Tax-swap plan will be on Florida ballot

Come November, Florida voters will decide if they want to codify in the state Constitution a dramatic change in the way public schools are funded.

Article Courtesy of The Miami Herald


Published April 26, 2008


A powerful citizens panel culminated a year of work on Thursday and put a plan to swap some property taxes for sales taxes on the November ballot, despite weeks of intense back-room lobbying by business groups that wanted to kill it.

The measure would cut most property-tax bills by at least 25 percent, revamp the way the state pays for schools and order the Legislature to replace the estimated loss of $9 billion with new, expanded sales taxes or other revenue.

The Taxation and Budget Reform Commission voted 18-7 for the amendment -- one more than needed to get it on the ballot.

The commission approved five other amendments for the November ballot. Voters must approve the measures by a 60 percent margin for them to be adopted.

Proponents hailed the tax swap as the salve needed to stimulate the ailing housing market, revive the economy and prepare the state's tax system for the next 20 years. The tax cut would take effect Jan. 1, 2010.

''With virtually the stroke of a pen, or the support of the people, this ballot initiative will create approximately $80 billion of wealth in Florida,'' said commission member John McKay, a Bradenton developer, former Senate president and sponsor of the amendment.

He said an analysis done for the commission by economist Hank Fishkind predicts the amendment ``will spur retail sales. It will accelerate the recovery of the housing industry. People will be be able to qualify for mortgages with less difficulty . . . Then, the construction industry will kick back in.''

But opponents warned the proposal -- which would eliminate the property taxes the state now requires school districts to collect -- is ''wrong-headed'' and ''foolhardy'' because it relies on the Legislature to find other means to fund education.

''We know that is not going to happen,'' said commission member Randy Miller, a vice president of the Florida Retail Federation and a former state Department of Revenue director. ``Where are we expecting to get this?''

The tax-swap idea received preliminary approval from the panel three weeks ago.

But mounting pressure from a stream of business and trade groups, and a one-man campaign by Senate Finance and Tax Chairman Mike Haridopolos, the lone legislator to speak out against the plan, led three commission members -- Susan Story, Brian Yablonski and Mike Hogan -- to switch sides and vote no.

Story, the chief executive of Gulf Power, said her main concern was that legislators will have few options but to raise some taxes on services that are now exempt. She said that will hurt small businesses and lead to job losses.

''I would love to have property tax relief, but I am very concerned,'' she said. ``It's one thing to have relief, but it's another thing not to have a job.''

But most commission members held true to the tax swap, considered by many to be the hallmark reform of their yearlong review of the state's tax system that involved what commission chairman Allan Bense said was ``hours and hours and hours and hours of public hearings.''

The Florida Constitution mandates that the panel meet every 20 years to recommend constitutional changes to improve the state's tax and budget system.

''If we don't vote this out, I don't think we will just disappoint the people. I think we will fail the people,'' said Roberto Martinez, a commission member and Miami lawyer. ``I think people want to have an opportunity to vote for a property-tax proposal and while this is far from perfect, it is the best and wisest proposal we can present to the people.''

McKay said he will raise money to promote the amendment he championed.

The Florida Association of Broadcasters, a trade group opposed to taxing advertising, is already mounting a campaign against it, Miller said.

''The good thing is it still has to go on the ballot. It still has to survive a campaign and the voters still have to hear the pros and con,'' said House Speaker Marco Rubio, who said Thursday he supports the amendment. ``I have a feeling the cons are going to be much better funded than the pros.''

Rubio said that while he understands the concerns of Haridopolos, he is confident the Legislature can find enough budget cuts, coupled with sales tax increases and economic growth, to stave off creating a sales tax on services.

'People need to know that a `No' vote dooms us inevitably to property tax increases in the state,'' Rubio said. ``If we keep this current system in place, you will be forced to raise property taxes in the future in order to fund education at a level where people want it.''

The panel will consider two more proposals Friday, after a parliamentary move allowed them to resurrect two plans that were considered dead: They will vote on a proposal to give constitutional protection to private school vouchers and a provision to require all schools districts to spend 65 percent of their budgets on education.