, lawmakers had the luxury of cutting taxes and increasing services. Those times are long gone. It's remarkable what a crisis can do to provide some clarity for lawmakers about the costs of failing to create a fairer, broader tax structure. They should seize the opportunity.