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News Story
Updated: 10/04/2013 06:38:50PM

Scott’s tax tour targets local revenues

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Gov. Rick Scott is on a “listening tour” to gather input about potential tax cuts he may propose when the Legislature reconvenes next March. But the list of cuts he has identified during tour stops so far would disproportionately come from local government revenues, not the state, and force further belt-tightening for cities and counties still reeling from falling property tax revenues and staff cuts. Worse, the biggest headwinds facing Floridians are a stubborn jobless rate and persistent wage stagnation, not taxes. Tax cuts being pondered won’t produce either jobs or higher wages or will simply fatten the bottom lines of existing businesses, most of them out of state.

Three of the taxes getting the most attention are property taxes, sales taxes and franchise fees. Florida’s constitution prohibits the state from levying property taxes, so any cuts would have to be Tallahassee-mandated cuts foisted on strapped localities. The Legislature has already handcuffed local governments with millage rate restrictions and further muddied an already overly complex tax system with its inscrutable roll-back rates.

Sales tax holidays are popular, but offer negligible benefits — $34.7 million in sales tax savings in 2013, of which $6.4 million came out of local revenue — while merely shifting consumer spending from one period to another. According to the Tax Foundation, a non-partisan tax research group, any employment bump associated with tax holidays would be by definition short-term. The savings consumers do realize during tax holidays is meager and deceiving. A University of West Florida study found that retail prices rose during tax holidays, biting into consumer savings and syphoning up to 20 percent of those “savings” into retailers’ pockets, the vast majority of which are operated by out-of-state corporations.

Franchise fees and services taxes are naturally frustrating to residents because businesses that must pay the fees or taxes — cable providers, telephone companies, power and water utilities, etc. — invariably pass on the cost to their customers. The Legislature already took away the ability of local governments to impose franchise fees on cable companies under the guise of fostering competition in the industry. (Forgive the snark, but have you enjoyed the array of cable TV choices in Polk County since the state took over franchising authority in 2007?)

Franchise fees remains a significant part of local government revenues. For example, Punta Gorda received $4.1 million in revenue from electric, gas, bottled water and communication fees and taxes in 2012-2013. If Gov. Scott wanted to give residents a tax break without taking it out of local governments’ bank account, how about a law prohibiting companies from passing through these levies to their customers? Even if franchise fee relief does pass the Legislature, we’re skeptical consumers would see a dollar for dollar reduction, while local governments would be forced to recoup the losses through property taxes or cuts services, infrastructure investment and more jobs.

It would be a far better use of Scott’s time to return to Tallahassee and convene a commission to find a way to reform Florida’s broken tax structure, so that our economic and political system isn’t intractably linked to special interest lobbying, election year pandering and the business cycle. It costs money to run a state. When political opportunists stop trying to paint all government as an unnecessary evil and realize it is simply us collectively governing ourselves, we can divide up the costs equitably and focus on making government better.


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