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Tax-cut letdown: Numbers may not add up

TALLAHASSEE, Fla. – June 13, 2007 – On the first day of the special session to lower property taxes, here’s what lawmakers started cutting: expectations for a huge tax cut this year and a January vote for even bigger savings.

The Republican-led Legislature didn’t appear to have the votes Tuesday to push deeper cuts more quickly because Democrats oppose $7.2 billion in school cuts over five years in the $31.6 billion plan.

But the schools dispute belies the real trouble: It’s almost impossible to fix the complicated tax system, protect local services and fulfill simple promises made by Gov. Charlie Crist and House Speaker Marco Rubio, who have raised public expectations of deep tax cuts.

The two Republicans have barnstormed the state separately for months. Rubio held out for bigger cuts in the recent legislative session, promising people will get a tax bill “they can afford.” Crist repeatedly pledged a reform that will send “a sonic boom” that will kick start the state economy when taxes “drop like a rock.”

That’s not likely.

“Taxes will drop, but more like a pebble,” conceded Sen. Jim King, a Jacksonville Republican. “A lot of people are expecting more than they’re going to get.”

Not enough

A number of Republican legislators said taxpayers were telling them the first phase of the plan, calling for an average 7 percent savings this year, isn’t enough. The plan uses tax rollbacks and caps that would cost local governments about $15.6 billion over five years.

The second phase calls for about $16 billion in homeowner savings, but takes money from schools. This phase, which requires a constitutional amendment, would need approval from 60 percent of voters.

To make the Jan. 29 ballot, legislative leaders need a three-fourths vote of each chamber.

Democrats say they’re not going along, and their support is critical in the 39-member Senate. Even if all 25 Republicans voted for it they would need six of the 14 Democrats to get it on the special-election ballot.

Republicans, who plan to pass the cuts and put the proposal on the November 2008 ballot by week’s end, accused the Democrats of simply “opposing tax cuts” and hiding behind kids to mask their agenda. The Republicans said they would find schools money somewhere in the budget next year.

Sen. Al Lawson, a Tallahassee Democrat who will lead his party next year, said Rubio and Crist “boxed us in” by calling for big cuts that could be made only by hitting schools, which legislators had planned to leave alone.

“I don’t care if they say I’m against tax cuts, which isn’t true. I’m not cutting schools,” he said.

The GOP doesn’t need the Democrats’ help in either chamber to put the measure on the Nov. 8, 2008, ballot. That requires only a three-fifths vote in each chamber, which the Republicans have.

In a strange twist, Democratic Leader Steve Geller of Cooper City said it’s “absolutely possible” Democrats would consider putting the measure on the January ballot if it was destined to go on the November ballot anyway.

Meanwhile, pressure to protect municipal budgets is mounting from firefighters to nurses to teachers. The House convened a special meeting to hear their concerns Tuesday but made it clear that the bills would not change.

Van Church, lobbyist for workers at Jackson Memorial Hospital’s Service Employers International Union, warned that the hospital district could lose $56 million of $140 million. “This is a recipe for human misery,” he said.

Miami-Dade County Commissioner Katy Sorenson urged House members to be careful. “There are too many voices missing from the conversation,” she said, such as the elderly single mother who relies on the city park program and library for child care or the child who gets FCAT tutoring at the county library. “These are the citizens who will see their service levels decline.”

Rubio said tax-cut opponents “create confusion, and they misstate the facts.”

He suggested House Democrats were hypocrites because they themselves offered a tax-cut plan that would have reduced school money. Democrats said their plan sought to plow money back into schools, while Rubio acknowledged he didn’t know where the state would find the money to make up for the $7.2 billion shortfall.

Will of the people

Rubio said the “compromise” plan reflected the will of the people and warned that if lawmakers don’t pass the tax-cut plan, citizens will do it for them.

As he spoke, a group of 150 elderly homeowners bused from Miami by Rubio supporters were gathering outside the Capitol to launch a petition drive seeking deeper cuts.

About 19 percent of voters say Rubio, a West Miami Republican, is doing well on the tax issue, but 39 percent disagree, according to a Zogby International poll. Crist’s numbers: 54 percent positive, 35 negative.

Gov. Crist downplayed his role in pumping up expectations, saying “what concerns me is that the people get relief.” He said the “saving grace” of the plan is that the people will make the decision.

But if voters don’t go along, taxes won’t drop like a rock. Miami Republican Sen. Alex Diaz de la Portilla said the first-year savings won’t give taxpayers a “Wow!” moment, and they could blame the governor. “The governor has got himself in a corner in that he has overpromised and he is going to underdeliver,” he said. “He has raised expectations that are not necessarily responsible ones for state government, and he’s going to have a very difficult time getting out of that.”

Copyright © 2007 The Miami Herald, Marc Caputo and Mary Ellen Klas. Distributed by McClatchy-Tribune Information Services. Miami Herald staff writer Gary Fineout contributed to this report.

NAR supports National Flood Insurance Program

WASHINGTON – June 13, 2007 – In support for protecting the integrity of the National Flood Insurance Program, the National Association of Realtors® (NAR) has called for greater participation in the program by homeowners and communities. NAR also said it was concerned over the potential negative impact of some elements of the legislation on the housing market, especially for families with low and moderate incomes.

In testimony before the House Subcommittee on Housing and Community Opportunity yesterday, NAR suggested that Congress develop a comprehensive approach to protecting homeowners, potential homebuyers, renters and business owners from the effects of future catastrophic natural disasters. Since its creation, the National Flood Insurance Program is credited with helping to reduce the escalating costs of repairing damage to homes, buildings and possessions caused by floods in participating communities.

“A strong real estate market is the linchpin of a healthy economy. To maintain the vitality of residential and commercial real estate, certain safeguards must be made available such as the federally backed flood insurance through the NFIP,” said Vince Malta, real estate broker-owner from San Francisco and vice-chair of NAR’s Public Policy Coordinating Committee.

H.R. 1682, The Flood Insurance Reform and Modernization Act of 2007, would maintain the partnership between local, state and federal government, and enable participating communities to purchase insurance as protection against flood losses in exchange for state and community floodplain management regulations that would reduce future flood damage. In exchange, the NFIP would make federally backed flood insurance available to homeowners, renters and business owners in these communities.

“The NFIP bill is a win-win in that it promotes responsibility by homeowners, the community and the government. Compliance with NFIP building standards resulted in nearly 80 percent less damage annually.

In addition, the cost of flood damage was reduced by nearly $1 billion because communities are implementing sound floodplain management requirements and property owners are purchasing flood insurance,” said Malta.

Although NAR supports H.R. 1682, Realtors believe certain components of the bill may have unintended consequences. “We are asking Congress to strike a balance between ensuring the long-term fiscal viability of the NFIP and avoiding disparate results that might cause market inequities and possibly lead to housing affordability problems,” Malta said.

NAR strongly supports provisions in the bill that include protecting the integrity of NFIP by fully funding existing obligations, increasing incentives for homeowners and communities to participate, and increasing awareness of flood risks. NAR expressed concerns over portions of the bill that might delay the updating of the 100-year floodplain maps, which according to Federal Emergency Management Agency is scheduled to be completed by 2010. “It is imperative that the flood maps are updated since they are the cornerstone of the NFIP program. Without accurate maps, property owners are not able to properly evaluate the risk to their property from flooding,” according to Malta.

NAR also expressed strong opposition to phasing out subsidies for non-primary residences and non-residential properties for several reasons including possible inequities, increased insurance rates and the “dramatic” effect on rental housing affordability, which would disproportionately affect low and moderate income individuals and families.

“NAR urges Congress to develop and enact a comprehensive natural disaster policy that protects not only homeowners but also all taxpayers because of proactive planning resulting in cost savings. We view reforming the NFIP as an important first step in this process. We look forward to working with Congress in achieving this important legislation,” Malta said.

High energy prices cut into housing budgets

ALEXANDRIA, Va. – June 13, 2007 – Rising energy prices are forcing more families to cut into the budgets they usually would use to pay for housing, food, and even health care, says a new study conducted for Americans for Balanced Energy Choices.

Squeezed the hardest are the country’s poorest families. For those with an after-tax income of less than $10,000, energy costs will consume 46 percent of their take-home pay in 2007, compared with 23 percent in 1997, according to the study.

Looking at a larger swath of the population – the 53 percent of American families who earn less than $50,000 – average transportation and household energy bills will take up 18 percent of after-tax income. That’s nearly double the costs of 1997.

The study was completed by Gene Trisko, an environmental attorney and energy economist, on behalf of Americans for Balanced Energy Choices, an organization that supports using domestic coal to generate electricity.

Gas prices rise the most

Gasoline accounts for the largest single increase in consumer energy costs with the average retail cost of gasoline increasing by 88 percent since 2001.

The study estimates that Americans will spend over $2,900 per family, or 6 percent of after tax income, on gasoline in 2007 with families earning between $10,000 and $50,000 spending 11 percent of after tax dollars on gas.

Spending on residential energy will consume 10 percent of after-tax income for families earning between $10,000 and $50,000. In the last decade residential energy costs have risen by 50 percent overall.

Here’s a look at how household energy spending has increased between 1997 and 2007, using projected figures for this year:

Electricity: 40 percent increase ($870 in 1997; $1,215 in 2007)
Natural gas: 64 percent increase ($579 in 1997; $949 in 2007)
Fuel oil: 96 percent increase ($714 in 1997; $1,402 in 2007)
Propane gas: 76 percent increase ($500 in 1997; $903 in 2007)

For more information about the study, go to: http://www.balancedenergy.org/abec/

Source: REALTOR® Magazine Online, Camilla McLaughlin