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Amendment 3: Should Florida's Constitution be changed to provide a new formula for limiting state revenue?
Rich Bard's picture
Rich Bard
Facilitator
Since 1994 Florida has had a limitation on revenue based on growth in personal income. Amendment 3 would instead limit state government's revenue to the previous year's revenue, plus an adjustment based on inflation and population growth. Proponents say the amendment is needed to restrain overspending during times of revenue growth. Opponents say it will hamstring Florida's ability to fund needed services, including education and medical care.
Ellyn Bogdanoff
Republican state senator, District 34 (parts of Broward and Palm Beach counties)
In 1994, Florida’s voters approved an amendment to the State Constitution that was intended to limit the growth of state government.  The theory was that Florida government shouldn’t grow faster than the people’s incomes that are funding it.  While the theory is sound, the voters likely did not anticipate that that our Legislature would reduce state revenue on its own. 
 
In the first few years after the adoption of the constitutional revenue limitation, state revenue collections were close to the constitutional limitation. Since that time, however, revenues have generally grown more slowly than personal income.  The only other year revenues came close to the limitation was in 2005-2006 when state revenues, beefed up by a red hot real estate market, came within $658 million of the limitation. 
 
The effects of the recent recession, coupled with changes in tax laws, have also contributed to the widening gap, and we do not expect it to narrow in the foreseeable future. 
 
Over time, the proposed state revenue limitation is more likely to constrain growth in state revenues than the current limitation.  If the adjustment for growth proposed in this amendment had been in effect since 1994, state revenues would have exceeded the revenue limitation in fiscal years 2004-2005 and 2005-2006.  This cap would have benefited Florida with a less drastic reduction in appropriations when the recession hit.
 
There are opponents of this amendment who try to draw a comparison to Colorado’s restrictive revenue limitation.  However, there are some important differences. 
 
First, the Colorado law applies to all taxing districts within the state and voter approval is required to approve any tax increase.  Amendment 3 is only a State Revenue Limitation. 
 
Second, the Colorado revenue limitation restricts general revenue to the prior year’s revenues adjusted for population growth and inflation.  Since the limit in Colorado is based on prior year’s revenues, any decline in revenues due to a recession leads to a permanent ratcheting down of spending levels in Colorado.   After the recession in the early 2000s, the ratcheting down effect held the revenue base at recessionary levels.  We specifically studied this issue when drafting our proposed amendment.  Because the proposed Amendment 3 is based on the prior year’s revenue limitation, there will not be a ratcheting down effect, and growth in our economy will be allowed to continue. 
 
Third, in Colorado, voter approval is required to approve any tax increase.  Amendment 3 would authorize the Legislature to increase the revenue limitation by a super majority vote, either permanently or for one year, or to place a proposed increase before the voters. 
 
Finally, proposed Amendment 3 directs "excess" funds over the cap to a Budget Stabilization fund until it is fully funded, then to pay down your local portion of the school property tax.  After each school district's required local effort is zero, only then will the cap require a return of STATE funds to the people, via some sort of reduction in general taxes or fees.  
 
Thirty states currently have some kind of limit on taxes or expenditures, and we have studied what works and what doesn’t. I believe that this proposed amendment is a prudent way to align our future budget growth. 
 
When the government takes less, the people have more.
Deirdre Macnab
President of The League of Women Voters of Florida (www.BeReadyToVote.org)
Florida is proposing a rigid formula to limit taxes. So … what’s your first reaction? You’re likely sitting back in your chair with a big grin on your face and saying, “Finally!”  The way the Florida Legislature has worded Amendment 3, you’ll want to buy five and take four home to give as gifts to your favorite relatives.
 
Well, keep your vote in your pocket for a moment while we dig into what Florida is actually proposing with Amendment 3.
 
Let’s start by examining the impact of this idea in the state of Colorado.  (I know it’s a stretch, because it’s in a whole different region than our sunny, sandy peninsula of Florida.) Listen to what the folks over in Colorado are saying about this limitation, which they adopted almost 20 years ago. 
  
-- Denver Chamber of Commerce Chief Tom Clarke says, “This rigid formula has been like financial quicksand for the state of Colorado. It has made it harder to attract companies with higher-paying jobs, and had a devastating impact on our schools, healthcare and infrastructure.”
 
-- PTA mom, Republican and small business owner Christi Hargrove, who has traveled America warning of the limit’s dangers, recalls asking her daughter why she had to wear her coat all day at school during the cold Colorado winters. “Because the heat is turned off,” said her daughter. That got Christi’s attention, for sure! With that motivation, she learned how TABOR (the so-called Taxpayer Bill of Rights) has affected the schools, bringing their funding from 35th to 49th in the nation.  It has had similar harmful impact on Coloradans’ ability to provide vaccinations to young children, offer health care to the elderly and maintain their infrastructure.
 
Colorado has now imposed a moratorium on the limitation.
 
Florida already ranks among the lowest in terms of per capita contribution to cover government services. We can ill afford to sink even lower and cut spending on schools and medical care further. How much bigger do we want our K-12 classes to grow, and what other programs can we continue to cut in our schools and universities?
 
This similar concept has been looked at and rejected by more than 30 other states (as well as our own Tax and Budget Reform Commission, which said “No”). The Arizona Legislature passed it last year, and conservative Gov. Jan Brewer vetoed it, citing her concerns about the increased cost of borrowing for the state. No state other than Colorado, with its moratorium now in place, has passed this idea after closer inspection.
 
This November you will see Amendment 3 dressed up in lamb’s clothing, promising (unbelievably) increased funding for education, caps on spending, etc.  The Center for Budget and Policy Priorities estimates that if this amendment were in place today it would cost the state in excess of $11 billion in revenues for services in just 10 years.
 
Let’s hope Florida voters don’t line up to be duped by this failed experiment that has wisely been rejected by 30 other states. The League urges all citizens to “Say No!” to proposed Amendment 3 to our Florida Constitution on the ballot this November, along with all the 11 proposed and ill-advised state amendments on your ballot this year.
 
Stephen Precourt
Republican state representative, District 41 (parts of Lake, Orange and Osceola counties)
Amendment 3 amends the Florida Constitution -- encouraging responsible budgeting by the state Legislature. It will replace the existing state revenue limitation, one based on personal income growth, with a new limitation based on inflation and changes in population. This amendment limits irresponsible spending and establishes a method to ensure any excess revenue is saved to address future economic hardships.
 
Just like your personal budget, the State of Florida must prepare a balanced budget. However, during times of growth, the state collects a larger amount of revenue than needed.  Unfortunately in the past, the Legislature has spent excess revenues instead of "saving for a rainy day." In the last couple of years, when revenues fell significantly and demand for state assistance was at an all-time high, having to decide which crucial services to curtail became an exceedingly difficult task without adequate savings.
 
Amendment 3 addresses the issue of having an adequate financial reserve to pull from when our economy is struggling. If state revenues collected exceed the new state limitation, additional monies will first be deposited into the Budget Stabilization Fund, then used to support and maintain public schools, and finally returned directly to the taxpayers.
 
The Legislature will still have the flexibility, albeit limited, to increase the revenue limitation by a super majority vote (60 percent) for a temporary increase in the cap, and a two-thirds vote for a permanent increase. Alternatively, the proposed increase in the cap can be placed before the voters, requiring approval by 60 percent. These precautions allow for the Legislature to respond to unique factors that may arise in the future, but requires government and the citizens of Florida to consciously approve spending above the designated cap.
 
Amendment 3 is also not Colorado TABOR; it only applies to state spending, not local governments.  The most important difference is that the revenue limitation in Amendment 3 grows each year from the prior year’s limitation, not the prior year’s actual revenues. Unlike in Colorado, our proposed responsible limitation would not have a ruinous “ratcheting down” effect on the cap during economic downturns, which prevents a normal recovery.
 
Citizens have the ability to make Amendment 3 part of our Florida Constitution on November 6. Amendment 3 ensures the Legislature is accountable by controlling growth in big government spending and holds state government to be fiscally responsible, by long-term, stable budgeting.
 

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