Gov. Jeb Bush's plan is expected to seek more cuts in the intangibles tax and push for a return of the sales tax holiday.
By STEVE BOUSQUET and JONI JAMES
Published January 20, 2004
TALLAHASSEE - Gov. Jeb Bush will send the Legislature an election-year budget proposal today that will feature more tax breaks, including another tax cut for affluent investors.
The governor also is expected to recommend resurrecting the popular sales tax holiday for back-to-school shoppers in his 2004-05 spending plan.
Bush, who already has promised to seek more money for community colleges and rural counties next year, will unwrap his budget at an 11 a.m. news conference.
"If history is any guide as to what my beliefs are, as it relates to the intangibles tax, for example, then I'll let you take that risk if you like," Bush told reporters who pressed him for tax cut details Monday.
"Part of our success as a state is that we've not taken all the money that the taxpayers have given us," said Bush, who cut $8-billion in taxes during his first term as governor.
Bush also has pushed hard to limit growth in state spending, which will top $53.5-billion this year. But it was unclear how Bush would compensate for the lost revenue from any new tax breaks in what is expected to be another tight budget year.
A nine-day sales tax holiday on back-to-school supplies and clothing would cost an estimated $33-million in lost revenue. Should Bush advocate doing away entirely with the intangibles tax on investors, the price tag for that cut would be $305-million over the next year.
Such cuts would come even as the state faces increased Medicaid costs of nearly $530-million and constitutional amendments that require the state to pick up all court costs and pay for reducing class sizes.
"I just don't see fiscally how he is going to get there," said Senate Budget Committee Chairman Ken Pruitt, R-Port St. Lucie.
Bush pledged in his 1998 gubernatorial campaign to eliminate the intangibles tax, arguing it punished Floridians for being good savers. So far, the Republican-controlled Legislature has agreed with him.
The tax has been cut four times, including three times since Bush took office. After raising $1-billion in revenue in 1997-98, it will raise an estimated $305-million next year. The only people still required to pay the tax are the wealthiest investors: individuals or businesses with more than $250,000 in assets or couples with more than $500,000.
Bush's latest push is sure to run into opposition from Pruitt and other Senate Republicans, who lost much of their enthusiasm for tax cuts in the face of the most recent economic downturn.
"I'll support it as long as he's willing to make the appropriate cuts in the base to go along with it," said Sen. Tom Lee, a Brandon Republican in line to be Senate president in November. "But I'm not going to play a bunch of shell games just to fund those tax cuts."
The state's latest cut in the intangibles tax, a $118-million cut that took effect this month, came as the state cut health care services for the poor and capped access to a state-subsidized health insurance program for low-income children. Lawmakers also raided a series of dedicated accounts for low-cost housing and other programs to pay for expenses such as schools and prisons.
Senate President Jim King, R-Jacksonville, said cutting the intangibles tax again will be difficult.
"The only people who have to pay it are the very, very wealthy," King said. "I'm cautious about saying that's what we're going to do until I see where the money's coming from. ... I'm anxious to see how the governor plans to do it."
Bush's budget proposal today will set the stage for what may well be another tortuous round of state budget negotiations. Florida is expected to have nearly $2.2-billion more in cash to spend next year. But most of it is one-time money, meaning policymakers are leery of using it to fund recurring expenses such as highway patrol jobs or teacher salaries.
Making the job even tougher: Lawmakers start the budget process in the hole. Last year, during the tightest budget negotiations in decades, the Legislature opted to spend $1.3-billion in one-time money to pay for established programs. Now they must find more money to continue the programs.
Bush hinted Monday he will look to college students to help with the state's budget crunch, though he won't push for tuition increases as high as last year's 8.5-percent increase for in-state undergraduate students.
Those tuition increases ate $200-million of the reserves in the state's popular prepaid tuition program.
"We shouldn't deal with tuition in a vacuum or Bright Futures (scholarships) or prepaid," Bush said. "It shouldn't have an impact, a dramatic impact on the students who have already made their decisions."
