In last week's Tax Justice Digest, we warned that May 8 could be a dark day for Florida taxpayers if the Commission charged with proposing tax-related constitutional amendments did not abruptly change direction. Well, that dark day may have already come, now that the Commission has tentatively approved a massive property tax cut, coupled with regressive sales tax increases to partially offset the revenue lost by that hike.
On the heels of fairly substantial property tax reforms approved by voters just this January, this proposal, which many are already considering a sure-bet to reach the November ballot, would eliminate most school property taxes in the state, with a cost to government of $9.6 billion. $3.3 billion of that would be offset with a one cent sales tax hike. The remaining $6.3 billion addition to Florida's existing $3 billion budget shortfall would be offset by removing numerous sales tax exemptions, taxing services, reducing spending, and in the meantime, hoping for strong economic growth. One member of the commission summed up the plan fairly well, stating "a sales tax is a regressive tax; we're not doing anything here except changing who pays the bill".
Unfortunately for Florida's children, (who just recently had $500 million cut from their schools' budgets) though much of the responsibility for funding education will simply be shifted to lower-income Floridians, significant cuts in education spending will also almost certainly occur. If the measure gains the approval of the voters, the legislature will be responsible for determining the methods for dealing with the loss of revenue. The opposition to removing sales tax exemptions and taxing services runs so strong in the legislature that these regressive tax increases will likely not be carried nearly far enough to offset revenue losses, should the plan pass. Cuts in spending should therefore be expected to be quite deep.
Simply put, the commission's plan is a failure by any number of measures. It makes Florida's tax system even less fair, leaves inadequate funding for even the most vital public services, and, as one member of the Chamber of Commerce stated, "nothing in this proposal will fix the brokenness" of Florida's property tax, which levies vastly different taxes even on neighbors with very similar homes. Hopefully by proposing a plan so extreme that it has spurred opposition from groups as varied as the Florida Chamber of Commerce, teachers' organizations, and advocates for the poor, the Commission has made it likely that Florida voters will vote down the plan in November.