Homeowners, businesses, manufacturers and back-to-school shoppers are emerging as the biggest beneficiaries of a $400 million tax break package being finalized by a Florida Legislature already eyeing its exit.
The Senate Appropriations Committee has approved a tax-cutting plan that would reduce the school tax rate paid by property owners by almost 6 percent; eliminate the sales tax that manufacturers have paid on equipment purchases, saving them $73 million; and give parents and students three tax-free shopping days for clothing and school supplies, Aug. 5-7.
A host of smaller scale cuts in a range of industry taxes – affecting metal recyclers, cruise ships, even the sale of pear cider – round out the tax-cut plan expected to win approval from the full House and Senate next week.
Lawmakers are set to adjourn the 2016 Legislature on March 11.
“All the tax cuts are good,” said Senate President Andy Gardiner, R-Orlando. “Each is in the eye of the beholder. The governor laid out what he hoped … but I think $400 million is pretty good. They’re broad-based tax cuts.”
Getting the tax breaks in place are a key part of settling the roughly $80 billion state budget for the year beginning July 1 — the only bill lawmakers must approve each year.
But the $400 million package is sharply scaled down from the $1 billion tax-cut plan sought by Gov. Rick Scott.
The governor ran television ads, conducted a bus tour in January, and solicited letters of support from dozens of city and county officials for a package of tax breaks and economic incentives that he cast as a blueprint for sparking the Florida economy and creating more jobs.
Last week, Scott said he still held out hope that lawmakers would come around.
But short of a late-hour windfall from lawmakers, speculation is rampant at the Capitol that Scott will end up mostly empty-handed and could exact revenge by vetoing millions of hometown projects sought by lawmakers from the budget.
Scott’s $1 billion cuts were aimed almost exclusively at businesses. His bid for another $250 million in economic incentives also was dismissed by state lawmakers uneasy about handing the governor cash he could use to pick and choose companies he might woo to the state.
Instead, lawmakers have tipped the tax-break proposal more toward consumers.
The school property tax reduction will absorb $290 million of the package of cuts. The infusion of state dollars is designed to slow the steady rise in taxes many homeowners and businesses are paying as property values rebound from a recession-era collapse.
All told, lawmakers plan to increase public school funding $458 million, a 1 percent boost, which Palm Beach County Schools Superintendent Robert Avossa dismissed this week as “embarrassing.”
But the increase will be financed by state dollars — not local property owners.
That’s another departure from Scott, who proposed a larger increase for schools but paid for it almost entirely by pulling more money from property taxpayers.
Scott, though, had a more ambitious sales-tax holiday proposal. He sought a 10-day tax-free shopping period that lawmakers scaled back to a mere three-day weekend.
The Legislature’s holiday would lift the sales tax from clothing costing $60 or less, and school supplies priced at $15 or less.
But computer purchases, which had been included in earlier tax-cut proposals, fell out of the latest deal.
Also lost were proposed tax breaks on material sold at school book fairs and college textbooks. A sales-tax holiday for small businesses on the Saturday after Thanksgiving was scrapped — along with Scott’s bid to reduce by 1 percent the sales tax businesses pay on leasing office and manufacturing space — which had strong support among business associations.
Eliminating the sales tax on manufacturing equipment purchases is among the few tax areas where lawmakers match Scott.
The Legislature in 2013 erased the tax for three years but Scott is pushing to have the levy taken off the books permanently next year. Lawmakers appear ready to go along, setting aside $73 million for the tax cut.
The roughly $80 billion state budget in the works also includes another Scott wish list item: a record level of per-pupil spending, an average $7,178 for each of Florida’s 2.8 million school children, topping by $52 the previous high reached in 2007-08.
Palm Beach County’s Avossa and other educators, however, downplay the boost as not keeping up with inflation and other rising expenses.
At the Capitol, legislative leaders defend their choice to cut property taxes, saying it will affect the most Floridians. They add that when state economists downsized revenue forecasts by $400 million in January, Scott’s ambitious tax-cut plan effectively was taken off the table.