State Politics

2010 FLORIDA LEGISLATURE Tax breaks and fee cuts pushed despite shortfall

TALLAHASSEE — After raising $2.2 billion in new taxes and fees last year, Florida legislators want to erase that memory this election year with proposals that roll back auto registration fees and steer as much as $100 million to businesses in new tax incentives.

The problem: how to pay for it. The House plans to budget about $88 million in tax incentives, the Senate plan includes $135 million in tax cuts, and both chambers plan to push a $44 million sales tax holiday for back-to-school supplies. All of it must come out of a budget that already has a shortfall of $3.2 billion.

Critics of the tax and fee cuts say competition already is fierce among programs that have been slashed in recent years. Republican legislators argue that tax breaks will spur economic development and that many of the tax incentives would not take effect until future budget years.

“I would argue that we should be putting in as much as we can because, at a time of economic downturn, we need to be investing in more economic development than even in good times when you have the money,” said Rep. Will Weatherford, R-Wesley Chapel.

Of the higher taxes and fees passed last year, $797 million came from fee increases for new and renewed auto tags and driver’s licenses. Now, Senate President Jeff Atwater wants to reassess some of those fees to determine if the increases were too high.

Sen. Jeremy Ring, D-Margate, isn’t surprised by the second-guessing of the fee increases.

“It’s a contradiction but it’s an election year,” he said. “And I think they’re responding to a backlash against some of the increases that were too draconian.”

In the House, the Economic Development Policy Committee on Wednesday approved 10 bills that would create tax incentives for everything from manufacturers of gas turbines for airplanes to training for workers who lose jobs because of the dismantling of Florida’s space program.

Rep. Ellyn Bogdanoff, who leads the House Finance and Tax Council, said House and Senate leaders have broad agreement on tax incentives to help the manufacturing, space, ports and the film industries:

n $100 million in incentives to upgrade Florida’s 14 ports in preparation for the widening of the Panama Canal in 2015. The incentives would cost $10 million per year, starting in the 2011-12 budget year.

n $67 million in sales tax breaks for certain manufacturing equipment.

n Up to $20 million annually in tax credits to movie and television productions, starting in 2011. (However, a bill has been introduced that would disqualify makers of movies and TV shows that contain “nontraditional family values” from receiving a “family-friendly” tax. (Read more in Business, 7B)

n About $25 million in funding to encourage new space-related businesses to retain thousands of jobs in Florida’s space industry after manned shuttle flights stop.

But some lawmakers warn there is no guarantee the programs will generate jobs. Last year, lawmakers passed $10 million in low-interest loans to small companies under an “economic gardening” program and Florida’s unemployment ranks continued to swell.

“State governments just do not have the tools to move employment rates in a giant way,” said Rep. Keith Fitzgerald, D-Sarasota, a political science professor at New College.

He sponsored the back-to-school sales tax holiday bill because he believes it has been proven to spark spending and increase revenue.

But he questions whether legislative leaders are effectively evaluating whether the proposals will produce jobs.