Tax relief plans far apart
State lawmakers have two weeks to meld House and Senate plans. There is no script.
By ALEX LEARY
Published April 23, 2007
TALLAHASSEE - The conventional wisdom on this week's showdown over statewide tax relief goes like this:
The unified Senate, with its targeted cuts and its unanimous vote, has the edge over the party-split House and its meat-cleaver proposal.
Don't be so sure.
The final act of the tax cut debate that opens this week between the chambers is something of a rarity in Tallahassee: It's a play that seems to have no script. The Senate plan is so different from the House version it's hard to see how they arrive at a single proposal to send Gov. Charlie Crist.
But maybe that's not true, either.
What happens over the next two weeks - or beyond if a special session is required - is of great significance to Floridians. Tax bills are going to change and it's likely the services of local government will, too.
Here's a look at the political dynamics for this debate. THE SENATE STORY: The Senate made it seem easy, dignified. After weeks of careful study, lawmakers came through on a promise of broad property tax relief. Without debate, the plan passed unanimously on Thursday.
"In eight minutes, we cut taxes by $12-billion. Just think of what we could have done in eight hours," teased Sen. Mike Fasano, who bumped into a House colleague on the street recently.
"Well, you guys are the wiser chamber," Rep. Dean Cannon shot back.
Kidding aside, many agree the Senate's united front provides the upper hand in negotiations.
"It's psychological, nothing you can put your hands on, but it will work on the House members," said Curt Kiser, a former Republican legislator from Pinellas County. "There's that old saying about a House divided."
But for every point, there's a counterpoint. The Senate's plan went down so easily some don't trust it, mainly because it would not save the average taxpayer nearly as much as the House plan would.
All those weeks of public flogging of the House's bold proposals made it a target for some, but it also may have whet the appetite of many taxpayers for something big.
Senate President Ken Pruitt has gotten an e-mail box full of reviews of his modest plan.
"As a lifelong Republican, I am disgusted with you and 'our' Republican Senate," Jack Loos of Fort Lauderdale wrote in an e-mail. "You should be trying to enact meaningful property tax relief, not trying to undermine it."
Here's what the Senate plan would do:
It would roll back property tax revenues for cities and counties to 2005 levels, where they would freeze for one year. After that, budgets could grow with the population.
It would give the popular concept of Save Our Homes what is called "portability." Longtime homeowners complain that they feel trapped in their homes because moving would mean losing the 3 percent cap on annual assessments and much higher tax bills, even if they go to a smaller home.
Portability alleviates that problem. But the Senate calls for increasing the 3 percent cap to 10 percent for several years.
Another part of the Senate plan is a $50,000 homestead exemption to first-time home buyers. It applies to homes worth at least $100,000, and the exemption would drop to the standard $25,000 once Save Our Homes kicked in.
The Senate also exempts the first $25,000 of business equipment from a tax on tangible property.
The House story
Under House Speaker Marco Rubio, the chamber announced its plan even before the session began, then tweaked it several times along the way.
Its centerpiece - and source of much controversy - is a plan to abolish all taxes on primary homes in exchange for a 2.5 percent sales tax increase.
Democrats, newspaper editorial writers and others have swiftly and loudly criticized the plan, saying it pushes a greater burden to nonhomestead property owners and disproportionately hurts the poor, who pay more of their income in sales taxes.
Some Republicans are squeamish, too, terrified of a plan that would require raising taxes by $9-billion to eliminate taxes for primary homeowners only.
"That's not what my seniors want me to do, that's not what my young families want me to do," said Sen. Fasano, R-New Port Richey. "Millionaires would enjoy not having to pay property tax and they can afford the extra 2.5 cents."
But Rubio has tirelessly promoted his plan, holding campaign-style conference calls and dispatching rank-and-file Republicans to host workshops around the state.
Despite the threat of a large defection on voting day, only two Republicans crossed party lines, and three Democrats were on Rubio's side.
Rubio, the charismatic 35-year-old from Miami, is still working the case. He will be the featured speaker at a tax cut rally in Tallahassee Tuesday.
Harmony after all?
Huge gaps remain between the competing plans, but they suddenly looked a lot closer on Friday when a House committee passed a bill that would provide Save Our Homes portability.
The bill was going nowhere because Rubio's plan to swap property taxes on homesteads for more sales tax made portability a moot issue.
House leaders insist they're just keeping options open, but the sudden move on portability suggests they might be willing to drop the big, bold tax swap.
If portability is in the mix on the House side, suddenly the House and Senate plans have a few things in common. Both would roll back tax rates for local government, and both would cap government budgets.
If the House really is willing to back off the tax swap idea - and the higher sales tax idea - the next two weeks could be about compromising over the details. - Portability. The House's newly passed plan calls for a straight transfer of any accrued benefit, while the Senate limits to $500,000 of home value and increases the cap 10 percent on assessments for several years. - Rollback. The House has two plans, one that would roll back government budgets to 2001 levels and another to 2003. The Senate rollback is to 2005.
A number of senators have said they could live with a rollback that goes back further, and the House seems ready to consider not gong back so far. It's not hard to imagine a split-the-difference deal rolling tax rates back to 2004.
As for the rest?
"We're not drawing a line in the sand," said Sen. Jim King, R-Jacksonville. "Everything of theirs will be considered over here, and we hope everything of ours will be considered over there."
Times capital bureau chief Steve Bousquet contributed to this report.