Rob Gurwitt is a GOVERNING contributor.E-mail: email@example.com
An election year is a notoriously awkward time to push contentious legislation. Why irritate powerful special interests--let alone some portion of the electorate--when your colleagues want everything to be as calm as possible?
For John McKay, president of the Florida state Senate, the answer is that he has no choice. This is his last year in the Senate--he must leave because of term limits--and he's decided not to run for any other office. And so, just as last year drew to a close, he unveiled his proposal for the most sweeping tax overhaul the state's seen in more than 50 years.
McKay's plan seems unobjectionable on its face: He wants to reduce the state's sales tax from six cents to 4.5 and eliminate the myriad exemptions that have crept into the tax code since the current structure was put in place in 1949--all but those on groceries, residential rent, health care services, prescription drugs and basic residential telephone service. The legislature could enact new exemptions, but only with a three-fifths vote; any move to increase taxes would require the same super-majority.
For McKay, this is a matter both of economics and of principle. Florida's economy, he argues, has long since outgrown the tax system's reliance on tourism and the sale of goods. "In 1964," he pointed out when he introduced his plan, "the sales tax applied to approximately 68 percent of Florida's economic activity. Today the sales tax applies to only 55 percent. Next year, Florida will collect approximately $17 billion in sales tax--and we will exempt about $23 billion in taxes." His proposal would repeal about $9.5 billion in exemptions. In particular, McKay says, it is unfair to Floridians not only that services go untaxed but that so do a broad range of businesses whose lobbyists have succeeded in winning exemptions.
"We have given the exemptions enough time. We were told, 'If you give us this it will expand the economy and you will get in more revenue,'" says Senate finance chair Ken Pruitt, a McKay ally. "Well, we have bought that argument for years and years, and the bottom line is, it doesn't pan out that way."
It will come as no surprise that Florida's powerful business lobby is hardly lining up to congratulate McKay on his forthrightness. At a meeting of lobbyists in late December to plot their opposition to the reform package, the attendees read like a who's who of the state's most influential interests: Manufacturers, insurers, broadcasters, banks, retailers, Realtors, independent business owners and accountants were all represented. So was Governor Jeb Bush, although not officially: Two former top aides were at the meeting.
What makes McKay's timing interesting is that he is a Republican in a state run by Republicans. The GOP holds both houses of the legislature, and its standard bearer in this year's gubernatorial election is incumbent Bush. An internecine fight over tax reform is not what party leaders had in mind for this year's legislative session.
The most difficult hurdle McKay may have to face is over in the House, where Speaker Tom Feeney has declared his opposition to raising taxes--which he argues McKay's package would do, even though in its early years it is revenue-neutral. McKay and Feeney have tangled several times in the two years they've presided over their respective chambers--the Senate as a whole is a more moderate body than the House, and McKay, who began his political life in the early 1970s as a Democrat, is more moderate than Feeney. He does have one strong card to play, however. Feeney wants to run for Congress this year, and wants a congenial congressional district to do it in; the Senate, however, will have to approve any redistricting package that supplies one.
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