Before they force Floridians to spend millions of their hard-earned tax dollars defending against a lawsuit, House Democrats should take a breather: Their case against the constitutionality of Tuesday evening's passage of a sales tax exemption on manufacturing equipment is no sure thing.
Speaker Will Weatherford and Gov. Rick Scott are keeping tight-lipped about their official legal justification of the exemption, which passed without the two-thirds majority Democrats are insisting it requires. Their silence is not surprising. No challenge has yet been filed with the courts, and House leadership probably doesn't want to publicly commit to a particular legal strategy or line of argument.
At the heart of the dispute is Article VII, Section 18(b) of the Florida Constitution, which reads:
Except upon approval of each house of the Legislature by two-thirds of the membership, the Legislature may not enact, amend, or repeal any general law if the anticipated effect of doing so would be to reduce the authority that municipalities or counties have to raise revenues in the aggregate, as such authority exists on February 1, 1989. (Emphasis added.)
The bill exempting manufacturing equipment from state and local sales taxes (HB 7007) was passed by a vote of 68-48 in the House, far short of the 80 votes that would constitute a two-thirds supermajority.
The key to House leadership's passage of the bill is probably the expression in the aggregate: If taken to court, Weatherford's lawyers will likely argue that HB 7007 does not reduce the overall (or "aggregate") authority of local governments to raise revenue, because:
1. There is no such thing as a special tax on manufacturing equipment. Right now, manufacturing equipment is just one of several categories of items that are subject to regular state and local sales taxes. HB 7007 does not take away from local governments their overall (or aggregate) authority to enact sales taxes, it just exempts certain products from that overall (or aggregate) authority.
2. Or, the House might argue that any revenue a local government loses from no longer being allowed to tax manufacturing goods can be made up for by their increasing the local sales tax rate on everything else. Hence, their overall (aggregate) taxing authority is maintained intact.
The House has another possible argument at its disposal: subsection (d) of the same section of the Constitution says that laws having insignificant fiscal impact ... are exempt from the requirements of this section, including the requirement of a two-thirds majority vote. Lawyers for the House could argue that the manufacturing sales tax exemption has a relatively insignificant impact on local governments.
To this writer's knowledge, neither the Florida Supreme Court nor any state district court of appeal has ever given an authoritative interpretation of these provisions of the Constitution. They have never defined the meaning of authority to raise revenues in the aggregate or what exactly amounts to an insignificant fiscal impact."
There's no doubt Democrats are consulting with their own lawyers and pollsters before deciding what course they will take next. They would do well to reconsider the threats they've breathed so far. Legally speaking, it's a well-established principle that all laws passed by the Legislature and signed by the governor arrive before the courts with a strong presumption of constitutionality.
Perhaps the Dems consider it worth one big shot to see if a legal challenge will blow away one of the governor's two main priorities in 2013. But in so doing, they risk the perception of forcing struggling Floridians to spend millions of taxpayer dollars to fight against a tax cut for an industry that contributes so much to the state's economy, and has the potential to contribute so much more in the way of jobs and productivity.
Reach Eric Giunta at egiunta@sunshinestatenews.com or at (954) 235-9116.
