Seeking to keep a campaign promise, Gov. Rick Scott wants the Legislature to make $1 billion in business-friendly tax cuts next year, but he’ll likely face a skeptical Senate again.
In his second inaugural address last January, Scott pledged to cut $1 billion in taxes over two years. But he’s less than halfway to his goal, and he can’t fulfill the promise without the Legislature’s help.
Scott wants to permanently repeal the corporate income tax paid by retail businesses and manufacturers, which he says would save them $770 million a year in taxes.
He also wants to reduce the sales tax on commercial rents from 6 percent to 5 percent, producing an estimated savings of $339 million over two years.
Also on Scott’s tax-cut list are a permanent repeal of the sales taxes on equipment purchased by manufacturers; a 10-day sales tax holiday for back-to-school items; nine-day holiday for hurricane supplies, and an extension of the sales tax break on college textbooks for one year.
“We are putting job creators on the road to success for years to come. I want Florida to be the small business capital of the world,” Scott said in a statement at his tax-cut announcement at a manufacturers’ conference in West Palm Beach.
By highlighting small businesses, Scott appeared to address head-on a finding by state economists that the economy would be stronger if the state boosted existing businesses rather than recruit companies from other states.
Florida expects a projected surplus of $635 million next year, but state economists say most of the money is needed to pay for higher Medicaid case loads and more students in public schools, state colleges and universities.
Scott also faces multiple competing spending demands:
▪ A Miami judge has found that Florida’s services for poor and disabled children are so underfunded that they violate federal laws. Improvements could cost $700 million.
▪ An independent audit of Florida’s prison system found that staff shortages are so severe that corrections officers are in physical danger.
▪ State agencies under Scott’s control want money to replace crumbling equipment and reduce rampant employee turnover, citing low pay for child abuse investigators and state crime lab analysts.
▪ The state highway safety agency blames antiquated computers for issuing thousands of driver’s licenses with the wrong addresses.
▪ The Tampa Bay Times and Sarasota Herald-Tribune have documented widespread abuse and violence in Florida’s mental institutions, some of it as a result of long-term neglect by state policymakers.
“We’d rather save you 70 cents on your cellphone bill than put that money in the budget for people who really need it,” Sen. Jack Latvala, R-Clearwater, told the Herald-Tribune.
Democrats were more critical. House Democratic Leader Mark Pafford, D-West Palm Beach, said Scott shows a shocking neglect of Florida’s needs and a loyalty to businesses at the expense of everyday people.
“Rick Scott is at the helm of the Titanic,” Pafford said. “He sees the iceberg and he’s directing the vessel directly into this catastrophe.”
Scott also wants a large increase in school spending, and will spend some of his precious political capital by demanding $250 million in incentive money to attract new jobs to Florida over the next three years.
Senate Appropriations Committee Chairman Tom Lee, R-Brandon, says Scott will have to agree to spending cuts elsewhere to make room for $1 billion in tax cuts, but that it’s too early to tell.
“Until we see the spending cuts the governor is proposing, it’s hard to know how we would absorb that,” Lee said. “But we certainly support cutting taxes and we are willing to support them to the maximum extent feasible.”
Scott will release his budget recommendations next month.
He sought $673 million in tax cuts in the 2015 session and his fellow Republicans sliced it to about $400 million. Scott wanted to reduce the tax on cell phones and satellite TV service by $43 a year, and legislators pared it to $20 a year.
Scott’s $1 billion proposal makes political sense on several levels.
Next year is an election year for most legislators, so cutting taxes would have a little extra political appeal.
Having learned from recent experience, Scott also is asking for more tax cuts than he’s likely to get.
But 2016 also may be Scott’s last best chance to make such an ambitious request. By this time next year, he will be at the midway point of his term, faced with the encroachment of “lame duck” status, and with it, an erosion of his political support.
Sen. Don Gaetz, R-Niceville, who chairs a budget subcommittee over all education spending, voiced doubts that the state can cut taxes by $1 billion and meet other urgent needs.
“It’s going to take massive spending cuts by the governor. I look forward to seeing them,” said Gaetz, who urged Scott to cut spending in the governor’s office.
Rank-and-file state workers have not had an across-the-board pay raise in eight years, and Scott prefers cutting taxes to raises for employees.
When Scott released his last set of budget recommendations in March, his office said: “The governor’s budget proposal provides ongoing tax cuts which will save money for virtually all employees and Florida families.”
Scott isn’t for budget austerity across the board. The governor’s proposal for record per-pupil spending in public schools will be expensive, and a proposal by the Department of Education would require higher property tax payments by homeowners and businesses.
▪ 2011: -$3.5 billion
▪ 2012: $273 million
▪ 2013: $846 million
▪ 2014: $336 million
▪ 2015: $635 million
Source: Bureau of Economic and Demographic Research