tampabay.com

Why tax plan faces a tough road ahead

By ALEX LEARY, STEVE BOUSQUET and JENNIFER LIBERTO
Published June 12, 2007


TALLAHASSEE - As the special session on property taxes begins today, intensifying criticism and a new focus on billions in cuts to schools threaten the plan even before it reaches voters.

The bipartisan goodwill from the regular session was starkly absent in a presession hearing Monday, with Democratic leaders in the Senate and House criticizing the plan and how it was developed behind closed doors.

"Is this also the biggest cut to educational funding in history?" Senate Democratic leader Steve Geller asked, jabbing Republicans who tout the $31.6-billion package as the biggest tax cut ever in Florida.

The plan was released late Friday evening to a collective sigh of relief from anxious Democrats and local government leaders who had feared the cuts would be more drastic.

But after reviewing the details over the weekend, the wary support turned to full-scale opposition. Democrats harped on the education budget, local government leaders railed about deceptively deep tax reductions for them, and South Florida lawmakers expressed alarm that nearly half of their residents would be better off doing nothing.

The tax plan has two main components: a rollback of local government tax bases with a cap on future tax collection, and new homestead exemptions worth $50, 000 to $195, 000.

Democrats, despite their minority status, hold unusual power in the tax cut debate because the homestead exemptions require changing the Florida Constitution. Voters must approve such changes, and getting it on the ballot with the presidential primary vote on Jan. 29 requires approval of three-fourths of the Legislature. Some Democrats would have to go along to reach that number.

The school budget issue is the first problem. To reach the $31.6-billion in total tax cuts, Republican lawmakers wrote into the plan $7.1-billion in cuts to school budgets over the next five years.

Legislative leaders said the state would make up the difference when lawmakers do a new state budget next spring, but putting such cuts on paper created a fresh wave of fear and aroused an education lobby that had been on the sidelines.

Even some within the GOP are leery of voting for a tax cut proposal that contains what they say is a "trust me" provision that future legislatures will make up for lost education funding.

"I'm genuinely concerned, " said Sen. Jim King, R-Jacksonville. "If you were a mother or father of a public school child, are you going to be happy with a promise?"

The problem with that, King said, is obvious: "People don't trust us." Still, King said, he planned to vote for the legislation.

Sen. Burt Saunders, R-Naples, is not as sure.

"We're going to have to see some substance, " he said. "At this point, I don't think we can get the votes because of the impact on schools."

Republican leaders insisted the state would make up the loss of educational revenue.

"If there's one thing I don't worry about, it's that education is priority No. 1, " Senate President Ken Pruitt said.

A recent Democratic plan also hit schools with revenue to be made up by through reserves or other sources - leading to charges of hypocrisy Monday.

* * *

If the proposed constitutional amendment does garner enough votes in the Legislature, Democrats suggested it could also fail to gain 60 percent approval statewide - the threshold for constitutional amendments.

While an estimated 73 percent of homeowners statewide fare better under the new homestead exemptions, half the people in heavily populated Dade and Broward counties fare better under the current system.

In spots like those, property values have risen so sharply that the Save Our Homes cap creates a greater tax exemption than lawmakers could create anew. That could jeopardize the vote.

"I'm not sure why people in South Florida would vote for this, " said Miami Beach Democrat Dan Gelber, who leads his party in the House. "It's very dicey."

In Broward, for instance, 220, 428 people would be better off with their current Save Our Homes benefit, which caps annual assessments at 3 percent, while 221, 141 would go under the new system.

"No one is worse off, " insisted Rep. Dean Cannon, the head House negotiator.

* * *

The rollback and cap had been one of the least controversial aspects of the $31.6-billion package and early reviews Friday evening were positive.

"I'm pleasantly surprised, " Pinellas County Commissioner Susan Latvala said then.

Monday was a different story.

"I'm no longer cautiously optimistic, " said Latvala, who is head of the Florida Association of Counties that had urged moderation in the rollback.

While cities and counties would be required to cut up to 9 percent based on a formula of past tax revenue growth, the actual average budget reduction this year is about 11 percent for counties.

That's because the formula is applied after tax bases are frozen at the current fiscal year. Add in the homestead exemption next year, and the combined potential cut is more than 20 percent

"That's meat and bone, " Latvala said.

Special taxing districts for fire service, water management and health care also face higher cuts than at first glace - about 8 percent this year and 19 percent the next.

"The more the Legislature presents the details, the worse it's getting for the citizens, " said Bob Carver, lobbyist for the Florida Professional Firefighters. "The citizens are not going to realize this, but they're going to have to cut the police and fire budgets to get these savings."

Firefighters from around the state will rally at the Capitol Wednesday to warn lawmakers that the cuts being considered would force layoffs in the fire service, a claim repeatedly contradicted by Gov. Charlie Crist.

Crist lobbied individual lawmakers on Monday and invited a ranking House Democrat, Rep. Jack Seiler of Broward County, to dinner at the Governor's Mansion.

"Let the people vote, " Crist told the Times. "The people want this so bad they can taste it, and the overriding interest is the will of the people."

It doesn't help everybody

In places where property values have grown fastest, the Save Our Homes cap is still a better deal for many. Would residents vote for a new tax plan that reduces government services but doesn't lower their tax bill? 

Unpopular cut for schools 

Statewide, school districts would lose $7.1-billion over five years. Leaders pledge to replace that money, but no one knows how.

After studying numbers over the weekend, city and county folks say the total tax cut will decimate their budgets. Expect a public campaign of opposition.

What's next?

House and Senate panels are expected to approve the plan Wednesday. That would send it to both chambers for a final vote as early as Thursday or Friday.

Tax-free news

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