State budget chief says state can afford tax cuts, incentives

  • November 10, 2015
  • /   Jim Turner
  • /   economy

TALLAHASSEE — The state has more than enough money to cover Gov. Rick Scott's push for business incentives and tax cuts while funding agency requests, his budget chief said in a memo Monday.

As Scott embarked on a statewide tour to push for his proposed $1 billion in mostly business-friendly tax cuts, Office of Policy & Budget Director Cynthia Kelly wrote that rather than the $635.4 million surplus state economists have predicted for the next fiscal year, "a more appropriate 'surplus' " is $1.6 billion.

Kelly's projection, first reported by the Tampa Bay Times, is based on the state being on track to bring in a record $29.8 billion in general revenue next year, including $1.3 billion in "new" revenue.

"Bottom line, there is more than sufficient revenue to fund all of the state's mandatory increases, as well as the governor's priorities for your agencies, the Florida Enterprise Fund and the proposed $1 billion in tax cuts," Kelly wrote in a memo to Scott's agency heads.

Kelly also noted that an increase in revenue the past couple of years has come as the state has made about $900 million in tax cuts.

The intent of Kelly's memo was to reduce fears by agencies leaders that they'll have to make cuts to accommodate Scott's requests.

Kelly's letter was spurred by comments from lawmakers and the media that Scott's request for tax cuts and $250 million in incentives for the state's public-private corporate recruitment agency Enterprise Florida would quickly exceed the surplus projected in a long-range financial outlook presented in September by the Legislature's chief economist.

Economists have noted that about two-thirds of the projected 2016-2017 budget year surplus will come from one-time, non-recurring money. They have also predicted that the surplus will drop to $583.7 million the following year and $222.2 million the year after that, due in part to the continuing cost of recent tax cuts supported by Scott and Republican lawmakers.

After Scott announced his proposed tax-cut package Thursday, Senate President Andy Gardiner told reporters that while many of the governor's proposals are already moving in bills by members of his chamber, lawmakers will need to see the rest of Scott's budget proposals before making any commitments.

"At the top of our list is going to be the tax cuts, certainly, but we've just got to figure the balance," Gardiner said Thursday.

Gardiner has said $250 million would be a starting point in discussions on tax cuts when lawmakers return to Tallahassee in January for an earlier-than-usual regular session. That session will include crafting the 2016-17 budget, which will take effect July 1.

The bulk of Scott's proposed cuts, which would be amassed over a two-year period, involve permanently eliminating the income tax on manufacturing and retail businesses, a cut the governor's office estimates at $770 million.

Scott's proposals also would make permanent the elimination of a tax on manufacturing equipment, reduce a commercial lease tax and extend a temporary elimination of sales taxes on college textbooks.

For most Floridians, the cuts will be seen through a pair of sales-tax "holidays," which total just over $70 million. A 10-day back-to-school "holiday" would lift sales taxes on certain school supplies, clothes and some electronics. A separate nine-day period would be set aside to remove sales taxes on hurricane supplies.

House Minority Leader Mark Pafford, D-West Palm Beach, predicted last week that fulfilling Scott's requests would require spending cuts to areas such as the environment and education.

Scott's tax-cut tour started Monday with stops in Melbourne, Clearwater and Miami. Additional stops this week will be made in West Palm Beach, Fort Myers, Jacksonville and Panama City. He will be in Jupiter with the state Cabinet on Tuesday.

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