State economic report casts doubt on feasibility of Scott's tax cut plan

Published Sept. 11, 2014

TALLAHASSEE — Since late August, Gov. Rick Scott's promise to slash taxes and fees by $1 billion over the next two years has been the backdrop for his re-election campaign, fueling a two-week tour through Florida.

But while Scott's campaign to promote the plan took him to the Panhandle town of Milton on Wednesday, the focus on whether it could actually work shifted 178 miles east to the Capitol, where lawmakers discussed the state's financial outlook.

The housing crash still haunts Florida's economy, state economist Amy Baker told legislative budget leaders. Florida is still No. 1 in foreclosure filings. Construction isn't projected to return to peak levels until 2022. Homeownership is at 65.3 percent, the lowest level since 1990.

Although tourism is booming, the housing hangover continues, forcing economists to project slower revenue growth than they had in the spring, Baker said.

"The residential real estate market is still sluggish," she said. "There's still a long way to go before normalcy is reached in Florida."

Assuming that lawmakers will set aside $1 billion in reserves, economists now estimate that next year's budget will produce a surplus of $336 million. That's less than half the $845.7 million surplus this year.

So, could Florida afford Scott's cuts?

"Unfortunately, we find ourselves in the middle of political season where things are said that can't be backed up,'' said Rep. Mark Pafford, D-West Palm Beach, the incoming House minority leader. "(Scott) commits a billion, but where do you find that? It's a campaign gimmick to increase his votes."

Announced on Aug. 29, Scott's package of tax cuts was so vague, it didn't explain when the cuts would take effect, or precisely define everything he's proposing.

The plan includes $200 million in cuts from sales tax holidays, and a $120 million reduction in the communications services tax, imposed on cellphone bills and other sources. Scott proposes a $120 reduction on the $225 charge for first-time vehicle registrations, but it's not clear how much this will cost the state in total.

Other plan components whose full impact aren't defined include eliminating the state's manufacturing sales tax, and phasing out the business income tax and the 6 percent sales tax on commercial leases.

Another tax cut, a limit on property tax increases that would affect local governments more than the state, would require the approval of 60 percent of state voters. While it sounds bold, it might not add up to much savings for homeowners.

In Hillsborough, for instance, such a tax cut would have saved the typical owner who qualified about $42 this tax year.

Scott hasn't said which year he wants the referendum on the tax to be put on the ballot.

His campaign spokesman, Greg Blair, said Scott will reveal further details of the plan in January — after the election.

The budget "will be balanced, and it will include all of his priorities," Blair wrote in an email.

Wednesday, Republican legislative leaders — whose support Scott would need if he is re-elected and tries to implement his cuts — were noncommittal.

"Any time you can give more money back to the taxpayers, we're open to that discussion," said incoming Senate President Andy Gardiner, R-Orlando. "What exactly that number will be, we'll have to wait and see."

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