Gov. Bush proposes $1.5 billion in tax cuts

Published: Wednesday, February 1, 2006 at 6:01 a.m.
Last Modified: Tuesday, January 31, 2006 at 11:32 p.m.
TALLAHASSEE - Adopting a proposal pushed by House Democrats that would give homeowners a $100 rebate, Gov. Jeb Bush outlined a $1.5 billion tax cut package Tuesday that also includes property tax relief, a sales tax holiday for school and hurricane-related purchases and the elimination of a tax on wealthy stock and bond owners.
Using a portion of more than $3 billion in new funds that should be available this year, Bush said he wanted to provide tax relief for homeowners because of rising property taxes and insurance costs.
"Owning a home in Florida has become increasingly more expensive during the last few years," Bush said.
The tax cuts are part of his philosophy of returning money to Floridians in times of strong economic growth, the governor said.
"We must remember that tax dollars belong to our citizens, not the government," he said.
Bush wants a $100 rebate for the 4.4 million homestead property owners in the state as well as approximately 600,000 mobile home owners.
It was the same idea advanced by the House Democrats earlier this month.
"I'm not sure if you stole the idea from us or we stole the idea from you," Bush told House Democrats. "The good news is the Democrats in the House are supporting major tax relief."
But at the same time, Bush did not embrace the House Republican leadership's proposal of a $500 million, one-week sales tax holiday that would eliminate the statewide 6 percent sales tax on the first $5,000 on most purchased items in August.
Another Bush measure would reduce the "required" local school property tax rate by 9 percent. He said it would help homeowners by saving them an average of $55 on their tax bills.
But an analysis of the state tax rolls shows major property owners would benefit more from the school tax break than homeowners.
It translates into multi-million dollar tax breaks for some of the state's largest companies. Disney, for example, could get a $2.5 million break; Universal another $500,000; Publix, Walgreens, Wal-Mart, Home Depot, Lowes, and Florida Power and Light combined for a $1.9 million break.
And the $55 tax break promised the "average" homeowner will likely be substantially less than advertised; probably closer to $20.
According to an analysis of the state's property rolls, the median homeowner in none of the state's 67 counties will receive a $55 tax break. In 27 counties, the break will amount to less than $10 for the typical homeowner. In Dixie County, it'll be about $1.
Even in Monroe County, the median taxable value of a resident's home will be about $199,000 this year, resulting in tax break of $50 - the highest in the state. The average value, however, was $306,000 resulting in a tax break of $145. Only 30 percent of the county's residents homeowners live in homes with a higher than average taxable amount.
And because of the way Florida's property tax system caps increases in homeowners' taxable values, the tax break will be larger for nonresident homeowners than a resident homeowner.
The governor's other tax cuts included:
  • $81 million for back-to-school and hurricane preparedness sales tax holidays. Bush also wants to make the holidays a permanent fixture in state law.
  • $161 million to eliminate the intangibles tax on major stock and bondholders. It affects 300,000 Floridians who own more than $250,000 in assets as individuals or $500,000 as a couple.
  • A $51 million cut by eliminating an alcoholic drink tax.
  • A $69 million tax break for companies that are buying equipment and machinery for research and development activities.
  • $75 million for venture capital initiatives to spur more high-tech companies and other innovative industries.
  • $15 million in tax incentives for companies developing alternative power and fuel initiatives, including hydrogen-fuel vehicles.
    House Speaker Allan Bense, R-Panama City, said he supports the governor's tax cuts, but also hopes that the House leadership's plan for a $500 million sales tax holiday for all items will be included in the final tax package.
    "I don't know what I did to make you mad at me," Bense jokingly told the governor when he learned the proposal would not be part of the governor's recommendations.
    Senate President Tom Lee, R-Brandon, refrained from assessing the governor's proposal, but said the windfall was likely a short-term phenomenon. He said $1.5 billion in cuts this year might be unsustainable "without cuts in the long term."
    Two Democratic candidates for governor criticized Bush's tax cut plan and said the money would be better spent on building schools or roads.
    "I'm against that," said U.S. Rep. Jim Davis, D-Tampa. "It's another election year tax gimmick."
    Instead of using the money for more $1.5 billion in tax cuts, Davis said the funds could be used to reduce class sizes in schools and build more roads or other infrastructure.
    State Sen. Rod Smith, D-Alachua, said the governor's tax cuts were a "poor strategy" for using a one-time surplus of state funds this year.
    Instead, Smith suggested $2 billion go to building more public schools, saying the money would yield 6,500 new classrooms.
    He also suggested $1 billion could be used to shore up two state insurance programs, with $527 million going to cover a deficit in the Citizens Property Insurance program to avoid assessing Florida homeowners a 6.8 percent surcharge on their insurance premiums.
    Smith also proposed spending $400 million to buy more land for the restoration of the Everglades. He said buying the land would speed the restoration and avoid higher land costs if it was purchased later.
    Lloyd Dunkelberger is in The Sun Tallahassee Bureau and Maurice Tamman is a reporter with the Herald-Tribune in Sarasota. Joe Follick of the Tallahassee Bureau contributed to this report.
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