Scott's Budget Priorities Under Pressure in Legislature

Tax Cuts
Posted at 12:00 PM, Jan 29, 2016
and last updated 2016-01-29 12:00:00-05

Leading senators linked an effort to hold down an increase in local property taxes to Gov. Rick Scott's pitch for tax cuts Thursday, potentially complicating one of the governor's key priorities for the 2016 legislative session.

Meanwhile, House and Senate budget-writers remain divided at least for now on Scott's other major agenda item for the Legislature: whether to set aside $250 million for a "Florida Enterprise Fund" as part of a change in how the state lures economic-development projects.

The differing approaches, which emerged as lawmakers began rolling out initial budget proposals for the year that begins July 1, confronted Scott with the possibility of a two-front battle for his priorities in the weeks ahead.

The potential increase in local property tax bills --- driven by rising property values and not an increase in the tax rate --- has become a target for Sen. Don Gaetz, a Niceville Republican who chairs his chamber's education budget committee, and other lawmakers.

In the plans being considered by lawmakers, much of a record amount of spending on schools would come from more than $500 million in increased property tax bills. Gaetz suggested Thursday during a committee meeting that holding down that increase should be part of any discussion about Scott's drive to provide $1 billion in tax cuts.

"If we do nothing and simply allow the formula to take effect and approve the governor's proposal, there's a $500 million property tax increase in the state of Florida," Gaetz said. "Pretty hard to sustain that kind of an increase when we're talking about tax cuts."

Speaking to reporters later Thursday, Senate President Andy Gardiner declined to explicitly link the two proposals even as he backed up Gaetz on describing a change to the education taxes, known as the required local effort.

"I certainly would believe that if we are taking on some of that local requirement, that would be a tax cut in my mind," said Gardiner, R-Orlando.

But House leaders have shied away from casting the increase in property values as a tax hike. Rep. Erik Fresen, a Miami Republican and Gaetz's House education-budget counterpart, said total property tax revenues dropped sharply following the financial crisis and haven't fully recovered.

That would amount to "essentially a tax cut, if you're going to have that mentality," Fresen said.

There are lawmakers on both sides of the Capitol who are hesitant about their respective chambers' approach. Senate Rules Chairman David Simmons, R-Altamonte Springs, said properties increased in value for different reasons.

"If something was just five acres of raw land, pastureland, whatever, and then it's turned into homes, that's not something that we can say is inappropriate to increase the amount of the required local effort (on)," Simmons said.

Rep. Fred Costello, R-Ormond Beach, drew a connection between Scott's tax ideas and the increase in local revenues.

"If we cut taxes here $1 billion and raise them $500 million at home, we need to call it a $500 million tax decrease and not a $1 billion tax decrease," Costello said.

Scott has brushed off the idea of using some of his proposed tax cuts to hold down the property taxes, telling a Senate committee earlier this month that he preferred his ideas, which would reduce state levies on things like commercial real-estate leases and corporate income.

"I think the important thing this year is to focus on the tax cuts that we've proposed. ... I think these are going to help continue to grow our economy, help get people jobs," Scott said at the time.

That would create economic growth that could lead to future cuts, including one on property taxes, Scott said. A spokesman said Thursday that the statement to the Senate Finance and Tax Committee still summed up the governor's views.

The Senate, meanwhile, backed up Scott on his proposal for the Florida Enterprise Fund. However, budget-writers would use $100 million in money from a legal settlement tied to the Deepwater Horizon oil spill to help bankroll the proposal.

Senators said using that portion of the $400 million the state is set to receive this year would follow the terms of the settlement, but at least one lawmaker on the committee that oversees the economic development budget was wary about tapping the funds that way.

"I would hate to see them go be used on the other coast when the effect of that was (on) the Gulf Coast," said Sen. Jeff Brandes, R-St. Petersburg.

The House left the enterprise fund out of its budget altogether, though Transportation & Economic Development Appropriations Chairman Clay Ingram, R-Pensacola, said House members were still working with Scott on the overhaul for incentives.

"I can say for one that I'm in support of reforming the process along with the governor," Ingram said. "We're not quite in agreement on policy language, but there's plenty of time left in the process."

Elsewhere, lawmakers wrestled with the health-care issues that caused the last regular legislative session to collapse. Senate Health and Human Services Appropriations Chairman Rene Garcia, R-Hialeah, said lawmakers have to deal with losing about $400 million in the Low Income Pool program, with the total going from $1 billion to $608 million.

He said the federal government also "tied our hands" on how the money could be distributed, requiring that the money go to covering the costs of charity care.

Garcia said the Senate budget plan creates four tiers in the LIP program, with hospitals receiving money based on the amounts of charity care they provide. The effect would be to send the largest shares of the money to safety-net hospitals that provide the most charity care.

Garcia said the proposal tries to "mitigate" LIP cuts, but doesn't use an infusion of state general revenue to help make up the lost LIP funding.

Among other parts of the health-care proposal, Garcia said it includes $36 million to help move about 1,300 people off a waiting list for services at the Agency for Persons with Disabilities.

"Sounds good, but the devil's in the details,'' said Sen. Eleanor Sobel, D-Hollywood, before Garcia's subcommittee approved the health budget plan.

The full House and Senate budgets will be released Friday.

News Service of Florida Executive Editor Jim Saunders contributed to this report.



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