$2.8 Billion Tax Cut Deal Collapses as Senate President Calls It Unsustainable in Light of Coming Budget Shortfalls

A $2.8 billion tax cut deal reached between Senate President Ben Albritton and House Speaker Daniel Perez last week to help bring the 2025 regular session to a close is now off the table.

The breakdown means legislators are nowhere near coming up with a new budget, which needs to be in place by July 1 or the state risks a government shutdown.

The Friday morning announcement from legislative leadership came as Gov. Ron DeSantis continued to tour the state attacking the House, and Perez by extension, for pushing a reduction in the state’s sales tax rate instead of backing the governor’s two-step plan to provide property homeowners relief.

Perez had championed a permanent reduction in sales taxes and last week Albritton said he was backing it. But in a memo to House members, Perez said Albritton has told him “he is breaking his commitment to the House that he publicly announced.”

“I was disappointed when the Senate President informed me of his decision to no longer bring the House’s historic tax proposal to the Senate floor,” Perez wrote. “As I’m sure you can appreciate, this blew up the framework for the budget deal we had negotiated.”

Albritton sent his own memo to his members shortly thereafter explaining that he was backing away from the agreement with Perez for an across-the-board sales tax cut because the governor had indicated the bill would be “dead on arrival.”

Three concerns

Albritton’s letter outlines three main concerns he heard from senators about the $2.8 billion tax agreement, of which $2.5 billion would be recurring.

“An across-the-board sales tax cut of one quarter of one penny is not meaningful, felt, or seen by families and seniors when compared with other available options. A $2.5 billion recurring tax cut is not sustainable when combined with the projected budget shortfalls already on the horizon. A $2.5 billion recurring tax cut may constrain options for the major property tax reform the Governor, House, and Senate, and most importantly – the Floridians we represent – are asking us to put forward.”

Albritton continued:

“Throughout the entire course of negotiations with the House, the Senate has been and remains committed to tax cuts that offer broad-based and meaningful tax relief for families, seniors, and small businesses. As negotiations move forward, [Appropriations] Chair [Ed] Hooper and I will continue seeking your advice and feedback.

“It is important to me that we develop a tax relief package that is sustainable for the long term and leaves room in our balanced budget for the voters to consider meaningful property tax relief on the ballot at the next general election. We will continue to work towards a final budget and tax relief package the House, Senate and Governor can support.”

The two sides need to reach a deal on the size and scope of tax cuts in order to reach a deal on budget “allocations” that determine how much money will be included in the final appropriations act.

The Senate and House on May 2 voted on a resolution (HCR 1631) that lists 16 bills the chambers will consider in an extended session. Included in the list is Albritton’s priority legislation to infuse $200 million in infrastructure in areas of the state that are less developed. Albritton has dubbed the bill “Rural Renaissance.”

Albritton said that day that the chambers had reached an agreement for a budget that included $2.8 billion in relief, which he noted is “the most historic tax relief package in the history of our state.”

The one must-pass bill

Nearly 2,000 bills were filed in the House and Senate for consideration during the 2025 session. Most of them didn’t pass — indeed, just 255 made it across the legislative finish line before the session adjourned.

But there’s just one bill the Legislature is required to pass each year and that’s the state fiscal year budget, officially known as the General Appropriations Act.

The chambers passed drastically different proposed spending plans for state fiscal year 2025-26 with a $4.4 billion gap between the two blueprints.

Perez has championed rolling back the state’s sales tax by 0.75%, to 5.25%. The speaker’s plan would roll back all other sales tax rates by the same amount — commercial rent from 2% to 1.25%; electricity from 4.35% to 3.6%; new mobile home purchases from 3% to 2.25%; and coin-operated amusement machines from 4% to 3.25%.

The Senate floated a more modest $2.1 billion plan centered around a permanent elimination of the sales tax on clothing and shoes costing $75 or less. Other parts of this plan include a permanent reduction in the business rent tax from 2% to 1%, a one-time credit for vehicle registration fees, and several sales tax holidays.

Meanwhile, DeSantis has pushed for elimination of property taxes, a proposal he has continued to champion this week at press events across the state, appearing Friday in Jacksonville.

–Christine Sexton, Florida Phoenix