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Following the Currents that Guide Florida's Future
How should Florida balance next year's state budget?
Frank Bentayou
Facilitator
Our current roundtable considers how three prominent Florida political leaders and the head of a state tax-watchdog group approach a major role of government: balancing revenue against expense. Balance is the key. Florida’s constitution requires the state spend no more than it earns, along with what it can safely withdraw from reserves. This year’s budget exceeds $69 billion, $1 billion less than last year. Next year, the state is looking at a $2 billion shortfall. The question to our roundtable participants: In light of Florida’s slipping tax collections and increasing demands, how should we balance Florida’s budget?
Lane Wright
Press Secretary, Florida Gov. Rick Scott

After months of traveling the state and listening to teachers, parents, students, small businesses owners and families, Gov. Scott has unveiled a budget that reflects the issues and solutions most important to Floridians – funding education and helping Floridians create jobs.

First, education: The governor proposes $1 billion in new state education funding.

This budget year, Florida faced significant education funding challenges. Florida gained 30,000 more students that require almost $200 million more in state funding. Florida also faces a $400 million reduction in ad valorem taxes due to declining property values and one-time state education funding. Despite these challenges, the budget Gov. Scott is submitting to the Legislature will include:

• Over $1 billion in new state K-12 funding.

• An increase in per-student funding to $6,372, including 30,000-plus additional children in the public school system and less local funding due to declining property values.

• The third largest amount of state K-12 funding in Florida history, at $9.5 billion.

Gov. Scott has said, “Let me be clear about this education budget. I will not sign any budget into law that doesn’t contain more state dollars for education than we have this year. I am absolutely committed to acting on what I have heard and prioritizing education funding in this budget.”

In addition, he is committed to controlling rising Medicaid costs. Some hospitals in the same area treating the same demographic have vastly different rates for the same services. That affects what we pay in Medicaid, and the current system doesn’t make any sense.

The governor’s budget finds significant savings from improving efficiencies in the way Medicaid reimburses hospital providers for inpatient and outpatient services and other efficiencies for hospital stays and emergency room visits. To create a fairer reimbursement methodology, the governor’s budget proposes paying similar rates for the same procedures in similar hospitals by creating a “flat rate” for hospital groups using averaged cost data.

“No program has grown as fast and as much as Medicaid,” Gov. Scott said. “And we must find a way to control the cost. If we do nothing, this program will bankrupt our state.”

Beyond that, the budget also addresses criminal justice reform, to which the governor has a strong commitment. The state’s prison population is shrinking, and Florida is experiencing a 40-year low crime rate. Floridians deserve to see some efficiencies as a result and divert those savings to education and igniting job growth.

Nan Rich
Democratic Minority Leader, Florida Senate

Earlier this month, as Republican Gov. Rick Scott unveiled his $66.4 billion budget to a roomful of reporters and agency heads, he suddenly proclaimed: “I’ve listened to hard-working Floridians. The dollars in this budget absolutely belong to them.”

Really?

Since the Republican domination of Tallahassee began more than a decade ago, we’ve heard a lot about “hard-working Floridians” and how the money “belongs to them.” But the reality hasn’t matched the rhetoric. In fact, it hasn’t come close.

The latest spending scenario offered by Gov. Scott not only disregards who actually pays the bills in this state, but also the values of middle- and working-class Floridians buried under the smoke and mirrors of special interests. To hear the governor and his Republican supporters tell it, the only choices in such austere times are between education and health care. Does Grandma lose her hospital bed to keep Johnny in an overcrowded classroom? Do we continue to cut physical education, art, music and teachers instead?

It’s a choice we shouldn’t have to make.

In the governor’s proposal to add $1 billion to education by cutting $2 billion from the joint federal/state Medicaid program -- most of it slashed from public hospitals -- he continues to impose the fundamental unfairness Republicans have created since first taking over and even Ronald Reagan ultimately rejected.

“We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share,” Reagan pronounced as he launched a campaign to undo massive “trickle down” tax cuts he had pushed a few years earlier. “Vanishing loopholes and a minimum tax will mean that everybody and every corporation pay their fair share.”

Unfortunately, just as prosperity failed to trickle down from tax cuts for the rich, so too did Reagan’s “tax fairness” message to Florida Republicans.

The budget surplus left by Florida’s last Democratic governor was quickly squandered by successive Republican governors as they delivered tax cuts to some of Florida’ wealthiest special interests. Financial commitment to education devolved from centering on teachers, students and the rewards of learning to standardized tests and commercialization of public education. So, too, did the delivery of health care and other critical programs on which our children, elderly, chronically ill and developmentally disabled relied.

The same play and the same cuts -- along with demonization of state and local public servants (as if they created the Great Recession), the indifference to the unemployed and the struggling small business owners -- are at work under Rick Scott, along with a push for even more corporate tax cuts.

For at least five years, Senate Democrats have sought to spare middle- and working-class Floridians from additional loads they do not need and should not expect. This same “99 percent” have been shouldering the greatest tax burden and getting the least in return. We have offered legislation to close loopholes that keep corporate giants from paying their fair share for the services they use, from highways to public safety, to clean water. With one exception, Republicans have refused to do so.

As the 2012 legislative session begins, and the unnecessary showdown between education and health care commences, GOP lawmakers would do well to remember their Republican icon’s description of his 1986 tax-reform law closing loopholes for the wealthy as “a sweeping victory for fairness; it’s also the best antipoverty bill, the best pro-family measure, and the best job-creation program ever….”

And Governor Scott would do well to listen.

Dean Cannon
Speaker, Florida House of Representatives

Florida continues to face the challenges of high unemployment and a sluggish economy that has not improved as quickly as we had hoped.

Governor Scott and Republican lawmakers have made many strides in advocating for policies that will help spark an economic recovery, but there is still a long way to go. However, the Legislature can continue to play a role in Florida's recovery by working to create an economic environment that allows the private sector to flourish.

Promoting private sector job creation must be at the center of our budgeting goals.  The last thing Florida businesses need is the government-initiated burden of more taxes and additional regulatory hurdles.  It is more important than ever to send the right signals to the business community.  To accomplish that, we must work hard to create an environment of stability and which will inspire confidence in business owners who create the jobs Floridians so desperately need.

During the 2012 Session, the Legislature will once again work to pass a balanced budget which does not raise taxes and continues to attract out-of-state businesses considering locating or expanding in Florida. Additionally, I believe we can send the right signals to the business community by finishing our work on time and setting aside ample reserves to prepare for future economic challenges.

Recently, Gov. Scott sent the Legislature a thoughtful recommended budget which outlines his priorities for the next budget year.  As our Appropriations subcommittees work to craft our own specific priorities for the coming year, I am confident the governor's blueprint will be a valuable tool, and the House and Senate will work together to pass a responsible balanced budget.

While facing another budget shortfall will be challenging, the Legislature has been making budget reductions for multiple consecutive years and our Members are now seasoned in preparing for cuts. We will continue to consider similar options that have been available to us in the past  to resolve the current shortfall. We can and will pass another balanced budget without burdening Floridians, but it will not be achieved without making additional sacrifices.

During these difficult economic times, Florida families and businesses are forced to make sensible choices and difficult sacrifices when planning their budgets and the Legislature should too.

Dominic Calabro
President and CEO, Florida TaxWatch

As we approach the 2012 Session, Florida’s leaders are tasked with balancing the state budget in the face of a deficit that could top $2 billion, the expiration of federal funds in several spending areas and a shaky global economy that is creating major uncertainty in the financial sector. 

It is the strong belief of Florida TaxWatch (www.floridataxwatch.org) that the state can balance its budget without raising or imposing new taxes on Floridians or reducing necessary and essential services. In the report of the Florida TaxWatch Government Cost Savings Task Force, released this fall, we have identified a menu of 135 productivity and efficiency improvements and other cost-savings measures that could net the state of Florida more than $4 billion in a very short period of time.

One of the key recommendations is an issue that has been in the news recently in regard to the post-Thanksgiving “Black Friday” and “Cyber Monday” shopping days. The proposal is the collection of “remote sales tax.” By far, the most significant tax compliance and collection issue facing Florida is the application of sales and use taxes to sales by remote vendors—those without a physical presence in the state.  The collection of this tax is both a rule-of-law issue, and a competitiveness issue.

This would not be a new tax on Floridians, as it is already required by law to be paid. However, as the law currently exists, it is the responsibility of the shopper, rather than the vendor, to remit the tax payment directly to the state. Very few taxpayers are even aware that such remittance is required of them. Evidence suggests that Florida is losing out on hundreds of millions of dollars each year from the state’s failure to collect this tax. Over the long term, remote tax collection could be used to reduce other taxes currently imposed on Floridians.

Even more than the lack of revenue, though, is the impact that not collecting this tax has on local businesses. With so many online retailers offering free shipping this time of year, our brick-and-mortar neighbors—paying their required state and local taxes as good corporate citizens—are losing customers to what they assume are tax-free purchases online. The lost sales cost local businesses revenue, cost the people of Florida jobs, and make it more difficult to build a sustainable, productive economy here in Florida. 

There are many things the Florida Legislature can do to balance the budget without raising or imposing new taxes and fees on Floridians.  One of them is collecting taxes that are currently owed. When combined with the 134 other recommendations in the Government Cost Savings Task Force report(http://www.floridataxwatch.org/resources/pdf/Report%20GCSTF%20for%20FY2012-13.pdf), it would go a long way towards balancing the budget, stabilizing and controlling government spending, and helping to grow and diversify Florida’s economy.

Comments

S. D. - Wed, 2011-12-21 10:40.

Gov. Rick Scott has suggested that the way to increase funding for schools is to boost lottery sales! According to an AP report of 20 December, an increase of approximately $240 million is expected by allowing automated machine dispensers of scratch off tickets and traditional Lotto and Powerball tickets.

Now this is the same Gov. Scott who told us he doesn't want to rely on gaming revenue for the budget. How stupid does he think we are? My next question is, who makes the machines that dispense the tickets? Have they been making contributions to politicians in Florida? Wanna Bet?

If our Gov. Rick Scott would have used some of his vaunted business skills we would have been allocated some of the "Race to the Top" federal educational funds. No, we can't have that, that would have required some give and take between the state and the Fed. Intransigence on the part of Gov. Scott ensured our application for these funds was doomed from the start.

I will have more to say on the State Budget later, so stay tuned.

Old Gimlet Eye



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