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Senate's tax break for motorists has insurance lobbyists up in arms

TALLAHASSEE — Florida lawmakers want to give motorists a break by scaling back some unpopular fees they raised to plug a budget hole a few years ago, but there's a catch.

To pay for it, the Senate wants to repeal a tax break the insurance industry has enjoyed for decades.

That isn't making the insurance industry happy.

On Thursday the well-connected industry, which is a major donor to the Republican Party, its candidates and Gov. Rick Scott's re-election effort, came out in force to oppose the idea, saying it could cost Florida jobs.

The Senate's budget-writing committee passed the measure anyway, 19-0. Senate President Don Gaetz, R-Niceville, cites the possible repeal of the 1987 tax incentive as an example why senators must scrutinize how they spend tax money.

Sen. Joe Negron, R-Stuart, wants to repeal a job credit that gives insurers a 15 percent tax break on the salaries of Florida employees, not including agents, which would raise about $220 million next year. House leaders call the proposal "interesting," but have not endorsed Negron's bill, SB 7132.

With the money, Negron would lower registration fees for cars and light trucks back to their 2009 levels. That year, lawmakers raised the fees to balance the state's $66.5 billion budget, forcing Gov. Charlie Crist to break a no-new-taxes pledge. A motorist would save $12 a year.

Republican senators argued that 26 years is far too long to review a tax break that was tailored to one industry.

"We have an obligation to start looking at these," said Sen. Andy Gardiner, R-Orlando.

Blindsided by the proposal when it surfaced a week ago, a parade of insurance lobbyists defended the tax break at a hearing Thursday.

Mike Hightower of Florida Blue in Jacksonville called repeal of the tax break "a major disincentive" and said it helps offset what insurers must pay under the new federal health care law.

Hightower is a major Republican player and his employer, formerly known as Blue Cross Blue Shield, gave $250,000 to Scott's 2010 effort and has given $100,000 to his 2014 re-election campaign.

"Is Florida Blue going to leave Florida? I doubt it," Hightower told senators. "We are vested here. We started here."

Industry lobbyists said the tax break has attracted 44,000 industry jobs to Florida since 2008, a time when unemployment in the state was skyrocketing. But when pressed by senators, they did not cite a single company that would not have come to Florida without the job credit.

That brought a scolding from one of the insurance industry's most reliable backers, Sen. John Thrasher, R-St. Augustine, who as a prominent lobbyist several years ago represented insurance interests in the Legislature.

"I love my friends in the insurance industry," Thrasher said as he urged them to find another source of money to reduce tag fees. "I hope my friends will come back with some ideas for us. Let's not just say 'No.' "

Longtime insurance lobbyists Gerald Wester and Paul Sanford said the tax break was a major factor in the decision by some national insurers to locate in Florida.

Sanford, who lobbied for the tax break in 1987, predicted that other states would soon offer incentives for firms to relocate from Florida.

"Those are very moveable jobs. You have highly skilled people doing claims work," Sanford said. "It doesn't matter where they work. … I'm not sure we want to run that risk."

After the hearing ended, Negron said he gave the insurance lobby a week to offer another source of revenue to reduce motorist fees, but it proposed nothing.

"This is the best case they can make? All I heard was speculation," Negron said.

He then showed reporters his handwritten note that State Farm made a $3.2 billion profit last year, and paid its CEO $9.6 million.

"This idea that if we decide to redeploy a tax incentive to our constituents that the apocalypse is going to occur — I don't think the facts support that," Negron said.

Contact Steve Bousquet at bousquet@tampabay.com.

Senate's tax break for motorists has insurance lobbyists up in arms 03/28/13 [Last modified: Thursday, March 28, 2013 10:59pm]
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