State: Leaders negotiate budget pact

TALLAHASSEE -- Gov. Jeb Bush and the leaders of the Florida Legislature agreed Sunday to delay a controversial tax cut for 18 months and trim more than a billion dollars in spending out of the state's $50-billion budget.

The agreement on how to deal with a $1.3-billion budget shortfall was reached in a series of telephone calls between House Speaker Tom Feeney, Senate President John McKay and the governor. The three Republicans are expected to appear together today or Tuesday to formally announce details of the agreement. They also plan another special session of the Legislature that probably will be called for late November.

The first special session that Bush called to deal with the budget crisis abruptly ended last week with lawmakers falling short of their goal for spending cuts and angrily blaming one another.

Under the latest agreement, a cut in the intangibles tax on stocks and bonds that is scheduled to go into effect Jan. 1 would be delayed until July 2003.

That would mean that Floridians with investments such as stocks and bonds would continue to pay a $1 tax per $1,000 of the value of their portfolios. The first $20,000 worth of those investments are exempt for an individual, and the first $40,000 for a couple.

Legislators approved changes earlier this year that would raise the exemption to $250,000 for an individual and $500,000 for a couple, starting Jan. 1. That law would remove more than a half-million Floridians from the list of those having to pay the tax.

But those changes would be delayed by 18 months if the Legislature approves the deal negotiated by Bush and the legislative leaders.

The fate of the $800-million in spending cuts approved by the Legislature last week remained unclear Sunday night. Those cuts could be used as a starting point for additional reductions in spending. Or Bush could veto the bill, and lawmakers could start over in the next special session with directions from the governor and legislative leaders.

Bush has yet to receive the legislation detailing the cuts already approved by lawmakers. There also are questions about whether the legislation violates the Florida Constitution because senators did not have it for three days before passing it.

Bush and Lt. Gov. Frank Brogan have been on the telephone with the two legislative leaders for several days, trying to hammer out an agreement on coping with the $1.3-billion deficit.

An initial special session called by the governor late last month ended after nine days in a bitter fight between the House and Senate, after they could not reach agreement on delaying a cut in the intangibles tax.

Feeney, R-Oviedo, had refused to let the House consider a bill delaying the $128-million tax cut. McKay, R-Bradenton, held the Senate to $800-million in budget cuts as part of a negotiating ploy with the House. But the House surprised McKay by approving the Senate's tax cuts and abruptly adjourning last week, leaving the budget cuts in place and McKay fuming.

The $800-million in cuts is $500-million less than the $1.3-billion shortfall the state faces in the wake of the slowing economy and the Sept. 11 terrorist attacks. The sluggish economy and the attacks have combined to dramatically slow tourism and sales tax collections.

Kim Stone, the spokeswoman for Feeney, said Sunday night that the speaker has now agreed to let the full House vote on delaying the intangibles tax cut for 18 months.

"The speaker will vote against it," Stone said. "But we only need 18 Republican votes and the governor will be lobbying for it."

In return, McKay has agreed to cut more out of the budget and take less from the state's reserves, Stone said. McKay could not be reached Sunday, and his spokeswoman said she was unaware of the agreement.

Bush has been pushing the House to agree to delay cutting the intangibles tax on stocks and bonds. This was to have been the third straight cut in the tax, which Bush and his Republican allies in the Legislature are determined to wipe out completely.

Democrats in both of the Republican-controlled chambers support a delay in the tax, which critics call a tax on "seniors and savers." But others deride the tax as a tax break for those rich enough to own thousands of dollars in stocks and bonds.

Feeney, a fervent supporter of abolishing the intangibles tax, is satisfied with the negotiated compromise, his spokeswoman said.

"The speaker is really, really pleased at where we are," Stone said. "He has always been flexible but wasn't going to trade something that was as important as the tax cut if we were not solving the problem."

The next special session is expected to generate more debate about the types of spending cuts approved by lawmakers in the special session that ended last week.

Those cuts would reduce a prescription program for low-income elderly, drug treatment programs for prison inmates, therapy for autistic children and aid to summer school students. Probation officers' caseloads would rise and counties would bear a higher cost of some programs, such as health clinics.

Back to State news

Contact the Times | Privacy Policy
Standard of Accuracy | Terms, Conditions & Copyright

Special Links

Lucy Morgan

From the Times state desk