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Tax Swap Could Be Bait And Switch

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JOSEPH H. BROWN

The Tampa Tribune

Published: July 27, 2008

Back in the 1990s, former Gov. Lawton Chiles compared Florida to an 18-wheeler running on a Model T engine. He was referring to the state's antiquated tax system developed before World War II when the state was the least-populated in the South.

With a constitutional amendment on the ballot in November that would swap property-tax levies for schools for a one-cent increase in the state sales tax, that engine could throw a rod, and some of the tires on that 18-wheeler might blow out.

Amendment 5 is the latest property tax "reform" proposal out of Tallahassee. If approved by voters, it would eliminate the state-mandated part of property taxes for schools, which account for about 25 percent of the average Floridian's tax bill.

Such projected tax savings sound appealing, even though voters approved an amendment in January that reduced property taxes statewide. But they better study this one carefully because the consequences could be devastating to Florida's already low-funded schools.

A Fiscal Trojan Horse?
Amendment 5 was put on the ballot by the Taxation and Budget Reform Commission. Other panels in other states have toyed with the idea of replacing localized property taxes as a key source of funding for schools because of obvious inequities. That's mostly because school funding debates - especially at the national level - focus on spending per pupil.

"For school children and their parents, principals, teachers and those concerned with public education in Florida, this may very well be a Trojan Horse because there is no constitutional assurance that education funding will be 'held harmless' after the first year," said Dominic M. Calabro of the of Florida TaxWatch, which released its report on Amendment 5 the other day.

According to the report, the state will have to find up to an additional $11.1 billion in state revenues or make significant additional budget cuts to fill the hole. And as a former state legislator told me last week, you can't leave such a responsibility up to the Legislature.

Sales Tax Still Pretty Low

A local official told me the problem with the amendment is a one-cent increase in Florida's sales tax won't be enough. At least two cents will be needed, along with getting rid of some current exemptions. But he, along with most lawmakers, wouldn't dare say this publicly.

The net tax burden would not increase, just shift a bit from property owners to consumers. All property owners are consumers, but not all consumers are property owners. Also, the sales tax captures revenue from tourists.

But, again, there's no guarantee this alternative funding stream will provide enough for our schools.

Personally, I wouldn't feel too burdened spending a little more in sales tax. I pay 10.25 percent when I visit my hometown of Chicago, and local residents like my brother have to also pay a state income tax.

Still, Floridians better study this carefully before they go to the polls on November 4. A "tax swap" could shortchange our schools.

Joseph H. Brown is a Tribune editorial writer.

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