Florida Agriculture Commissioner Adam Putnam offers a practical way to generate desperately needed funds for school construction that merits the Legislature’s support.
The proposal also includes a business tax cut aimed at making Florida more competitive.
Putnam’s plan is to cut in half over three years the 7 percent tax on energy used by businesses. Residents pay no such sales tax. Putnam says large corporations are exempted, so the tax affects mostly mid-sized businesses.
At the same time he would direct the tax’s revenues be used for the construction and maintenance of Florida’s public schools and universities.
The bulk of such funding has come from Public Education Capital Outlay fund, a tax on electric, telecommunications and cable bills.
Because of widespread cellphone use and energy efficiency advancements that have cut electricity use, PECO funding has dropped precipitously.
In 2006-07 it generated $1.8 billion. The PECO fund now has $73.4 million, thanks to lawmakers transferring funds from general revenue. The Hillsborough school district alone faces at least $117 million in unfunded renovations projects.
As Putnam says, PECO is no longer a sustainable revenue source. The business energy tax would be. The tax now raises about $450 million a year. If Putnam’s plan were to be adopted, after the three-year phase-in period Florida schools would receive about $225 million that could be bonded for capital projects. His tax cut would save commercial enterprises as much.
Lawmakers and Gov. Rick Scott are floating other appealing tax-cutting ideas this session, but Putnam’s proposal deserves a serious look.
Easing the energy-use tax could be seen as weakening an incentive for conservation, since additional energy use increases the tax bill.
But Putnam points out that Florida businesses pay more taxes on energy consumption than half the other states in the Southeast. Slashing the tax might encourage companies to move or expand here. Most businesses, after all, try to minimize energy costs — regardless of any tax.
And Putnam’s proposal includes another tax-cutting provision that would promote conservation. It would offer a tax-free holiday weekend for energy- or water-efficient appliances of up to $1,500.
We find tax-free holidays a bit of a gimmick, but there is no question they are popular. Putnam’s staff estimates the holiday would save consumers about $375,000 and generate about a 20 percent increase in sales for retailers.
Although no substitute for more substantial — and enduring — conservation policies, the tax holiday could make Floridians more discerning in their purchases.
Lawmakers may debate whether the business energy tax cut is the best of the many tax cuts they’ll consider this session. But there should be little debate about the need to find a reliable source of school construction funds.
Putnam offers a smart solution.