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    McKay stays the course on tax plan

    To make his case, the Senate president will link the tax system to problems in the schools.

    By STEVE BOUSQUET, Times Staff Writer
    © St. Petersburg Times
    published February 25, 2002

    TALLAHASSEE -- To just about everyone except Senate President John McKay, it appears hopeless. A lost cause. Game over.

    After a week in which the House humiliated him by rejecting his tax proposal by a 99-0 vote, McKay acts like he's just warming up. He still vows "substantive" change in Florida's tax law will occur. He talks of a session ending in July instead of March. He says Gov. Jeb Bush and House Speaker Tom Feeney are "in denial" over Florida's financial instability.

    Confronted with overwhelming and powerful opposition, McKay plots his next move and scoffs at talk of a graceful exit. He shakes his head at the idea that lobbyists and some lawmakers in both chambers are quietly crafting a tax proposal McKay might accept, like a permanent joint committee that will review every tax exemption.

    "Another study commission? We've done seven or eight of them, and nobody's done a damn thing," McKay said in an interview Friday.

    Instead, the Bradenton Republican said his next step is to make the case for a new tax system by linking it to festering problems such as school crowding or low pay for Florida teachers. Such a move would infuriate Republican strategists, because it would please Democrats who don't want Bush to win re-election.

    "It is an abstract subject," McKay said of tax reform. "When the time's right, we will attempt to tie it to tangible issues that people will be able to understand. But you've got to do it at the right time."

    It now seems more certain than ever that if he is to win any tax reform, McKay will have to use all his clout and play hardball with Bush and Feeney on the pivotal issues remaining before the Legislature: the budget, reapportionment and creation of the new chief financial officer position in the Cabinet.

    Considering the power of business lobbyists and the fact that it's an election year, it is significant that McKay's proposal has gotten this far. Not since 1987 has any serious effort to overhaul Florida's tax system received such attention. That was when the Legislature approved a tax on services with then-Gov. Bob Martinez's backing -- only to repeal it after just six months.

    Now McKay is biting the hand that feeds legislators' campaign money. Central to his thesis is a concept that seems unusual to most Republican lawmakers: Businesses do not pay their fair share of taxes.

    McKay wants to ask voters to lower the tax rate from 6 to 4.5 percent, keeping exemptions for groceries, rent and medicines, and reducing business taxes on electricity. To regain the lost tax dollars, McKay would ask the Legislature to tax nearly 100 services, including accounting, dry cleaning, legal services and residential pest control.

    The notion of overhauling the tax system in any election year was difficult enough. But McKay has been hampered by a series of factors both institutional and personal, and he has made some questionable moves of his own.

    McKay and Feeney don't get along. And in a reapportionment year, most lawmakers are far more preoccupied with the shape of their districts than the state's revenue projections.

    Moreover, McKay is not a typical politician.

    He has never bothered to accumulate IOUs by doing favors for other legislators, so he is conspicuously short of help when he needs it most. He has not been able to find a member of the other chamber willing to sponsor his bill: Step 1 in the Legislature.

    Sen. Daryl Jones, D-Miami, who voted for McKay's tax package, says it was rushed forward too quickly and that House members felt McKay "was shoving it down their throat."

    Under Feeney's direction last week, they shoved it right back.

    "This is one of those things where you think you have a good idea, you talk to four or five like-minded people, you all polish your good idea, and then you roll it out and the other 16-million people hate it and you wonder what went wrong," J.M. "Mac" Stipanovich, a former chief of staff to Martinez who is now a lobbyist fighting McKay's proposal, said recently.

    The message of tax reform also needed a friendly, reassuring messenger. McKay is not a particularly charismatic politician.

    He's most at ease in his other life as a broker and developer, a world of real estate closings and profit-and-loss statements. "I'm a businessman," he likes to say.

    Soon, McKay will be a full-time businessman. The fact that McKay will leave politics in November has worked to his disadvantage. It has liberated him from having to consider what voters might think, but it has liberated lobbyists, too.

    They don't fear his returning as a Cabinet officer or member of Congress. They have fought him toe-to-toe, filling the airwaves with harsh antitax TV ads and accusing McKay of brow-beating senators for votes.

    McKay denied threatening anyone. "If they can find any evidence that I've threatened anybody," he said, "I'll resign from this office."

    But his business experience has taught him to compare closely both sides of the ledger: money coming in and money going out.

    "It is beyond my capability to understand why the governor and speaker seem to be in denial about the opportunity to examine both sides of the ledger," McKay said.

    Bush remains unconvinced, though he said recently that he agrees with McKay on the need to restudy some of the most bizarre tax exemptions.

    "There are some exemptions in the code I'm not happy with," Bush said. "We're going to work together and bring together a consensus on that."

    Lobbyist Ken Plante, a former state senator who has closely followed the tax debate, said he remembers McKay talking 10 years ago about the need to overhaul the tax structure. Plante, a former top aide to Bush, said McKay could have done some things differently. But Plante warned against writing McKay's tax plan obituary.

    "Maybe if he had had public hearings all over the state. . . . It's hard to say," Plante said. "But the session's not over yet. I've seen stranger things happen."

    Sipping bottled water in his Senate office, McKay hinted at what lies ahead.

    "If fear is part of the equation, there's still a long way to go in this session," he said. As a real estate broker and developer, McKay said, he learned a valuable lesson: "People don't make decisions until they've got to make decisions."

    -- Times staff writers Wes Allison and Lucy Morgan contributed to this report.

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