Compromise is the talk on Scott's tax cuts, incentives

By JIM TURNER
THE NEWS SERVICE OF FLORIDA

THE CAPITAL, TALLAHASSEE, February 19, 2016.......... Legislative leaders say compromises will be needed to bridge vast differences in their tax-cut and economic-incentives proposals, as Gov. Rick Scott continues to stand firm that his requests will bolster Florida's economy.

In a release Friday announcing that Labinal Power Systems, an aeronautical power and electric systems firm, will expand its footprint in Manatee County, Scott touted his requests for $1 billion in tax cuts and $250 million for business recruitment incentives.

"By creating the new $250 million dedicated Florida Enterprise Fund and cutting $1 billion in taxes this year, we will be able to make Florida first for jobs,” Scott said in the release.

But across the Capitol, the need to compromise is in the air.

"I think it's important that everybody is going to have to give, everybody is going to have to give a little," Senate President Andy Gardiner told reporters Thursday. "The House is going to have to give, the Senate is going to have to give, and the governor is going to have to give."

There are three weeks left in the regular session, and Gardiner added that the incentives and tax cuts need to be decided before budget "allocations" can be set. Such allocations are a key first step in budget negotiations because they determine how much money will go to each major spending area, such as education and health care.

The House has rolled out a nearly $1 billion tax-cut package (HB 7099), which features many cuts Scott has sought, while the Senate is looking at about $250 million in cuts.

Meanwhile, the Senate has matched Scott's $250 million incentives ask, which would be handled through the public-private Enterprise Florida. The House has proposed $80 million, even as some members believe increasing the total from the current year's $43 million in incentives funding is too high.

House Speaker Steve Crisafulli, R-Merritt Island, echoed the need for compromise. He also alluded Thursday to a decision last month by a panel of state economists, known as the Revenue Estimating Conference, to lower a forecast of tax dollars.

"That (compromise) is what we believe we will have to absolutely do to, you know, get out of here," Crisafulli told reporters. "Obviously the governor has a commitment in his mind with regard to economic development and tax cuts of about 132 percent of the discretionary money available in this budget; that's before the Revenue Estimating Conference came back and said we're $390 million off. So keeping that in mind, and 160 members in both chambers that have an interest in the budget, we will all have to compromise. No question."

Talk of compromise comes as the House has decided to take up a bill (HB 1325) Tuesday that would set new policies for economic incentives. Crisafulli said it is important to have the policy in place before dollar amounts are discussed.

"We think we have a good bill as it is, and obviously there will come a time when we have to have more conversations on it with our Senate partners," Crisafulli said.

The House policy proposal, which doesn't include any money, matches many aspects of a broader Senate economic-incentives bill (SB 1646).

Under both proposals, the governor would be able to approve grants under $2 million and only have to provide legislative leadership with a written description of those projects. The House speaker and Senate president would have two weeks to file objections to projects in line to get $2 million or more.

Both the House and Senate also propose that any incentive deals drawn from the Florida Enterprise Fund have at least a 20 percent local financial match. Projects would be intended to create at least 10 jobs, and no payments would be made until performance conditions are met.

A key area of disagreement is on the potential return on investment. The Senate would like any company getting an incentive deal to provide a 2.5-to-1 return on investment. The House measure seeks a 3-to-1 return.

The legislative jockeying comes amid pushes by advocacy groups sending out calls for and against aspects of Scott's requests.

The Tallahassee-based group Florida TaxWatch held a news conference on Thursday declaring support for Scott's incentives request.

Former U.S. Sen. George LeMieux, chairman of the TaxWatch Center for Competitive Florida, said the money is needed "in order to maintain the tremendous economic growth in the Sunshine State."

Meanwhile, the conservative-advocacy group Americans for Prosperity Florida continues to call job-recruitment incentives "wasteful" and "handouts," while it supports tax cuts.

"Florida's economy has bounced back because our economic infrastructure outpaces almost all other states," Americans for Prosperity State Director Chris Hudson said in a release on Thursday. "That's why people and businesses want to come to Florida."