State leaders: Tax increase would threaten new - jobs

The DZ Concrete Plant is among new tenants at the Rick Scott Industrial Park near The Villages.

As new members of the Sumter County commission are pushing for a tax increase that would punish new business, leaders at the state level are igniting their strategy to lure it to the Sunshine State. Ex-Democrats Oren Miller and Gary Search are championing the reversal of the county’s longstanding pro-business strategy, seeking to dramatically raise road impact fees on new homes and businesses countywide. Search has pressed to nearly double the fees from the current 40% of the maximum allowed by law to 75%; Miller wants a 150% increase to the full maximum. Longtime Republican commissioners Doug Gilpin, Gary Breeden and Craig Estep tabled the matter until July after a standing-room only crowd pleaded with them earlier this month to reconsider the severity of the economic fallout.

The move smacks of politics instead of sound policy, say state economists and business leaders who are fighting to land businesses in Florida that are fleeing high-tax states like California, Illinois, New Jersey and especially New York at a record pace.

Miller and Search campaigned on a stick-it-to-The-Villages-Developer platform, but their tax increase also targets businesses of all sizes at a time the pandemic has already closed more than half of small businesses in Florida, according to the Florida Small Business Development Center Network.

“For years, residents of high-tax states like New York, Illinois and New Jersey have been flocking to Florida to escape oppressive taxes and regulations,” Sen. Rick Scott (R-Naples) told the Daily Sun. “They are sick of being overtaxed because their state and city can’t make the hard choices to properly manage their own budgets.”

As the Miller-Search tax increase would be passed along to consumers, Scott said the results would mirror the strategy of New York Democratic Gov. Andrew Cuomo, “who is now begging for a federal bailout to backfill his poorly managed budget and threatening to raise taxes on his citizens even more — that’s insane.”

While Sumter weighs the Miller-Search tax increase, the state is winning the business recruitment war elsewhere by touting its overall low-tax ranking, said Florida Secretary of Commerce Jamal A. Sowell, president and CEO of Enterprise Florida Inc., the state’s public-private economic development partnership.

“People are looking at Florida not only as a retirement destination but also to start families,” Sowell said. “Overall, Florida’s the best deal you can give anyone for economy and lifestyle.”

Florida’s pro-business stance has propelled it to fourth place on Tax Foundation’s State Business Tax Climate Report.

New Jersey is 50th in the ranking, California is 49th and New York is 48th.

The ex-Democrats behind the tax increase proposal both com from high-tax states: Miller retired to The Villages from Illinois, ranked 36th, and Search retired to The Villages from Pennsylvania, ranked 27th.

Sumter County has powered the state’s economic engine for several decades, former Gov. Scott and current Gov. Ron DeSantis said.

For example, the day before the Miller-Search tax increase was proposed, The Villages was named America’s top-selling master-planned community for the 11th consecutive year.

“Great news for Florida!” DeSantis said on Twitter of the ranking, two days after the Miller-Search tax increase was tabled. “The Villages continues to support a thriving housing market. This serves as a national example on how to prioritize economic prosperity.”

Experts such as Chris Edwards, director of tax policy studies at the Cato Institute, say local governments should be protecting that prosperity by avoiding, not embracing, tax increases.

New York is “in a death spiral,” Edwards said. “The more businesses and wealthy residents that leave the state, the worse their budget situation will be. It’s also going to be hard to raise taxes, because that will only push more people to leave.”

And Sowell and Edwards say that even with its proximity to major transportation routes, Sumter could fall behind in the race to secure big money coming to Florida. Already:

Icahn Enterprises just relocated its headquarters and $5.1 billion in total market-valued subsidiaries and investments from New York City to a Miami-Dade County barrier island.

Scotlynn Group’s USA Division, a transportation and logistics subsidiary of Canada-based Scotlynn Commodities, chose Fort Myers for its U.S. headquarters.

Aerion Supersonic, an aviation manufacturer, announced it will relocate its headquarters from Nevada to Melbourne.

SIMCOM Aviation Training, a pilot and maintenance simulation training firm, began preparations last year to expand its Orlando facilities to create a worldwide headquarters and training facility.

Lloyd’s of London, the global insurance and reinsurance firm, is expanding to Miami.

Aberdeen Standard Investments, a global investment firm with about $563 billion in assets under management, also expanded to Miami.

Recruiting businesses from New York is a high priority for Frank Calascione, Sumter County’s economic development director.

“Yes, New York, and the entire Northeast in general, for both operations and relocation of corporate headquarters,” he said.

Calascione and his staff also are fielding increased inquiries about the county as a corporate destination.

“We’ve have had multiple recent inquiries from Pennsylvania, the Northeast states and Canada, mainly because the companies are looking for expansion into our rapidly developing market because we have the population, tax environment and a quality of life to support their business and workforce needs,” he said.

According to Don Magruder, chairman of the Commercial Contractor Association of Lake-Sumter and a former chairman of the Florida Building Material Association, the Miller-Search tax increase places those opportunities in jeopardy.

“Businesses and capital will find places where they are welcome,” Magruder said. “To raise impact fees 150% at this time sends a harsh anti-business message to the rest of the country.”

Leaders at the local level have roundly decried the Miller-Search tax increase.

“This will just cripple business growth,” said Scott Renick, The Villages’ director of commercial development. “It’s going to kill deals; it’s not going to happen. From the folks we’re talking with, this could have a phenomenal impact in the face of COVID-19. A lot of our businesses also will be adversely affected by the new minimum wage law, especially restaurants. You’ve already got businesses struggling to make ends meet and meet payroll. Any expansions are because of their ability to aggregate costs across multiple locations. This would take that away.”

Under the Miller-Search tax increase, road impact fees for a small business wanting new office space would soar from $2,367 per 1,000 square feet to between $4,379 and $5,918 per 1,000 square feet.

“In an effort to have The Villages Developer pay for everything, and the citizens pay for nothing, the citizens will be paying in a big way,” said commissioner Doug Gilpin, who received advanced county commissioner certification 10 years ago, about his opposition to the Miller-Search tax increase.

“We’re in a position in which the housing market is still robust,” he said. “What we lack is a strong and vibrant commercial community. BJ’s Wholesale Club may reconsider its decision to build in Sumter County. And forget any opportunity for a Costco, Trader Joe’s or Whole Foods Market.”

For major business players, the penalty would quickly become millions of dollars.

UF Health officials already have said the Miller-Search tax increase may torpedo its new hospital that the previous commission greenlighted to anchor a 400-acre medical city in the south county. 

Ocala State Sen. Dennis Baxley, who represents The Villages, said the Miller-Search tax increase could halt some statewide projects, such as an alternate route planned for U.S. Highway 301 south of Florida’s Turnpike.

And Don Magruder, CEO of Leesburg-based RoMac Building Supply, said the Miller-Search tax increase during the pandemic would be the nail in the coffin for new manufacturing plants, office buildings, retail center and medical services here.

 “Supply channels are broken and building material commodity prices are at record high levels with no predictions of lower pricing anytime soon,” he said. “Nationally, thousands of construction projects are being delayed or canceled because of high pricing or the inability to secure materials. Dramatically raising impact fees during the worst pandemic in 100 years will cost good jobs.”

The county is already struggling to provide affordable housing for Sumter County workers who live outside the age-restricted community of The Villages.

For example, families with students in The Villages workplace charter school currently are living in seven different counties, and only a third of those in the tri-county area have found homes in Sumter, according to Director of Education Randy McDaniel.

Young people such as Coby Sharp, of Oxford, are among those who have spoken out against the Miller-Search tax increase. A recent graduate of The Villages High School, he landed a job with MiCo Customs through the school’s Construction Academy.

The Miller-Search tax increase would raise impact fees for a single-family home in The Villages by $1,458. But in non-age-restricted areas where Sharp would live, it would be an extra $3,998.

“I want to stay in Sumter County,” he told the commission. “But with these high impact fees you’re proposing, it would be hard for me.”

Affordable housing will become even more important for the rising number of remote workers looking to relocate even if their companies aren’t moving, Edwards said.

“In New York, for example, you’re paying a premium in cost of living and taxes for the opportunity to live in one of the major metros in the world with a lot of cultural amenities,” he said. “It’s now far easier to relocate to a state with a lower tax rate or different bundle of amenities, like beaches or the mountains. And Florida has created a very attractive tax environment for them, too.”

If that trend continues, outmigration could exceed anything New York has seen before. During the past five years, Florida’s population grew by 6%, while New York’s decreased by 1.7%, according to the U. S. Census Bureau.

“The fear for New York is that this is just the tip of the iceberg in a business climate that may be much more welcoming to remote workers post-pandemic,” said Jared Walczak, vice president of state projects at the Center for State Tax Policy at the Tax Foundation, a nonprofit tax watchdog. “The location of their jobs may be irrelevant. There are lots of different reasons why they’ll move. But they won’t be as tethered to the job market, which will be a concern to states like New York.”

Time is of the essence. While the Sumter commission continues to consider the Miller-Search tax increase, projects approved by the previous commission roll on.  

Concrete and steel are steadily rising at the Gov. Rick Scott Industrial Park, a massive project that economic forecasters said will create 20,000 jobs and millions of dollars in tax revenue.

Calascione also pointed to other “spinoffs” from the project that — if the Miller-Search tax increase is defeated — are expected to lift the local economy.

“Everything from unexpected parts, supplies, health care services, automotive repairs, restaurant orders will be needed by those businesses and employees working in the park,” he said.

In addition to the medical city, other major projects approved by the previous commission that could be in jeopardy with the Miller-Search tax increase include a second charter school campus, multigenerational housing neighborhood and new commercial lifestyle centers.

Among the loudest voices in opposition are those of small businesses owners operating outside of The Villages.

“Small business owners are already having to rely on government (pandemic) funds just to get by, and now they want to take that away, too, with new taxes,” said Robbie Shoemaker, principal broker with Flamingo Real Estate and Management in Wildwood. “I know they call it an impact fee, but it’s really just another tax, and we all know it. Now is not the time to be doing this.”

Specialty Editor David R. Corder can be reached at 352-753-1119, ext. 5241, or david.corder@thevillagesmedia.com.