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State Budget Woes Expected to Worsen

When economists announce the new projections for the State’s current year budget this Friday, the new numbers are expected to show that this year’s budget is another $800 million short.  In the meantime, legislators have made little headway in looking at sales tax exemptions or any other revenue generators to help make up the $5 billion shortfall projected for next year’s budget.

From the St. Pete Times:

For the first time in more than two decades, the Florida Legislature is taking a serious look at eliminating some sales tax exemptions that have been embedded in the state tax code at the request of special interests.

They’re not getting very far.

The House Finance and Tax Committee on Wednesday wrapped up its six-week review of sales tax exemptions as it watched a parade of lobbyists defend $385 million worth of exemptions — everything from tax breaks on Super Bowl tickets and skybox seats to religious items and bottled water.

The Senate continues a similar review today and next week plans to start hearing bills on other ways to raise money, including increasing the cigarette tax, imposing a user fee on bottled water companies and eliminating corporate tax loopholes.

There’s little sign that many of the sales tax exemptions will fall and, if they did, they wouldn’t go far in filling the more than $5 billion budget shortfall economists are expected to update Friday. 

“My sense is this is a stall tactic and not a responsible effort to address the revenue problems we have,” said Rep. Keith Fitzgerald, a Sarasota Democrat on the Finance and Tax Committee. He acknowledges that he and other Democrats have often railed against sales tax exemptions “largely for the symbolic purposes of getting across that special interests have a lot of power in Tallahassee.” He says, however, that they “never suggested or hinted that sales tax exemptions were the way to address our revenue problem.”

Senate budget chief J.D. Alexander thinks the appetite for new revenues may change when economists announce new projections that this year’s budget will be another $800 million short and next year’s budget is worse than they thought.

“I think the mood may change dramatically once we see our estimates on Friday,” said the Lake Wales Republican.

Senate Republican leader Alex de la Portilla of Miami said that in the Senate “everything will be discussed, including sales tax exemptions. … It is becoming increasingly obvious that we may not be able to get out of here without seriously looking at revenue generators.”

The last time the Florida Legislature conducted a thorough review of its sales tax exemptions was in 1987 when it adopted the ill-fated tax on services, but that was repealed nine months later when lawmakers raised the state sales tax to 6 percent.

The House Finance and Tax Council heard Wednesday from the last of a list of lobbyists defending the 51 tax exemptions the committee decided were worthy of review.

Over the course of their six-week review, they heard arguments that: Tax exemptions for Super Bowl tickets are needed because they have been written into the contract with the NFL. Exemptions on skybox tickets are needed to benefit nonprofit sports teams who want to lure patrons. Exemptions on ostrich feed help keep down the price of eggs. And bottled water shouldn’t be taxed because it’s a necessity when the water supply is tainted.

Lisa Mallozzi, a Cooper City commissioner, was one of only three people to testify in favor of repealing exemptions. Mallozzi, in Tallahassee for Broward County’s annual legislative day, urged the committee to end the bottled water exemption and consider repealing other exemptions for the sake of schools.

“There are many people in this state who use bottled water as a convenience, and we could use this money to fund our public schools,” she said. She said companies that get tax breaks and other incentives “will be in business in 20 years, but none of Florida’s children will be able to run them because they didn’t get a good education.”

House Finance and Tax Committee Chairwoman Ellyn Bogdanoff said that before legislators agree to repeal any tax exemption, they’ll decide what impact the move has on jobs.

“Sometimes the cure is worse than the disease,” said Bogdanoff, a Fort Lauderdale Republican. “If the cure is to eliminate sales tax exemptions, the question you have to ask is how many people will lose their jobs. You want to put money into the schools, but you can’t if you can’t put food on the table.”

Rep. Scott Randolph, an Orlando Democrat, said the debate in the House committee has convinced him the House is not serious about eliminating tax exemptions. “Every industry can argue that they’re important to the economy,” he said.

Bogdanoff defended the hearings as a legitimate exercise to educate legislators.

She said the committee will use its four-hour meeting on Monday to decide which exemptions will be proposed for repeal.

Fitzgerald suspects House leaders of having a political motive for their prolonged sales tax review.

Republican leaders “want to see if they can get Democrats in the position of removing some sales tax exemptions” so that Republicans can “accuse us of being tax and spend liberals,” he said.

Fitzgerald complained that he would like to see the House get serious and start considering bills that could help the state solve the revenue crisis.

“The fact is, we never suggested or hinted that the way to address our revenue problems is going through a line by line review of sales tax exemptions. That’s not where the money is. I would like to see us get serious and start considering some bills.”

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Filed under: Florida, Florida Legislature, Florida Politics, , ,

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