Fight Rages in Florida To Save Tax on Services

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Gov. Bob Martinez of Florida may have won back some public support this month when he proposed repealing the state's new 5 percent tax on services, but he gained a vociferous foe in the state's education community.

Education groups throughout Florida rallied last week to save the tax. And they plan to launch a statewide advertising campaign in support of the levy this week, when lawmakers reconvene for the second week of their special session.

The legislature met at the Governor's request Sept. 21-23, but lawmakers failed to reach agreement on the tax.

The Senate passed a bill that would replace the 5 percent tax on services4with a one-cent increase in the sales tax. The House adjourned without taking any action on the measure.

$265-Million Loss

The 5 percent tax on services, ranging from advertising to pest control, took effect July 1. It is expected to raise at least $721 million in revenues this fiscal year, and $1.2 billion in fiscal 1988-89.

Members of the education community estimate that schools could lose as much as $265 million this fiscal year alone if the tax is repealed and not replaced with another source of revenue.

The one-penny sales tax proposed by the Senate would raise nearly the same amount as the tax on services during its first few years. But because Florida's service industries8are growing so rapidly, it would not generate as much income as the services tax over the long term.

Education leaders from across the state--including Commissioner of Education Betty Castor--converged on Tallahassee Sept. 21, at the start of the special session, to express their support for the tax on services.

According to Ms. Castor, repealing the measure would send voters the "wrong signal" about the momentum of the state's school-reform movement.

In addition, she said, rolling back the tax halfway through the current fiscal year would force many districts into financial "chaos."

'A Mistake'

Mr. Martinez originally had waged a bitter fight to win passageel10lof the new tax. But the Governor now claims he "made a mistake."

In the last few months, national corporations have withdrawn millions of dollars in advertising from Florida, and the Governor's voter-approval rating has plummeted in the polls.

In addition, a grass-roots movement is urging voters to abolish the tax by approving a constitutional amendment in November, when many lawmakers stand for re-election.

"The sales tax on services has shaken public policy in Florida to its very foundation," Mr. Martinez said. "We cannot force upon the people of this state a tax they so strongly oppose."

The Governor has asked lawmakers to overturn the tax, effective4Jan. 1. He has promised to prepare a revised budget for the legislature between now and January that would spell out where budget reductions could be made.

Lawmakers expressed some disgruntlement last week, however, when the Governor called them into special session without having proposed a new budget.

A legislative staff member predicted that if the Governor vetoes plans to revise the services tax, or to replace it with another source of revenue, lawmakers would override that veto.

Meanwhile, education groups are exhibiting the most "united front" they have shown in years, according to Richard C. Holihan, executive director of the state's Education Standards Commission. The commission has predicted that loss of the services tax would have "catastrophic results" for Florida's schoolchildren.

Vol. 07, Issue 04

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