nine rs of fiscal responsibility & florida state data

8/7/2019 Nine Rs of Fiscal Responsibility & Florida State Data

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BUDGET USINGAN ASSESSMENT OF FLORIDAS

THE NINE Rs OFFISCAL RESPONSIBILITY

A PROJECT OF


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THE NINE RS OF FISCAL RESPONSIBILITY

* * *These ideas, originally developed by the John Locke Foundation,

establish criteria that encourage our core principles of entrepreneurshipand fiscal and regulatory restraint.

* * *

Reorganize government agencies in order to consolidate the states duties and

REORGANIZE STATE GOVERNMENT

expose agency encroachments into areas beyond the core functions of government.

Current state agencies have become bloated and inefficient. Special interests have been creatingcarve-outs and set-asides within current government programs to serve their own self-interest.Many programs where created to address a problem from years ago that still exist even thoughthe problem they were created for have been solved. Some will argue that there is a fundingincrease involved when implementing a reorganization of government agencies. An initialincrease is expected as employees get moved around, property leases have to be brokenprematurely, and other administrative costs are encountered.

However, these costs are nominal compared to the legitimate savings that can be gained overtime by reorganizing and consolidating state functions. For example lets look at the corefunctions of six state agencies: Department of Community Affairs (DCA), Department ofTransportation (DOT), Department of Environmental Protection (DEP), Water ManagementDistricts (WMD), Fish and Wildlife Commission (FWC), and Department of State (DOS).

All six agencies have planning and permitting responsibilities; four - DOT, DEP, WMDs andFWC purchase state lands; and all six perform comprehensive plan reviews. As you can see,the core functions overlap a great deal. Merging agencies so that similar functions areconsolidated will create a more transparent, and subsequently more accountable, stategovernment.

The state government should also dissolve any entity that is supported by a tax or broad-based fee when elected officials are not the decision-makers eliminating taxation withoutrepresentation. Water Management Districts are a good example of this. It is fundamentallyun-American to give the powers of taxation to an appointed Governing Board. So many of thefunctions of WMDs, like land purchases and permitting, are identical to the functions of DEPand could be subject to a self-supporting user fee. The dissolution of the Water ManagementDistricts would create a property tax cut for Floridians of almost a billion dollars a year.


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The state government should eliminate current barriers to the free-market and

REVIVE FREE ENTERPRISE

enact policies that will encourage competition and economic growth.

The economic development function of government needs to be critically examined. Americansfor Prosperity believes it is not the job of the state government to be marketing itself and

incentivizing business with taxpayer dollars. The administrative and operational tasks ofexisting agencies and offices that address Floridas business development need to beconsolidated in an effort to save money and reduce regulatory red-tape. Most importantly,economic development incentives should be eliminated. Priority should be given instead tocreating a competitive marketplace that will promote and sustain business through theimplementation of broad based reforms that will attract new businesses and generate sustainedeconomic and employment growth.

Interestingly, Florida considered one of the more business friendly states in the nation currentlyranked fifth by the Tax Foundation. However, we have one of the highest unemployment rates

in the country and have suffered one of the highest rates of foreclosure of any state. Both ofthese are indicators of the economic burden currently facing the residents of Florida.

Current regulations are overbearing and can restrict access to a competitive marketplace. Insome situations special interests have successfully lobbied to have government control programsso that their profits are secure, creating industry monopolies. In other instances, government haslimited access to the market or created a government-subsidized competitor to control costs.Removing prohibitive regulatory oversight and government incentives will promote newbusiness development and increase competition.

Corporate and special interest tax loopholes should be eliminated.

REDUCE BIASES IN THE TAX CODE

Currently a variety of special exemptions, exclusions, and credits litter the tax code. Tax creditsimpede the free-market, narrow the tax base and drive up tax rates for those businesses orindividuals who dont qualify. Tax credits complicate the tax system, and the more business-friendly and transparent the tax system the greater the increase in economic growth and businesscompetition. It is time to end programs that have existed merely to placate special interestgroups.

In times like these, government can be tempted to offer increased economic incentives throughtax breaks, cash subsidies and tax holidays with the goal of attracting more investment anddevelopment. However, the economic climate must be addressed in the long term, not justshort-term incentives which often are used as a substitute for true tax reform. Instead oflegislation for specific events like the NBA All-Star game or a week-long holiday for thepurchase of Energy Star appliances, the best approach would be enact broad tax reform thatencourages long-term economic development and returns millions of dollars to the taxpayers.


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Entitlement programs, like Medicaid and education, should be reformed to

REFORM ENTITLEMENT PROGRAMS

minimize dependency and encourage personal responsibility.

Combined, Medicaid and PreK-12 education made up roughly $40.4 billion, or 57.3 percent ofthe total state budget in 2010-11. In both programs there are protectionist components that drive

up the costs Medicaid coverage has been expanded beyond the poor and needy, and the focusof public education has become less about the student and more about teachers and schools.

Medicaid makes up roughly 18 billion dollars of the total state budget. In the last decadeMedicaid funding has doubled, from $8.9 billion in 2000 to $17.9 billion in 2010. This rate ofgrowth is unsustainable and the Governor and Legislature must take steps to slow down theescalation of Medicaid funding. Comprehensive Medicaid reform is necessary to better targetservices to truly needy individuals while providing more transparency for the effectiveness ofthe services. The scope of Medicaid has grown far beyond its original intended coverage of thepoor and now includes non-poor children, pregnant women, and elderly residents of nursing

homes whose backgrounds and family finances place them firmly in the middle class.

In 2010-11, PreK-12 Education made up 22.4 billion dollars, almost one-third, of the states totalbudget. Given the failure of Amendment 8 last fall, there does not seem to be relief for themandatory class size requirements which have already cost more than 18.7 billion dollars toimplement since 2003. The Governor and Legislature must look at creating opportunities formore innovative solutions, such as joint-use facilities, to offset the current funding challenges.We commend the legislature for addressing the states compensation and promotion system, onethat has not rewarded excellence, with the passing of Senate Bill 736. This bill appropriatelymoves the emphasis to student success and teacher performance, instead of regulatory schemes

that protect outdated union ideals of seniority for teacher promotion.

The consumers of government services should participate in the costs for

REQUIRE MORE USER RESPONSIBILITY

those services that are outside the basic governmental functions.

For any government program or activity outside of its core function, a funding mechanismshould be developed and implemented to better cover the associated costs of operation,maintenance and staff of said program or activity. The goal should be to make non-essentialgovernmental functions more self-sufficient. Services should require additional user

responsibility either through fees, earnings or philanthropic donations.Another important area for reform is the restructure of state employment and retiree benefitsprograms. In the private sector, employers have moved away from defined benefit pension plansand replaced them with defined contribution plans (such as IRAs, 401(k)s and the like). With thelatter, employees retain ownership and control of their own money. Making similar changes atthe state level would lower administrative costs and improve both employee welfare andmanagement flexibility.


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Allow voluntary citizen organizations to provide civil services, which encourages

RESTORE CIVIL SOCIETY

civic participation and strengthens communities.

Nonprofits and charities form a third or independent civil sector that deliver importantservices and benefits that neither governments nor profit-seeking businesses can deliver aseffectively. The state should be careful not to supplant these institutions of civil society that arealready doing good work in areas of critical need such as homelessness, hunger relief, andemergency response.

It is important to redirect spending to higher priorities

REDIRECT SPENDING TO HIGHER-PRIORITIES

and programs with accountability and proven results.

The Governor and Legislature must refocus on the core functions of state government likeeducation, infrastructure, and public safety. Programs and projects outside the scope of theessential nature of state government should be addressed to focus on those services that onlyserve the core functions. Non-essential programs should either be reconstructed to be self-supported or should be phased out. Focusing the state government on its core mission has twodistinct, positive results. The termination of ancillary programs will free up additional funds tobe returned to the taxpayers of Florida, and core essential services may not have to seereductions in overall budgets.

When the common citizen is faced with a budget dilemma, unnecessary items are typicallypared from the budget. In times of shortfalls, like Florida is currently facing, legislators need totake a hard look at the necessity and efficiency of every program that the state funds. Not onlyshould they examine its need to exist but to whom it provides services and how efficiently itprovides them.

There should be performance measures for every program performed by the state, andeach program should be subject to penalties for failing to meet the desired outcomes. If aprogram cannot meet standards set by legislators, the resources should then be returned to thetaxpayers or allocated to programs that actually produce positive results.

Government accounting in Florida, unlike private sector accounting, to date has not effectivelymeasured how the taxpayers money is being spent. One solution is to have every state programnot only benchmarked against other states programs, but also against private industriesperforming similar tasks. These measures must be outcome-based so legislators and taxpayerscan evaluate if the program is delivering the benefits that were promised on its inception.


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The state should examine the role of county and city governments, re-shaping the

relationship and cooperation on the delivery of services.

RESHAPE THE STATE-LOCAL GOVERNMENT RELATIONSHIP

Americans for Prosperity is a strong supporter of taxpayer rights and believes that real spendingcaps need to be enacted at both the state and local level in order to control government spending

into the future. During years of economic growth, the state and local governments expandedservices and responsibilities to match their expanding revenues. However, as the economydeclined fees and taxes were increased to balance the loss in revenues. Spending caps willrequire government to live within its means.

Over the last decade, the data showing the increase in local government spending per person inthe state is disturbing. In the last decade, local government property tax collection nearlydoubled from $14.29 billion in 1999-2000 to $28.14 billion in 2009-2010 - a ninety-sevenpercent increase, or about $1,497 per person. Thats almost six times greater than the statepopulation increase of seventeen percent during the same time.

Any governmental regulation that is deemed an essential state function, such as theidentification and demarcation of environmentally-sensitive areas, should be pre-empted fromadditional local government regulation. This will reduce local government functions whileclarifying government regulatory scheme as one of state interest.

The funding for any advocacy positions within an agency should be

REMOVE ADVOCACY PROGRAMS

removed and strictly prohibited.

Taxpayer dollars are a precious thing and the Governor and Legislature must work to be goodstewards of those dollars. Those in both the executive offices as well as the legislature shouldavoid the trap of political patronage which has become a way of life for many in the statescapitol city. Campaign workers too often can be found serving as legislative liaisons for stateagencies or as staff in the legislature. Essentially, elected officials are using taxpayer dollars tocreate an army of lobbyists beholden to themselves who are paid to influence a sister branch ofgovernment or at times their own branch of government the Legislature. State agencies shouldbe a resource for the Legislature, providing information and helping Members to understand theramifications of proposed statutory changes. As needed, any agency head or program directorcould answer questions posed by the Legislature.

Cost savings can be further passed on to citizens on a local level by evaluating the roles of andneed for both in-house and contract lobbyist hired by cities, counties and governing boards. Thefirst step in removing unneeded advocacy programs on these levels would be a full andtransparent audit of the costs associated with having these employees. Americans for Prosperityencourages immediate and comprehensive accountability for the resources, needs andperformance measures associated with these positions.


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STATE DATA SHEET

An analysis of Floridas statisticsas they relate to growth, jobs and taxes -

and a comparison to other states in the southeast.

February 2011


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EMPLOYMENT & JOBS

Florida Private Sector Employment:

Over the last year1

Over the last 5 years: - 9%: +.76%

Over the last 10 years: +.77%

Total Government Employment Growth2

:

Over the last year: -.36%Over the last 5 years: +1.62%Over the last 10 years: +10%

Government Employment as Percent of Total Employment in Florida: 15.4%o Alabama: 20.5%o Georgia: 17.8%o North Carolina: 18.6%o South Carolina: 19.3%o Texas: 17.6%

Private Sector Wages as a Percentage of State Government Wages:3

94.59%

o Alabama: 82.10%o Georgia: 113.98%o North Carolina: 90.17%o South Carolina: 87.69%o Texas: 108.48%

Number of Public Employees Per 10,000 People: 502.2 (ranked 9th)

o Alabama: 619.5 (ranked 40th)o Georgia: 556.6 (ranked 25th)o North Carolina: 614.9 (ranked 39th)o South Carolina: 582.7 (ranked 34th)o Texas: 563.5 (ranked 27th)

1 October 2009 October 2010, BLS Jobs Data. Private sector only.2 Includes federal, state and local government employees in Florida.3 2008 salary data, BLS.


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TAX BURDEN

Seven State Tax Rate ComparisonTop tax rate

for

individualwith$50,000taxableincome

Total state

and localpropertytax

per capita

Top

CorporateIncome

Tax Rate

SalesTaxRate

StateGasTax

State and

Local TaxBurden

Per Capita

State and

Local TaxBurden asa Percentof Income

Florida NONE $1,476 5.5% 6% $0.345 $3,441 9.20%

Alabama 5% $454 6.5% 4% $0.209 $3,144 8.50%

Georgia 6% $1,009 6% 4% $0.209 $3,735 9.10%

NorthCarolina

7.75% $815 6.9%5.375

%$0.302 $3,663 9.80%

SouthCarolina

7% $980 5% 6% $0.168 $3,127 9.10%

Mississippi 5% $758 5% 7% $0.188 $2,834 8.70%Texas NONE $3,580 6.5% 6.5%

4$0.20 $3,580 7.90%

Tax Foundation Tax Freedom Day for Florida: April 5th, ranking 31st highest in the nation

o Alabama: April 2 (42nd highest)o Georgia: April 8 (24th highest)o North Carolina: April 7th (26th highest)o South Carolina: April 3 (40th highest)o Texas: April 5th (32nd highest)

Tax Foundation business tax climate and ranking for Florida: Florida ranks 5th in the TaxFoundation's State Business Tax Climate Index.

o Alabama: 28tho Georgia: 25tho North Carolina: 41sto South Carolina: 24tho

Texas: 13th

ALEC-Laffer Economic Competitive Index

o Economic Performance Rank: 6ho Economic Outlook Rank: 5th

4Plus an additional marginal tax of .5%-1%.


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INCOME

Per capita personal income cumulative growth 1998-2008: 44.3% (ranked 29th)

o Alabama: 48.3% (ranked 20th)o

Georgia: 31.6% (ranked 49

th

)o North Carolina: 35.2% (ranked 46th)o South Carolina: 39.5% (ranked 41st)o Texas: 46.1% (ranked 26th)

Personal Income Per Capita (2009): $37,780 (ranked 24th highest)

o Alabama: $33,096 (ranked 41st)o Georgia: $33,786 (ranked 39th)o North Carolina: $34,453 (ranked 35th)

o South Carolina: $31,799 (ranked 47th

)o Texas: $36,484 (ranked 29th)

Florida Annual Private Sector Pay Rank (2008/2009 Data): $39,610 (28th highest)

o Alabama: $37,774 (ranked 34th)o Georgia: $42,999 (ranked 18th)o North Carolina: $39,996 (ranked 29th)o South Carolina: $35,442 (ranked 43rd)o Texas: $ $46,730 (ranked 9th)


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POPULATION

Domestic Migration from Florida, 1999-2008: +1,324,743

o Rank in Migration: (higher number rank indicated greater migration): 1st in the nation.

Migration Regional Comparison, 1999-2008

o Alabama: +77,100 (ranked 15th)o Georgia: +572,636 (ranked 5th)o North Carolina: +578,253 (ranked 4th)o South Carolina: +283,237 (ranked 7th)o Texas: +735,815 (ranked 3rd)

Gross State Product Growtho Percent Gross Domestic Product Growth 2005 2009 (Real Dollars): +10.7%

Per Capita State Domestic Product, 2009: $36,065

o Alabama: $32,748o Georgia: $36,677o North Carolina: $38,847o South Carolina: $31,618o Texas: $ 42,526


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GOVERNMENT

Estimated Florida total state and local spending for 2010: $179.8 billion (ranked 48th) *1lowest spending 51 highest spending

o Alabama: $43.2 billion (ranked 27th)o Georgia: $88.7 billion (ranked 42nd)o North Carolina: $83.4 billion (ranked 41st)o South Carolina: $46.7 billion (ranked 28th)o Texas: $229.4 billion (ranked 49th)

Estimated total state and local debt: $133 billion

o Alabama: $27 billiono Georgia: $60.7 billiono

North Carolina: $51.2 billiono South Carolina: $37.8 billiono Texas: $261 billion

Total education spending per capita (07-08): $9,035

o Alabama: $9,103o Georgia: $9,788o North Carolina: $7,996o South Carolina: $9,170

o Texas: $8,320

Estimated Total Percentage of State Expenditures on Education: 27%

o Alabama: 28%o Georgia: 34%o North Carolina: 28%o South Carolina: 25%o Texas: 27%

Percentage of Florida education funding provided by:

Federal Government: 8.3%

State sources: 39.4% Local sources: 52.3%

nine rs of fiscal responsibility & florida state data

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