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Adam Putnam: Business Energy Tax Cut Could Be Short-Circuited

November 17, 2013 - 6:00pm

Agriculture Commissioner Adam Putnam says his proposal to trim the sales tax on energy used by businesses may have a hard time advancing during the coming legislative session.

Putnam said Monday he remains behind the proposal to cut in half the 7 percent tax and to redirect the remaining revenue for school construction and maintenance.

However, with a number of lawmakers offering competing proposals for carrying out Gov. Rick Scott's request to cut up to $500 million in taxes and fees, Putnam wasn't willing to say he would do everything he could to prioritize the energy-tax measure during the 2014 session.

"I've been in their shoes, I know they've got a lot of ideas," Putnam, a former lawmaker, told reporters during a pen and pad session in his Capitol conference room. "They've got a budget they need to balance, and concerns about a surplus that hopefully will continue to be as robust as they've projected. But given the uncertainty of the national economy, we may not know until March just what type of budget outlook we have and how much there is to make the type of investments this might cost."

Putnam's proposal would cut the sales tax that private firms pay for electricity to 3.5 percent, collectively saving businesses about $250 million a year. The remaining revenue would become a source for the Public Education Capital Outlay (PECO) program. Currently, the business energy sales-tax money goes into the state's general revenue.

The business sales tax proposal came after state economists projected a surplus of $845.7 million for the 2014-15 budget year. But the economic forecast will be revised in March. And Scott's request for $500 million in cuts to taxes and fees has set off proposals from lawmakers.

Senate Appropriations Chairman Joe Negron, R-Stuart, proposed a measure (SB 156), which has already started to advance through the Senate, that would roll back about half of an unpopular 2009 hike on vehicle-registration fees.

Senate Finance and Tax Chairwoman Dorothy Hukill, R-Port Orange, has a couple of proposals, one (SB 266) that calls for a 2 percent cut in the state's communications-services tax and another (SB 176) that would cut a rental tax from 6 percent to 5 percent.

"There seems to be a consensus in the Legislature on reducing the vehicle tag fees, which would presumably eat up a big piece of what the governor put out there in that half-billion dollars," Putnam said. "I know they've got a lot of ideas that have percolated, and we're going to be passionately making our case."

Negron's proposal, estimated to provide an average $12 in savings for each vehicle registration, has been projected to collectively save motorists $182 million during the next budget year, growing to $239 million the following year and $244 million a year later.

Cutting the communications-services tax would reduce revenue by an estimated $282 million, while the 1 percent drop in the rental tax is projected to cut $250 million a year from state revenue.

Meanwhile, House Finance and Tax Chairman Ritch Workman, R-Melbourne, has said the Legislature isn't bound by Scott's $500 million mark, as the final number will depend in part on the size of the estimated state budget surplus when lawmakers sit down to craft a final package.

Putnam had announced the energy proposal during his Florida Energy Summit in Orlando on Oct. 14, as he unveiled a package for legislators that included an annual sales-tax holiday on energy-saving appliances, similar to the back-to-school tax holiday.

He has also proposed expanding to commercial properties a residential property-tax exemption on installing renewable-energy systems and undertaking a study on Florida's future natural-gas demands.

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