Floridas top legislative leaders are convinced they can work out the differences between the state House and Senate budgets, but a tax cut proposal pushed by Gov. Rick Scott is likely to hit the cutting room floor.
House Speaker Dean Cannon, R-Winter Park, said Monday that Scotts plan to phase out Floridas corporate income tax -- which currently stands at 5.5 percent -- is not high on the wish list of the states top companies.
The governor made a big priority of the corporate income tax cut. Frankly, of all the Florida CEOs Ive spoken to, not one of them has actually asked for the corporate income tax cut. Theyve asked for things like property tax relief, regulatory relief, Cannon said Monday during a joint TV interview with Senate President Mike Haridopolos, R-Merritt Island.
Gov. Scott included a reduction in the corporate income tax to 3 percent next year in his budget proposal, with the complete elimination of the tax by 2018. He has maintained that position, claiming the cutsare essential to giving Florida a competitive advantage with other states in attracting businesses.
Cutting the business tax puts more money in the pockets of business owners. They can then grow their business, hire more employees, and create more jobs. It will also remove hurdles for people starting a business, Scott said in his latest weekly radio address.
Haridopolos has left the door open for property tax cuts to come out of the budget process, but has repeatedly stated that his first priority is closing Floridas $3.8 billion budget deficit by cutting spending.
Both the House and Senate budgets cut $3.8 billion in spending, but do it in different ways, leading to a gap in the overall numbers. The Senate budget is $69.8 billion, $3.3 billion more than the House, mainly due to the inclusion of the states water management districts and clerks of court system, which are functions of the state but have their own taxing authority.
The Senate budget not only brings the water management districts into the budget, but gives the Legislature greater oversight of the boards and reduces their current millage rates by $210.5 million.
Its a state operation, and we were looking at the idea that theres some discussions about the water management districts maybe having a little bit too much taxing authority, and the other thing is that they are sitting on a lot of reserves, Haridopolos said.
Another key difference in the two budgets is their take on pension reform for state workers. Both require the 655,000 members of the Florida Retirement System to contribute to their own pensions, but the House calls for a flat 3 percent contribution rate, while the Senate has a tiered approach. The Senate plan includes a 2 percent contribution for earnings up to $25,000, a 4 percent rate up to $50,000, and a 6 percent rate for earnings over $50,000.
Cannon said he is open, but cautious, toward the Senate proposal.
As to the tiered approach, well certainly take a look at it. Ive got a little bit of a concern about the ability to implement a tiered approach because theres some complexity to those layers, Cannon said.
Haridopolos stressed the similarities of the two budgets ahead of the negotiations.
As a whole, when you talk about the normal things in the budget, we are lined up, Haridopolos said.
Budget talks between the Florida House and Senate are set to begin this week, but members of the conference committee have yet to be announced.
Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.
