April 24, 2008

Controversial tax swap plan will go to the voters

By JAMES MILLER
STAFF WRITER

TALLAHASSEE –- A plan that would let voters eliminate the main local property tax for public schools is headed to the November ballot.

The powerful Florida Taxation and Budget Reform Commission today backed the proposal, which would require the Legislature to replace the money using other sources, including sales tax increases.

The commission’s vote, its second on the proposal, came after weeks of intense lobbying from business and industry groups who oppose increased sales tax and, possibly, introduction of a tax on services.

But commissioners who backed the proposal said it is a necessary response to Florida residents clamoring for property-tax relief.

"They know what the stakes are," Commissioner Carlos Lacasa said. "And they also know what the benefits are."

The proposal would let voters save as much as 40 percent of the average property tax bills in Volusia and Flagler counties.

The Legislature would be required to replace the money and make sure school funding increases proportionally to 2007 and 2008 in the swap's first year, 2010-11.

One estimate has put the cost at $11 billion.

Proponents say the proposal would offer huge savings to all property owners, giving them money to spend and aiding the staggering real estate and building industries.

But business and industry groups argue it could drive up consumer costs, discourage new business investment and harm competition and tourism.

School officials have also raised the alarm about using a less stable source of money

The proposal gives lawmakers four options for replacing the money:

-- A 1 percent sales-tax increase.

-- Repeal of sales-tax exemptions, excluding those that serve a "public purpose," such as those for food, prescription drugs, electricity and heating fuel.

-- Spending cuts in other parts of the budget.

-- Other revenues identified by the Legislature.

An analyst with Florida TaxWatch, a nonpartisan watchdog group, said last week a 1 percent sales tax increase likely would generate $4 billion in 2011.

But that still would leave the Legislature needing to repeal many exemptions that are considered crucial by the industries that get them.

The Legislature could also turn to a sales tax increase greater than 1 cent or taxes on services.

The proposal would also cap annual assessments for non-homestead properties at 5 percent.

"If we don’t vote this out I don’t think we will just disappoint the people," Commissioner Roberto "Bobby" Martinez said before the vote. "We will fail the people."

The commission, slated to convene next in 20 years, is made up of appointees by the governor, Senate president and House speaker.

Putting the amendment on the ballot required 17 votes today.

It got 18 votes

TALLAHASSEE –- A plan that would let voters eliminate the main local property tax for public schools is headed to the November ballot.

The powerful Florida Taxation and Budget Reform Commission today backed the proposal, which would require the Legislature to replace the money using other sources, including sales tax increases.

The commission’s vote, its second on the proposal, came after weeks of intense lobbying from business and industry groups who oppose increased sales tax and, possibly, introduction of a tax on services.

But commissioners who backed the proposal said it is a necessary response to Florida residents clamoring for property-tax relief.

"They know what the stakes are," Commissioner Carlos Lacasa said. "And they also know what the benefits are."

The proposal would let voters save as much as 40 percent of the average property tax bills in Volusia and Flagler counties.

The Legislature would be required to replace the money and make sure school funding increases proportionally to 2007 and 2008 in the swap's first year, 2010-11.

One estimate has put the cost at $11 billion.

Proponents say the proposal would offer huge savings to all property owners, giving them money to spend and aiding the staggering real estate and building industries.

But business and industry groups argue it could drive up consumer costs, discourage new business investment and harm competition and tourism.

School officials have also raised the alarm about using a less stable source of money

The proposal gives lawmakers four options for replacing the money:

-- A 1 percent sales-tax increase.

-- Repeal of sales-tax exemptions, excluding those that serve a "public purpose," such as those for food, prescription drugs, electricity and heating fuel.

-- Spending cuts in other parts of the budget.

-- Other revenues identified by the Legislature.

An analyst with Florida TaxWatch, a nonpartisan watchdog group, said last week a 1 percent sales tax increase likely would generate $4 billion in 2011.

But that still would leave the Legislature needing to repeal many exemptions that are considered crucial by the industries that get them.

The Legislature could also turn to a sales tax increase greater than 1 cent or taxes on services.

The proposal would also cap annual assessments for non-homestead properties at 5 percent.

"If we don’t vote this out I don’t think we will just disappoint the people," Commissioner Roberto "Bobby" Martinez said before the vote. "We will fail the people."

The commission, slated to convene next in 20 years, is made up of appointees by the governor, Senate president and House speaker.

Putting the amendment on the ballot required 17 votes today.

It got 18 votes