Historic, yes; could be better

Florida Speaker Daniel Perez didn’t get nearly as much as he wanted, but he did pretty well. All things considered.

And even if it took the Florida Legislature more than the usual 90 days, Perez and his House colleagues prevailed in their most recent legislative session to accomplish a feat that is rarely achieved in American government: 

With their counterparts in the Senate chamber finally acquiescing, Perez led the Legislature to truly cut the budget. Not as much as Perez proposed, but still.

That is something we will never see in our lifetimes coming from Washington, D.C. Nor for that matter from most governments — local or state across the nation. The only time it happens is when the economy tumbles into recession, and lawmakers have no choice.

But Perez and his Florida House colleagues ably cajoled the state’s senators to agree on cutting Florida’s annual budget for 2025-26 to $115.1 billion from $118.6 billion, a 3% reduction.

Now, that’s not exactly a “big whoop” moment. It’s hardly a ripple in the huge truckloads of cash that flow into Tallahassee. Perez originally wanted a more meaningful $5.5 billion, or 5%, reduction in spending, and he wanted to cut the state’s sales tax rate from 6% to 5.25%.

But given the standard practice and history of most legislatures, Florida’s included, of spending every dollar that comes in, actually reducing spending when the state and national economies are not in recession is nevertheless a highly unusual achievement. It’s news.

Before heaping glowing accolades on Perez and the entire Legislature, however, as we all know and as the cliché goes, the devil is in the details. And those details reveal that you can make the case the Legislature once again played its game of benefiting selective individual Floridians with “targeted” sales tax exemptions, while Senate President Ben Albritton, R-Wauchula, also managed to keep a large portion of his pet projects in the budget — nearly $200 million worth of new recurring expenses. 

We all know: Legislation is always about picking winners and losers.

Nonetheless, give Perez and his House colleagues credit for recognizing state spending needed to be cut to avoid fiscal and economic pain in the next two years. At the same time, they created a foundation that inhibits the Legislature from doing what government does best — creating new spending each year that never goes away.

As noted in this space a month ago, during Gov. Ron DeSantis’ two terms, the Legislature and DeSantis have taken advantage of Florida’s growing economy. Florida’s gross domestic product has increased 63% since the second quarter of 2020, reaching $1.738 trillion — fourth largest state GDP in the nation behind California, Texas and New York. And thanks to that, Florida’s government has increased its spending 33% in the same period.

Has your business’ spending risen that fast in six years?

But in late 2024, the Legislature’s economic forecasters at the Office of Economic and Demographic Research issued a report that said if the Legislature did not rein in recurring spending, the state was headed for deficits that would mushroom to $6.9 billion in two years.

That caught Perez’s attention. To avoid inevitable pain, and to his credit, Perez said the Legislature needed to quit approving and locking in new recurring expenses. Instead, Perez preached in his speeches legislators needed to cut spending and divert excess revenues to reducing Florida’s long-term debt. Florida’s long-term debt over he past five years has hovered at about $60 billion. (The state’s cash and investments hover around $95 billion.)

To help Floridians directly, Perez also wanted to cut the state’s sales tax rate — a big ask that state senators don’t have the guts to stomach. You always hear: We can’t risk a big cut like that. What if the economy goes into a tailspin and sale tax collections plummet?

Conversely, Perez saw the cut in the sales-tax rate as having three benefits: It would increase the Legislature’s spending discipline; it would give all Floridians more disposable income; and that, in turn, would translate into more retail sales and either the same or increased sales-tax revenue. 

It’s the Laffer model: State’s with falling tax burdens perform better than those with stagnant or rising burdens.

He tried. 

Meantime, President Albritton, R-Wauchula, spoke like a fiscal conservative but acted like a standard-issue, Florida legislative leader. Albritton’s initial budget proposed cutting spending a paltry 1%. He also told lawmakers at the beginning of the session he wanted to divert nearly $300 million of general revenues to his Rural Renaissance campaign — new social and economic programs in the state’s rural areas — and to new spending to revive Florida’s dying citrus industry.

These contrasting approaches set up the stalemate at the end of the regular session. Perez and the House wanted to go big; Albritton and the Senate wanted fiscal conservatism light.

What did we get? Compromise, of course. 

Someone had to give. And because of their deadline and the one job Florida lawmakers are required to fulfill — that being adopt a new annual budget by July 1 — they ran out of time. Each side had to give.

Which side benefited most? Or, which side gave in the most? If you take what Perez initially sought — the big, bold moves of a 5% cut in spending and a reduction in the sales tax rate, which would have totaled about $12 billion in spending cuts and tax savings — Perez gave up more.

Even so, both sides predictably are declaring their work as historic fiscal conservatism and have spun their press releases in the most positive tones. That’s the dignified, respectful and politically advantageous thing they always do — heap praise on each other for doing such tough work for Floridians.

Perez: “It is rare for government to voluntarily shrink its budget. It is even more rare to have a group of leaders more focused on saving for the future, instead of needlessly spending in the present. This unprecedented, conservative budget will secure our state’s financial future and continue to invest in the priorities that have made Florida a nationwide leader in economic growth, education, public safety and individual freedom.” 

Albritton: “Florida Senate is running to the fight for meaningful, broad-based tax relief to keep more money in the pockets of the hard-working Floridians and local businesses who earn it … Cutting taxes on essentials helps keep Florida affordable. 

More Albritton: “This year, we are right-sizing our budget for the long-term, spending less, while setting aside robust rainy-day funds … ” 

Albritton’s press releases carried subheads that highlighted specifics: “Pays down state debt, lowers per capita spending, reduces growth of state government. Accounts for broad-based tax relief” … “Targeted, broad-based savings on essentials for families and seniors keeps Florida affordable, Eliminating Business Rent Tax keeps Florida competitive.”

All true, and it all sounds wonderful. (See Key Provisions of the Budget, above.)

Indeed, from a business perspective, credit Perez for persuading the Senate to pay down debt — about $830 million this fiscal year, then $250 million each year thereafter. Every CEO and family knows interest payments eat into daily operations and living. Requiring that cash to go to debt reduction is like a restraining order on the Legislature. It takes that much cash away from lawmakers’ ability to heap on more and new recurring expenses and subsidies. 

And hallelujah! Lawmakers finally had the courage to eliminate the sales tax on business rent. It always served as a disincentive for businesses to open or maintain multiple offices. With that gone, Florida will become more attractive to business. More important, that sales tax money will be freed up for more than 2 million businesses to expand, hold prices steady or increase their employees’ pay, all of which provides fuel for an expanding economy and more tax revenues for the state. 

But now turn to the not-so-swell.

This needs to be addressed: President Albritton’s campaign to save Florida’s citrus industry. 

When the session began, Albritton told fellow senators:

“I was born and bred in Florida citrus, and this vital industry is not going down on my watch. To those growers who are left in the business, hear me when I say, you are not forgotten, you are not alone and I’m running to this fight … This Florida legacy will live on.”

Convincing his colleagues that recent research is offering hope, Albritton secured $139 million for the citrus industry — about $100 million of which will be subsidies to growers. 

While Albritton’s devotion to this flagship industry is noble, a question that should be asked and debated (but wasn’t) is this: Is it the responsibility of Florida taxpayers to save an industry? To save an industry that has been in almost free-fall decline for 25 years? 

Consider this: 25 years ago, Florida’s all-orange production totaled 223 million boxes. For the year ending in July, the production is expected to be 12 million boxes — a 95% decline.

Florida’s citrus industry has been in the state’s blood for centuries. What’s more, $124 million for research and subsidies is only a pittance in Florida’s budget — 0.1%. 

But is that the best, fairest and proper use of taxpayer money?

Finally, just as the sun rises in the east, our lawmakers concluded their session touting their $1.3 billion in consumer sales-tax holidays and permanent exemptions for Florida families.

This practice is now an annual routine. (See Key Provisions.) But it’s a political gimmick.

Fiscal conservatives, this one included, welcome any cut in taxes. And certainly all of these permanent and seasonal tax holidays will help Floridians who buy those taxable items. 

But it’s picking selective winners. Cuts for some, not for all.

The Legislature could be far more heroic if it did what Perez proposed — cut the sales tax rate and, likely, broaden the tax. 

Indeed, if you tried wading through Florida’s tax system, no doubt your eyebrows would go up at many of the goofy things that are exempted or given special treatment.

As lawmakers spend the next few months trying to figure out how they can cut Florida’s property taxes, in Perez’s second year as speaker, let’s hope he doesn’t rest. To be sure, the Legislature deserves credit for what it accomplished in its most recent session. 

But in the words of a Sarasota Ballet master of Russian descent: “Was good. Could be better.”