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Scott’s Proposed Billion-Dollar Tax Cut and $250 Million For Job Subsidies Sets Up a Fight

| January 7, 2016

tom lee

‘I think that’s the big question for the Legislature is, just how much of the farm are they willing to bet on future economic growth in the state of Florida?’ Tom Lee, who chairs the Florida Senate Appropriations Committee, said. (Caroline Ferguson/Florida Memory)

An election-year budget that includes huge tax cuts, record funding for public schools and a new initiative to bring jobs to Florida might be good politics for lawmakers. The question is whether they can afford it.

When lawmakers start the 2016 legislative session Tuesday, it will have been years since the House and Senate were in the depths of the fallout from the global financial meltdown that forced painful cuts to schools and politically perilous increases in tobacco taxes and motor-vehicle fees.

But for some lawmakers, the memory of those and other budget crunches are still fresh. As a result, many of them are cautious about Gov. Rick Scott’s ambitious designs for a spending plan that would slash $1 billion in taxes, boost funding for schools and set aside $250 million for a new approach to luring economic-development projects to Florida. (The record funding for schools is in nominal, not inflation-adjusted, dollars.)

Lawmakers also face other pressures, including a push for pay raises for at least some state employees and questions about whether property-tax increases that come with rising home values are tax hikes.

Asked whether the Legislature could do everything Scott proposed in his $79.3 billion plan, Senate Appropriations Chairman Tom Lee, R-Brandon, said it is possible.

“But I’m not going to like what we have to do to get there,” he said.

Part of the dispute is how to define the size of the state surplus. Scott’s office has argued that the surplus for the coming budget year, which begins July 1, could be as much as $1.6 billion — far above the $635.4 million projected by the state’s official long-range financial outlook. The governor would decline to fund some of the items that are taken into account by the outlook’s projection.

Lawmakers have looked warily at that idea. And some are wary of cutting taxes without knowing whether those decreases would boost the state economy enough to make up for the lost revenue or tip the budget into the red in future years.

“I think that’s the big question for the Legislature is, just how much of the farm are they willing to bet on future economic growth in the state of Florida?” Lee said.

To be sure, the broad strokes of at least two elements of Scott’s plans will likely gain approval in the session. A large tax cut of some size — the Senate’s minimum has been $250 million, but it’s likely to be far more than that — will almost certainly be approved. And legislators also seem eager to pass the record for per-student funding for public education set nine years ago.

“Whether per-student or total pot of money, that is something that we’re focused on,” said House Speaker Steve Crisafulli, R-Merritt Island.

But lawmakers also have their own priorities, from departments that didn’t get part of Scott’s largesse to pet projects in their local districts. That could matter as much as concerns about future budget shortfalls.

“We have to look at that three-year outlook, but we also have to look at other agencies,” said Senate President Andy Gardiner, R-Orlando.

Pay increases for state workers could be one of the flashpoints. Instead of raises, Scott’s budget includes a bonus system that could award employees up to $1,500. Scott also left out a pay raise for state firefighters, which has been a priority of Agriculture Commissioner Adam Putnam — and something the governor vetoed last year.

The American Federation of State, County and Municipal Employees in Florida, a union for government employees, underscored lagging pay in a statement following Scott’s proposal.

“Nobody can deny the fact that public workers have had their budgets cut to the bone, and then some, while failing to have seen their hard work reflected in any positive change in compensation while all around them the cost of living has continued going up,” said Andy Madtes, the group’s executive director.

Crisafulli said his chamber has looked at which agencies might have trouble retaining employees because of poor pay and will consider raises in at least some departments.

“It’s a large number because these agencies are large agencies, and that can add up really quick,” he said. “So we have to be thoughtful in our approach, but it’s certainly something that’s on the table.”

Even advocates for programs that were taken care of in Scott’s spending plan have pushed back on some aspects. Florida Education Association President Joanne McCall noted that Scott’s record funding for education doesn’t account for inflation and largely comes from an increase in local property taxes because of rising real-estate values.

“The state continues to shift the burden of paying for education increases onto local property owners,” she said. “The state should get it right and make our public schools a top priority.”

There are two places where lawmakers might find a little bit of extra money. One is a meeting this month of state economists, who will forecast tax revenues for the coming budget year one more time before the Legislature begins to work in earnest on a spending plan. But major increases are not expected.

The other potential source is money that might be freed up by the renewal of a gaming compact with the Seminole Tribe. Scott has proposed a deal that would give the state $3 billion in exchange for allowing craps and roulette at the Seminole’s casinos, but the money wouldn’t kick in until 2017.

But inking a deal could allow lawmakers to tap funding that’s been set aside since the old compact expired. So far, at least, legislative leaders are resisting putting money from the politically difficult agreement into the budget. They also haven’t ruled it out.

“It may just be a situation, depending on the timing of when you could pass a compact, that you may be able to build that in. … Maybe there’s a way, but I certainly wouldn’t do it until it actually passed and went to the governor,” Gardiner said.

–Brandon Larrabee, News Service of Florida

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