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  Tuesday, September 04, 2007 As tax collections slow, state legislative leaders announce plans for budget-cutting special session Facing an ongoing decline in state revenue collections, leaders of both the Florida House and Senate announced late yesterday, their preliminary plans for yet another special session, this time to discuss budget cuts in reaction to Florida's slowing economy. (To read the news release and related memos, just click here) The special session is tentatively scheduled to begin on Sept. 18 and continue into the first week of October. A slowdown in documentary stamps and sales tax collections, primarily resulting in a slump in the real estate market, is forcing the reexamination of current state government's $71.5-billion budget which went into effect on July 1. Economists are scheduled to meet next week to try to quantify the shortfall lawmakers will be faced with during the special session. Some believe it could reach as much as $1- billion or more. The purpose of the session will be to adjust state government spending to more closely match the actual and projected revenue forecasts. Florida's constitution requires a balanced budget so deficit spending is not an option. Since tax increases are not currently being discussed, it's likely education and healthcare programs will be the probable targets for cuts given their dominance in the state's budget. But all of that could easily change once lawmakers are back in town. Right now their plan is to deal only with budget items, however, the formal proclamation due out soon, will detail the exact agenda. Governor Crist has suggested he may recommend adding two issues left unresolved from the spring's regular session: the future of the current PIP/no-fault automobile insurance requirement set to expire on Oct. 1, and funding for Florida's popular and ever-growing KidCare health insurance program. Budget Panel Urged to Get Rid of Sales Tax Exemptions State constitutional law expert Robert Nabors recently suggested to the members of Florida's Taxation and Budget Reform Commission they recommend that legislators take a close look and eliminate a number of the state's sales tax exemptions, presumably in an attempt to expand the state's tax base and provide more money for public schools. According to a report in the Palm Beach Post, Nabors urged members at their July 20th meeting to "listen to John McKay" a current appointee to the Commission and former Florida Senate president. During his tenure McKay championed several ideas to enact reforms to provide for systematic review and/or elimination of such exemptions, however none ever were successful in winning final approval. After leaving the dais McKay's continued his efforts, though with no greater measure of success once again, this time instead seeking signatures and voter approval for similarly-minded constitutional amendments. Originally branded as the "FAIR" amendment, a variation of his original idea is still alive today, though only limping along in a plight to gain significant signatures to win a place on the 2008 ballot. However, it now seems McKay's focus is trained on influencing the Commission before it finishes its work next year, rather than trying to sell the state's voters at large on the merits of his ideas yet again. ###
Join the 4th District AAF along with various related trade organizations as we meet in Tallahassee to discuss our businesses with state legislators. There will be fun events and important face-to-face meetings with lawmakers. This will be the most important thing we do all year. Don't miss it!
Key Factoids
If the state were to implement a 6% sales tax on advertising:
Source: The Advertising Coalition - Global Insight 2005 study.
Keep all of these things in mind when the Florida Legislature starts talking about repealing our tax exemption. Fact: The Advertising Industry provides thousands of clean-industry jobs in Florida. Fact: In the wake of 9/11, hundreds of ad agency jobs have been phased out of Florida and consolidated in agency headquarters in New York. Fact: The agency business was originally funded by a 15% commission structure which has been shrinking to 5%-10% just to keep jobs in Florida. Fact: Agencies work long, hard hours to earn and collect their 7.5% commissions from clients who are increasingly drawn to consolidated buying sources in New York to save 1% in their media purchases. Fact: Asking agencies to represent and collect a 6% surcharge in the form of a tax will drive most of the clients to use out-of-state agencies. Fact: Most Florida-based advertising jobs will be driven out of Florida to any of the remaining states that do not have ta gross reciepts tax. Fact: Thousands of good Florida jobs will be lost. Fact: The anticipated revenue from this action will be dramatically reduced because of the shift of spending to other states. Fact: Those few remaining agencies in Florida will be paying a tax equal to more than 90% of the revenue the company actually earns. Opinion: If you think the Boston Tea Party was memorable, wait until you ask the struggling mass communications companies to pay out a tax equal to 90% of their operating revenue! Opinion: There are more significant downsides to taxing creative advertising services. One: A company can bring those services in-house and not pay sales tax on its own employee's salary, thereby decreasing business given to outside agencies. Second: How would a national or international advertising creative, such as a logo, be taxed if created in or out of the taxing state. In the end it would drive creative services out of the taxing state. Keep repeating to yourself... "I do not want to become a tax collector for the state of Florida!" Remember: No business, big or small, ever pays taxes. They pass it on to the consumer. When you remove a tax exemption you have just raised taxes on the citizens of Florida. http://www.4aaf.com/lobbyist.cfm  |
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©2010 Ad Fed of Greater Ft. Lauderdale |
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