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Sunday, June 5, 2011

How the Florida Legislature hurt the middle class and rewarded its friends

From the Palm Beach Post

TALLAHASSEE — The biggest tax break created by Gov. Rick Scott and the Republican-led legislature will let the average home­owner in Palm Beach County knock about $28 off his or her property tax bill next year.

But for some of the state's biggest companies, including several that helped power last year's GOP political campaigns, the tax cut will yield tax savings of hundreds of thousands of dollars and maybe even more than $1 million for a few.

Legislative leaders passed a law, signed by Scott on May 26, that cuts the tax revenue collected by the state's five water management districts by $210 million across the state.

Republican leaders say the cut is part of their effort to jump-start Florida's feeble economy, but environmentalists say the declining dollars will erode land, water and flood protection programs.

And like many Democrats, some conservationists see the tax cut in starkly political terms, deriding it as a thank-you from Republicans to some of their powerful contributors.

"It's a flagrant political move and bad public policy," said Kirk Fordham, chief executive officer of the Everglades Foundation. "There's also a huge inequity when you look at its effect on average homeowners in the water districts, compared to what it means to big landowners."

In the South Florida Water Management District, property tax collections must drop by $120 million, or 30 percent, under the new law (SB 2142).

Officials said the district's current tax rate of $0.624 per $1,000 in taxable value probably will shrink by 30 percent to achieve the reduction, but district tax rates won't be finally set until the fall.

For the owner of a median­-priced home in Palm Beach County, now at $198,000, a 30 percent cut would amount to about a $28 savings.

Big donors get big breaks

Florida Power & Light, Walt Disney World, BellSouth and Universal are among the companies that stand to gain the most under the tax cut because they own the highest-valued property in the South Florida district's 16 counties, which range from Monroe in the south to Orange in the north and include Palm Beach, Martin and St. Lucie.

FPL and Disney could save more than $1 million each on their tax bills for the budget year that begins Oct. 1.

They also were among the Florida Republican Party's biggest contributors during the 2010 election campaigns, when Scott defeated Democrat Alex Sink and the GOP grabbed unprecedented two-thirds majorities in the state House and Senate.

FPL donated $1.1 million to the state GOP, while Disney contributed $854,364, according to an analysis of contribution records by the National Institute on Money in State Politics.

Mark Bubriski, an FPL spokesman, said the utility giant pays about $1.1 billion in taxes to Florida governments, so the property tax cut is modest. Utility regulations prohibit the money from going to political purposes, he added.

"It's really a small amount in the overall rate base," he conceded.

Andrea Finger of Walt Disney World said, "We don't yet know the impact" of the tax cut.

Asked if it would have any bearing on the company's political activities, she added, "The two are unrelated."

Progress Energy, a Central Florida utility that contributed $770,000 to the Florida Republican Party for last year's campaigns, stands to save more than $158,000 on its district property tax bill.

The state GOP's largest private contributor, U.S. Sugar Corp., also is a major industry and landholder within the South Florida Water Management District.

It donated $2.2 million to the Florida GOP for last fall's campaigns. But because much of its 187,000 acres of land earns an agricultural tax exemption, U.S. Sugar doesn't appear on the district's list of top property taxpayers.

The companies also gave to the Florida Democratic Party, but in amounts far less than they gave the state GOP, records show.

Republican leaders downplay the symmetry between party donors and those gaining the most in tax breaks.

"It's probably not an earth-shaking revelation that people who own a lot of property could get the best benefit under this," said Sen. Don Gaetz, R-Niceville, in line to become Senate president following next year's elections. "And, similarly, it's maybe not surprising that people who own a lot of property might be Republicans."

But Democrats said the water district tax reductions are part of a disturbing pattern that emerged during the spring legislative session.

House Democratic Leader Ron Saunders of Key West said legislation that hurt members of public employees' unions, reduced environmental oversight and made it tougher for activist organizations to register voters were partisan policy decisions.

"Republicans seemed to find a lot of ways to reward big contributors this session," Saunders said.

Cuts deepest in south

In anticipation of the South Florida district's $120 million decline, the district's new executive director, Melissa Meeker, overhauled the $1.1 billion agency's organizational structure last week, recasting its executive management team and cutting executive salaries.

Meeker also has said the district's budget - which will reflect planned layoffs and other personnel changes, including a possible reduction in staff benefits - will be completed by July.

With the South Florida district absorbing the biggest cash reduction because it collects the most taxes of all the districts, the legislation culminates a year marked by an uneasy relationship among South Florida water managers, Scott and influential Republican lawmakers.

As a candidate last summer, Scott joined tea party supporters outside the district's headquarters in West Palm Beach to criticize water managers' plans to buy 26,800 acres of U.S. Sugar Corp. land for Everglades restoration.

Scott said the plan, led by then-Gov. Charlie Crist, put the "interests of one company above those of the 7.5 million people who will end up being taxed."

'Open for business'

As governor, Scott found a political ally in Senate budget chairman J.D. Alexander, R-Lake Wales, a citrus grower, who pushed the property tax reduction through the legislature. Most of Alexander's home Polk County is in the Southwest Florida Water Management District. The legislation signed by Scott slashes that district's property taxes 36 percent, the largest percentage cut taken by any of the state's five water management districts.

Alexander, a grandson of late citrus baron Ben Hill Griffin Jr., is president and chief executive officer of Alico Inc., a land management company with more than 135,000 acres, mostly in the South Florida district.

The Northwest Florida district, in Gaetz's Panhandle home, is the lone authority not required to reduce property taxes.

The $210 million property tax cut is the crowning piece of a $308 million overall package of tax reductions approved by lawmakers this spring.

Scott had advocated a far more ambitious $1.7 billion package of cuts, which was sharply scaled back by lawmakers. Scott, though, had proposed a similar 25 percent reduction in water management district tax revenues, totaling $178 million.

He has since said the state's spare $69.1 billion budget and new tax breaks show "we are clearly open for business."

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