Tax cuts merit a mere whisper
By STEVE BOUSQUET, Times Staff Writer
TALLAHASSEE -- As governor, Jeb Bush has cut billions of dollars in taxes. But now that he's running for a second term, he has been talking a lot more about the billions he has spent on schools and human services.
Bush's emphasis on spending speaks volumes about how the political ground has shifted since the economy soured and required more than $1-billion in budget cuts last year. Bush, in a tight race with Democrat Bill McBride , must appeal to Democrats and independents, some of whom think taxes have been cut too much.
Tax cuts came up just briefly during the third and final gubernatorial debate Tuesday night.
"I'm proud of our record of cutting taxes for savers and small businesses, which is why our economy now leads the nation in job growth," Bush said in the hourlong debate.
McBride rarely mentions tax cuts either. Instead, he says Bush recklessly turned a surplus into a deficit.
"He inherited a $3-billion surplus when he came into office. He spent it down, and now we're in a deficit situation," McBride said in the debate.
On Wednesday, Democratic legislators took that line of attack a step further, saying the revenue lost from Bush's tax cuts could have paid for smaller classes.
A Bush campaign brochure says he has cut taxes by $4-billion. That's enough to pay for the first-year cost of the class size initiative that Bush says Florida can't afford. But McBride didn't make that connection.
Most of that estimated $4-billion comes from three years of paring the intangibles tax on stocks and bonds. Bush signed legislation in 2001 increasing the exemption for couples from $40,000 in savings to $500,000. The change helps 750,000 Floridians, less than 5 percent of the state's population.
For now, tax cuts are out and spending is in.
"Tax cut fever has subsided," said U.S. Rep. Mark Foley, R-West Palm Beach, a Bush supporter. "We realize the money is simply not there, and you can't keep providing tax relief when the economy's not there. I think that tax cutting, and that jargon, has probably run its course, and until you see a resurgence in the economy, where do you cut it from?"
Sen. Ron Klein, D-Delray Beach, questioned the "choices" made by Bush, especially the intangibles tax cut.
"There hasn't been any proposal to reduce class size in the past 31/2 years. These were choices made by the governor and pushed on the Legislature," Klein said.
For the most part, the governor's race has been a referendum on public education. In TV ads Bush talks about putting more money into classrooms, setting higher standards and getting a traffic light for a rural elementary school.
"For him, education is the No. 1 issue," said Sally Bradshaw, Bush's closest political adviser. "He has also made growing the economy a priority. In the absence of tax cuts, you would not see Florida leading the nation in job growth."
Bush's opponents see an election-year transformation.
"Bush is a chameleon," said Tony Welch, a McBride campaign spokesman. "In a campaign, it's time for him to move to the middle."
McBride promotes a 50-cent cigarette tax increase, and he favors an initiative to reduce class sizes that's extremely popular despite a price tag in the billions. He also talks of wiping out some tax exemptions, which Bush says is the same as raising taxes.
Bush frequently cites his tax cuts as having been a catalyst for job creation. But his Office of Tourism, Trade and Economic Development cannot cite a study that shows a correlation.
A member of Bush's Council of Economic Advisers, Florida State University economist Randall Holcombe, said the connection is difficult to draw.
"The tax climate is important, but it's hard to quantify," Holcombe said. "It's hard to say that tax cut created these jobs. It's more of a qualitative answer. Certainly lower taxes are one thing that attracts jobs to this state."
A voter looking for a TV spot about tax cuts will have to settle for state Rep. Johnnie Byrd, the Plant City Republican who will take over as House speaker next month. A new 60-second ad aimed at seniors, paid for by the Republican Party, shows Byrd saying, "Because seniors deserve to enjoy their retirement, we cut their taxes."
While other big states are hurting, Bush says, Florida's economy has stabilized and revenues for the first quarter of the budget year were higher than anticipated. He now wants to borrow $2.8-billion to build 12,000 additional classrooms that he says will reduce class sizes in the early grades.
A Republican Party poll by the Tarrance Group showed that only 10 percent of those surveyed knew that state taxes had declined. Fifty percent said the tax burden remained the same, and 21 percent said taxes had gone up. The rest didn't know. A party spokesman said the poll numbers, first reported by Gannett News Service, were from selected state House districts and do not accurately reflect statewide opinion.
A St. Petersburg Times/Miami Herald poll last month suggests that the electorate is divided over tax cuts. Forty-one percent said taxes were cut too much; 33 percent said they were cut just right; 17 percent favored deeper tax cuts; and 9 percent were not sure.
Bush also advocated the successful repeal of a by-the-drink tax in bars and restaurants, a tax cut sought by the Florida Restaurant Association, which supports his re-election. This year he also got an accelerated depreciation allowance for business equipment purchases, estimated at $262-million.
Democrats say Bush frittered away the surplus by giving tax relief to those who needed it the least, businesses and the wealthy.
A new St. Petersburg Times analysis shows that a growing segment of the cost of education has been shifted to property taxes paid by homeowners and surpluses in the state retirement fund.
At campaign stops, McBride rarely mentions Bush's tax cuts. When he does, he cites them as a case of misplaced priorities. McBride's running mate, state Sen. Tom Rossin, struck a similar chord in an Oct. 10 debate with Lt. Gov. Frank Brogan.
"These tax cuts that they have taken for the past 31/2 years have put the state in a tremendous hole," Rossin said. "If we had bonded that money, we would have something like $18-billion."
-- Times staff writer Wes Allison contributed to this report.
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