The concern: Reducing Florida tax collections amid a global upheaval could threaten a host of state and local government services.
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- Florida Republican leaders are promoting large tax breaks, potentially adding to economic uncertainty amid President Trump’s tariffs.
- Competing tax cut plans are in play, with the House favoring a sales tax reduction, the governor proposing property tax rebates, and the Senate offering a mix of one-time tax holidays and exemptions.
- The tense political climate between the House and Governor DeSantis may complicate budget and tax cut negotiations.
While President Trump’s tariffs are making a rollercoaster of the economy, Florida’s Republican leaders are on a risky ride of their own by promoting massive tax breaks that may add even more to the uncertainty.
The plans are already out there, ranging in scope from $2.1 billion to $5.4 billion in givebacks. But some warn that reducing Florida tax collections amid the global upheaval could eventually threaten a host of state and local government services.
History shows that when consumer spending, tourism and home-buying slumps, Florida’s sales-tax driven economy usually nosedives. Lawmakers struggled to re-do state budgets following 9/11, the housing collapse of the late 2000s, and the COVID-19 shutdowns.
“Even if a full-blown recession does not materialize, economic growth is virtually certain to slow in the months ahead, with negative consequences for state and local tax revenue,” the Institute on Taxation and Economic Policy, a nonprofit studying state and federal tax policy, wrote in a new report.
Dueling tax cut plans in play as session hits homestretch
The Florida House, under Speaker Daniel Perez, R-Miami, already has advanced a $5.4 billion tax cut, built on reducing the state’s 6% sales tax to 5.25%. Gov. Ron DeSantis has countered that with his own $5 billion proposal that would rebate $1,000 to every homesteaded property owner in Florida.
The Senate is trying to bridge those two increasingly hostile camps, this week unveiling a $2.1 billion reduction that exempts clothing costing $75 or less from sales tax, lifts the cost of auto registrations for a year, and adds a flurry of sales-tax holidays. Such short-term tax-free days have been dismissed by Perez, who likened them to a “stunt.”
Still, in an appeal to the governor, the Senate proposal also orders a study of reducing or eliminating property taxes, intended to conceptually set the table for a 2026 ballot initiative the governor wants.
Senate President Ben Albritton, R-Wauchula, so far is the only state leader to say he is wary of giving away too much state revenue too quickly in an uncertain time. Of the House plan, Albritton has said, “That’s going to be hard because that’s going to impact the budget pretty substantially.”
Key for Albritton is that most of the Senate’s tax break is a one-time pay-out, with less than $1 billion in so-called “recurring” revenue.
DeSantis’ checks to Florida homeowners also would be a one-time bounty. But the governor isn’t stopping there, wanting voters next year to maybe consider eliminating property taxes, which would really upend revenue forecasts.
One-time payouts favored by Senate president
The House’s plan, though, clearly imposes a permanent hit on sales tax, which provides for about three-out-of-four general revenue dollars used to build the state’s budget. The Senate for the coming year is proposing to spend $117.4 billion while the House budget proposal is $112.9 billion, both sides well below the current year’s $118.6 billion spending plan.
The state has robust reserves of about $15 billion. So that means if there’s a severe economic downturn stemming from the trade war triggered by the Trump tariffs, lawmakers would be able to patch short-term, state budget shortfalls that emerge.
But sales taxes are the life’s blood of state spending, powering education, health care, environmental programs and transportation. Property taxes keep local governments afloat, helping pay for public safety, fire protection and schools.
With both on the chopping block this spring, unease is growing.
Some experts say the state’s GOP leadership is trying to match the government-slashing of President Trump and his Department of Government Efficiency under advisor Elon Musk.
“With DOGE and everything else that’s happening nationally, there just seems to be blood in the water about how governments operate and people are intent on attacking their fiscal policies,” said Sean Snaith, an economist at the University of Central Florida.
“But there’s a big difference between the federal government, which is running almost a $2 trillion (yearly) deficit and a national debt of $36 trillion, versus state and local governments, which in Florida have to balance their budgets and spending,” Snaith added.
‘Blood in the water,’ thanks to DOGE?
Albritton also seems to be considering the DOGE effect.
“We’re a growing state, so when we make these decisions, there is a minimum threshold of what the state budget needs to be to make sure that the garbage is being picked up, you know?” Albritton said. “That (electricity) is being delivered. All the things that state government is required to do, right?”
What kind of tax breaks will be settled on when the Legislature is scheduled to adjourn May 2? “I don’t know where that sweet spot is,” Albritton conceded.
The mood at the Capitol also isn’t good for dealmaking. The House under Perez has been regularly clashing with DeSantis.
The latest exchange focuses on the House’s investigation of Hope Florida, the social services assistance agency close to First Lady Casey DeSantis, and its related foundation, which reportedly funneled $10 million last fall from an unreported settlement to political committees helping the governor fight a marijuana ballot measure.
The toxic environment between the House and DeSantis isn’t going to help budget or tax-cut negotiations.
Atmosphere not good for deal-making
“DeSantis would do a massive cut to local government funding,” House Democratic Leader Fentrice Driskell of Tampa said about the property tax idea. “DeSantis wants the headlines from the tax cuts but he won’t be the one trying to figure out how to afford teachers in Miami-Dade, or police in Orlando or firefighters in Tampa.
“He’s trying to give away the backbone of our local communities’ budgets and once again, it’s more about him and his ambitions than Floridians’ futures,” Driskell added.
Still, with Democrats supporting, state representatives voted unanimously for the House’s $5 billion sales tax break. Florida’s sales tax costs poor families a larger share of their household budgets than it does wealthier families, and some Democrats said they welcome reducing it.
Many, though, also said they worry about the cut’s effect on state services. They’re urging lawmakers to enact policies that would close exemptions favoring corporations and wealthier Floridians. But that argument is playing a secondary role in the tax-cutting drama now playing at the state Capitol.
ITEP, the tax research organization, said the economic slowdown emerging with the tariffs will ripple through every phase of spending.
“Sales taxes collected from spending on discretionary items is particularly at risk in the months ahead as consumers face sticker shock from tariff-induced price hikes for motor vehicles, electronics, appliances, clothing, and other items,” ITEP reported.
“One likely result of higher prices on these items is that consumers will choose to delay or forgo some purchases, such as by holding onto their old car longer than they otherwise would have.”
Sen. Don Gaetz, R-Niceville, was in the state Senate during the housing collapse of 2008. He said many lawmakers want to go slow: “I think everyone’s being cautious right now and the Senate president (Albritton) is being cautious with his tax proposal, and that’s why I’m supporting it.”
But Senate Finance and Taxation Chair Bryan Avila, R-Miami, whose committee approved the Senate’s $2.1 billion plan Tuesday, said that if harder economic times are on the horizon, Floridians will welcome a substantial tax break.
“We all agree we need to do as much as possible to lessen that financial burden, because there’s a level of uncertainty at the federal level that could have an impact on our families,” Avila said.
John Kennedy is a reporter in the USA TODAY Network’s Florida Capital Bureau. He can be reached at jkennedy2@gannett.com, or on X at @JKennedyReport.
