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Florida legislature reaches tax deal as budget crisis nears end

TALLAHASSEE, Fla. (Reuters) – Florida legislators voted to send Republican Governor Rick Scott a package of more than $400 million in tax cuts on Monday, trimming fees on a wide range of services, from cellular phone and cable TV bills to yacht repairs.

The tax-cut package negotiated by House and Senate budget managers was a major piece of a 20-day special legislative session that members expect to conclude on Friday with passage of a state budget of around $76 billion.

The tax deal and a separate hospital funding solution appear to have ended a bitter and long-running dispute between the Republican leaders in both houses that forced the special session.

Division among Republican leaders over expanding Medicaid and funding for hospitals treating indigents caused the regular legislative session to dissolve April 28, but negotiators scored a breakthrough last Friday on a formula to divide $2 billion in hospital money – using $400 million from the surplus and forcing reduction of other programs.

The House had earlier killed a Senate-passed bill that would have expanded Medicaid under the Affordable Care Act.

Scott had sought about $700 million in tax cuts at the start of the session and the House approved a $690 million package. Having to put up the hospital money killed numerous hometown projects sought by members in the special session, along with the scaling back of tax cuts.

The Senate voted 34-2 for the package and a few hours later the House passed it 91-2. Scott said he will seek more tax cuts in 2016 when the legislative session reconvenes.

“Cutting Florida’s cell phone and TV tax is particularly important because it will save money for Florida families who pay a cell phone, satellite or cable TV bill,” Scott said in a statement.

Reducing the communications services tax accounted for $226 million of the total package and works out to about $20 a year for a consumer paying $100 a month in cable and cellular bills.

The package also includes a 10-day “sales tax holiday” for back-to-school shopping and a full-year exemption for college textbooks, adding up to about $110 million.

One point of controversy was a $60,000 cap on sales taxes for boat repairs, which means renovation and overhauls costing over $1 million would pay the same tax as less extensive work. But supporters of that $5.5 million tax break said it would help generate jobs in South Florida’s marinas and boatyards.

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