Rejecting tax breaks, Florida lawmakers approve sales tax holiday

The final tally of tax breaks passed in HB 7097 added up to $47.7 million in one-time sales tax holidays, down from the $235 million in annual tax cuts approved two days ago.
The state of Florida will offer a sales-tax holiday again this year.
The state of Florida will offer a sales-tax holiday again this year.
Published March 14, 2020

TALLAHASSEE — After ignoring the mounting cascade of event cancellations, business shutdowns and Wall Street sell-offs, Florida legislators on Friday did what they had been resisting for weeks: they scaled back the tax breaks they wanted to hand out to corporations — and built some reserves for an inevitable economic slowdown.

The final tally of tax breaks passed by lawmakers in HB 7097 added up to $47.7 million in one-time sales tax holidays, down from the $235 million in annual tax cuts approved two days ago by the GOP-dominated Senate Appropriations Committee and less than the $193 million package approved by the House.

“I know it’s less than what we had planned,’’ said Sen. Kelli Stargel, R-Lakeland. “But I almost feel like it’s the least we can do for our residents who’ve gone through this.”

The Senate approved the deal 36-2, with only Sens. Tom Lee, R-Thonotosassa and Kevin Rader, D-Delray Beach, opposing it. The House approved it 104-8.

“It allows for flexibility given we don’t know what may be coming in weeks or months,’’ Rep. Bryan Avila, R-Miami Springs, the House sponsor of the measure.

Coronavirus response

Legislators spent most of the final scheduled day of the legislative session in prolonged recess as House and Senate leaders met behind closed doors crafting what they were calling a “coronavirus package” to respond to the pandemic. Leaders said they estimated they would add as much as $500 million to a “budget stabilization fund” that could offset losses in revenue.

Left unfinished was the only piece of legislation they are required by law to pass in the 60-day session, the budget. Differences over how to handle the scaled back projects in the wake of the novel coronavirus pandemic will be worked out over the weekend and legislators are expected to return next week for a final vote by Friday.

“We’re looking at making sure we have some additional reserves, and so we’ve decided to go back and take another look at the tax package,’’ said Senate President Bill Galvano as he shuttled between offices during negotiations.

The dramatic reduction was the result of worries that sales tax revenue declines would cripple Florida’s tourism-based economy as cruise ships cancel operations, theme parks close, and conventions jettison events.

The final package eliminated several provisions intended to help certain industries including a one-time $2 million tax credit for rental car companies, a reduction in the commercial lease tax, an exemption for heavy equipment rentals, an exemption from sales taxes for admissions to Formula 1 Grand Prix events, a 10-year extension of monthly distributions for the World Golf Hall of Fame and a tax break for solar installations for Florida Power & Light.

Also removed was a $76 million annual reduction in the state communication services tax that would save anyone who purchases a mobile phone, video or satellite service 0.5% on every dollar of taxes and a reduction in business leases.

But the one issue that led to a hours-long stalemate on the final day was a proposal by Avila and a priority of House Speaker José Oliva, R-Miami Lakes, to strip millions from the Miami-Dade tourism bureau and use it to pay for flood-control projects, pollution protections, seaweed cleanup and other expenses tied to water quality.

The issue has raised concerns by local tourism development officials that they could lose significant funds at a time when they need to offset the impact of the novel coronavirus.

The Senate had rejected the plan earlier in the week, when Sen. Anitere Flores removed it from the House tax package. Despite hours of negotiations, the Senate refused to accept Oliva’s and Avila’s appeals to restore the proposal.

The tax package includes the $42 million three-day back-to-school sales tax holiday Aug. 7 through Aug. 9 and the $5.6 million seven-day disaster preparedness sales tax holiday from May 29, 2020, through June 04, 2020.

Despite the scaled back tax deal, some legislators said they expect they may be back to revise the budget again.

“There’s a 99% chance we’re going to have come back and tweak.” said Flores, a Miami Republican. “You’ve never had a situation where major theme parks are closing, where, you know, in spring break week in Miami, they’re trying to shut down as many things as they can.”

Rep. Travis Cummings, a Fleming Island Republican and chair of the House budget committee, said the tax cut package was whittled down so the remaining budget includes “what we need to make sure we have enough resources over the coming months.”

The tax package included a series of other issues, such as extending the time property owners impacted by Hurricane Michael can begin rebuilding while retaining prior homestead assessment limitations, a requirement that charitable hospitals provide community benefits that exceed the value of their property tax exemptions, and requires school districts to provide capital improvements to charter schools.

Both the House and Senate have also included in their draft budgets a $543 million refund to the largest corporations in the state.

Senate Democrats on Thursday tried to cancel the scheduled refund to the state’s top 1% of businesses as part of the 2017 federal Tax Cuts and Jobs Act, but Republicans rejected it.

Sen. Jose Javier Rodriguez, a Miami Democrat, also attempted to persuade senators to close a loophole that allows companies to evade paying Florida corporate income taxes by creating subsidiaries in other states. His amendment, proposed on Thursday, required companies to report their business subsidiaries jointly, as is required in other states, and would raise an estimated $478 million.

“It’s been called one of the biggest self-inflected wounds of the state” because Florida allows companies to profit from doing business in Florida but evade taxation by locating the subsidiary somewhere else, he said. Republicans in the Senate rejected the amendment on a voice vote.

Those decisions drew criticism from community activists who blasted the tax package as short-sighted when Florida’s most vulnerable face uncertain healthcare options, lost income and little safety net.

Ida Eskamani, grassroots lobbyist who represents New Florida Majority and Organize Florida:

“What the coronavirus has showed us is how an economy that runs on profits over people is inadequate to address a crisis that disproportionately impacts our most vulnerable communities, mainly working families and senior residents on fixed income,’’ said Ida Eskamani, who represents New Florida Majority and Organize Florida.

“Our people need paid sick leave, waiving costs associated with COVID-19 testing and treatment, expanded Medicaid, and a moratorium on evictions, foreclosures, and utility shut-offs.”

They urged lawmakers not to pass the tax break package and urged legislators to expand the session to find a way to help employers pay sick leave to workers or allow healthcare facilities waive costs associated with COVID-19 testing and treatment.