House passes tax breaks

The bill, which serves up $200-million in tax breaks to businesses in the coming year, surprised the Senate.

By LUCY MORGAN, Times Tallahassee Bureau Chief

© St. Petersburg Times
published March 15, 2002

TALLAHASSEE -- For weeks, House and Senate Republicans have been fighting over more money for education.

Democrats have been pushing for more money for social services.

There has been little talk of tax breaks.

Until Thursday.

The House on Thursday pushed through a bill that its leaders say gives Florida businesses a $200-million tax break in the coming year. Gov. Jeb Bush said he will sign the measure into law.

The action outraged some legislators.

"We can't pay teachers, meet education needs and the basic needs of the elderly, but we're giving a big corporate tax break to business," complained House Minority Leader Lois Frankel, D-West Palm Beach.

The move surprised the Senate, which has not included any tax breaks in its budget and has spent most of the 2002 Legislature pushing a plan to eliminate nearly 100 tax exemptions.

State Sen. Don Sullivan, R-St. Petersburg, said the move by the House creates a new stumbling block in budget negotiations.

"I think it's something that will have to be resolved at higher levels than me," Sullivan said.

House Speaker Tom Feeney said he will try to find $200-million to replace the lost revenue but likes the idea of giving a tax break to businesses. "It's an enhancement to the Florida business community," Feeney said.

And everyone knows a tax break stimulates business, Feeney insisted.

In fact, this tax break is tied directly to the economic stimulus package Congress passed last week.

The measure was part of a seemingly innocuous bill the Senate passed Feb. 27 to align the state's corporate tax code with the federal government's. It has been waiting for the House to act ever since.

Similar bills pass the Legislature routinely every year. Normally such bills raise more revenue for the state, but the stimulus package Congress passed last week lets companies write off investments and purchases more quickly.

That depreciation provision will cost states such as Florida a total of $4.6-billion in lost revenue in the coming year, according to the Center on Budget and Policy Priorities. Florida's loss over two years totals about $500-million, House analysts said.

Congress had not yet acted when the Senate passed the tax bill last month, so senators did not know it would cost the state money. Instead, it was seen as a largely technical change.

Late Thursday, Senate budget experts insisted the measure will not produce a tax cut for the coming year because it adopts the federal tax code as it existed on Jan. 1. Congress passed its stimulus package March 9.

Feeney said he will let the "lawyers and staff figure it out."

House leaders Thursday clearly saw the measure as an opportunity for a tax break. So they moved the bill to the top of the agenda and swiftly waived the rules to take a final vote on it. Normally the bill would have to wait a day for the vote.

House Democrats questioned the sudden change in agenda, but didn't vote against the bill, which passed 112-0.

The House moved quickly after learning that Sullivan had filed a last-minute budget amendment to allow the state to continue collecting the money.

Now there is nothing the Senate can do about it.

"I think a lot of people feel tricked," said Minority Leader Lois Frankel after making an unsuccessful move to recall the bill once Democrats realized what had happened.

Frankel said Republicans have the votes in the House to pass anything but wanted to hide what they were doing.

"They just wanted to do it without letting anybody know," Frankel said. "I believe they are ashamed."

-- Staff writers Alisa Ulferts and Steve Bousquet contributed to this report.

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