The $5 Billion Budget Hole:
Increasing Revenue to Protect School Funding
Mar 10, 2009
The drop in housing values and the economic slowdown have blown at least a $5 billion hole in Florida's budget. Legislators are constitutionally required to balance the budget, and the biggest fight this session will be over how to do that.
Leaders in the House are maintaining their staunch opposition to any increases in taxes and fees. Even though the education budget has already been reduced by $1 billion over the last year, House Speaker Larry Cretul (R-Ocala) has introduced legislation (HJR 919) aimed at relaxing the requirements of the class-size amendment to allow further cuts in the education budget.
Health care budgets have also been slashed, and during a special session in January, the Legislature raided the Lawton Chiles Endowment Fund, money from the tobacco settlement used for health care for children and seniors.
However, Senate leaders and some House members have offered support for legislation to increase revenue from a variety of sources. While comprehensive tax reform is extremely unlikely, these proposals could offer enough increased revenue to protect schools and other essential services from further cuts.
Here are some of the proposals:
Cigarette Tax
Florida currently has the fifth lowest cigarette tax in the nation. It hasn't been increased since 1990, even to keep up with inflation. Several bills have been filed to increase the tax, including HB 887 by Rep. Juan Zapata (R-Miami), which would increase the tax by .65 to $1 per pack. A recent poll showed that 72% of Floridians would support a full $1 per pack increase.
Bottled Water
Every day, commercial water bottlers take hundreds of thousands of gallons of water in Florida, bottle it and sell it. How much does the state collect for the use of this precious natural resource? Nothing. Not even sales tax on the bottles of water that are sold to Florida consumers. Governor Crist has proposed a 6-cents-per-gallon tax on water used for commercial water bottling, which would raise approximately $70 million per year. Florida bottlers oppose the tax, saying it would put them at a disadvantage to out-of-state companies. As a compromise, they've suggested imposing the state's 6% sales tax on all bottled water sold in Florida regardless of the source, which would raise about $43 million per year
Sales Tax Exemptions
Florida relies on sales tax for 75% of state revenue, but there are more than 200 special interest and business exemptions to the sales tax. These exemptions include a wide range of products, including charter fishing boat rentals, farm equipment, horse- and dog-track admissions, stadium skyboxes, Super Bowl tickets, collectible coins, cattle growth enhancers, livestock feed, and many more.
Seminole Gaming Compact
Under federal law, the Seminole Tribe can expand the types of gaming in their casinos without the state's consent and without paying taxes on the proceeds. Governor Crist negotiated an agreement with the Seminoles last year that would have earned the state hundreds of millions of dollars per year in new revenue, but legislators have blocked the effort. There is a renewed effort to ratify the compact and begin collecting the taxes.
Take Action
Check back often for updates on the progress of these and other proposals. And stay tuned to your email for action alerts from CIVIC -- we'll let you know when you can most effectively make your voice heard. If you're not a member, sign up in the "get involved" box on the right column.