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A closer look at Rick Scott's jobs plan shows his challenges

This summer Rick Scott  released details of his “7-7-7” plan — seven steps over seven years to create 700,000 jobs.

WILL VRAGOVIC | Times

This summer Rick Scott released details of his “7-7-7” plan — seven steps over seven years to create 700,000 jobs.

TALLAHASSEE — As CEO of the country's largest hospital chain, Rick Scott earned a reputation for setting aggressive cost-saving goals and constantly monitoring the progress.

Now that he's Florida's incoming governor, he wants to "measure the living daylights" out of state government.

Here's a benchmark: 1.71 million new jobs.

That would increase the state's work force by 24 percent, more than enough to employ every out-of-work Floridian.

It would also fulfill the pledge Scott made this summer when he released details of his ambitious "7-7-7" plan — seven steps over seven years to create 700,000 jobs.

Now that the campaign is over, Scott is feeling the weight of that promise.

"Find me 700,000 jobs and I'll do pretty much anything," he joked during a recent meeting with state lawmakers.

But another look at Scott's jobs plan shows he's on the hook for much more.

New residents, jobs

Start by adding 1.05 million jobs to Scott's goal.

That's how many jobs state economists expect to trickle into Florida over the next seven years without any help from the new governor. Scott's economic adviser, Donna Arduin, said these jobs are in addition to what Scott is supposed to create by cutting taxes, reducing spending and eliminating some business regulation.

Arduin warned that Scott can't be responsible for the national economy and the expected growth it gives Florida during the next seven years.

For one, economists regularly adjust estimates: In 2004, Florida's nonfarm work force was forecast to top 8.7 million people by now. The most recent count puts it at 7.2 million, or about 17 percent off.

Another problem: It will be difficult to tell which jobs are created thanks to Scott's policies and which ones arrive with the new population.

"You're never going to know which jobs were created because of which event," Arduin said. "There is no way to perfectly tag it."

7-662-7?

Another issue is that Scott overestimates his plan.

To smooth the cadence of the "7-7-7" campaign message, Scott rounded the number of jobs the plan would create.

The actual number is 661,914.

But that number "wouldn't work as well" in 30-second TV ads, Scott said.

Despite the rough measure, Scott, 58, knows he'll be judged on job growth.

"Jobs and education," Scott said. "Those are the things that change people's lives."

To that end, Scott spent five days on the road this month visiting some of the state's top job producers, including defense contractors in the Panhandle, the aviation industry in Jacksonville and the "Medical City" cluster of biotech companies in Orlando.

Economic investment

Scott's plan estimates 60,000 jobs over seven years from $600 million in economic development investments.

After his tour in Orlando, Scott praised the partnerships between state universities and private companies.

"If we can do this a few times around the state, I could get to my goal of 700,000 jobs pretty fast," Scott said.

Economist David Denslow agreed.

Every new retiree in Florida helps create about one job in the state economy, Denslow said. But every college-educated man or woman who moves to the state creates two.

"For one, they earn more and spend more," said Denslow, research economist for the University of Florida's Bureau of Economic and Business Research.

College-educated workers also "share ideas," he said.

But a detailed version of Scott's plan acknowledges the state's budget woes and notes there will be "minimal" money available for incentives in the first year.

Instead, the plan is for Scott to focus on eliminating regulations, reducing taxes and cutting spending.

Fewer regulations

Scott's drumbeat for less regulation is expected to be welcomed by a Republican-led Legislature that has complained about overregulation in Florida.

Arduin estimated regulations cost Florida businesses $10.7 billion in production. Lowering "key regulatory costs" will spark economic growth, according to the plan, and add 237,699 jobs and $1.5 billion to the budget by year seven, according to the 7-7-7 plan.

Scott has yet to isolate a specific regulation he would like to eliminate, but he continues to cite a 2008 study from the Pacific Research Institute, a conservative, California-based think tank, that put Florida as the 45th most regulated state in the country.

"What's the benefit of a regulation, other than a delay?" Scott said.

Cutting spending

Cutting spending and lowering business taxes would bring 364,214 jobs, the biggest part of Scott's jobs plan.

Scott wants to start by saving $300 million this year with a 5 percent cut to the state's work force.

But a report this month shows Florida has 117 state workers for every 10,000 residents and spends $38 per resident. Both ratios were lowest in the country, according to the state Department of Management Services.

If Scott follows his first-year plan, he'll wring another $500 million out with "operational efficiencies," $1.3 billion in changes to the state pension and $1.8 billion in "health care reform."

Those changes would pay for Scott's tax cuts this year.

But he has not offered details on where he would make changes to the health budget. He has said he favors state workers contributing to their pensions, but that would save the state, at most, about $700 million.

Scott has met with lawmakers during the past month, but few are willing to identify cuts.

"They talk about streamlining things, but they don't talk much about spending cuts," Scott said.

Scott won't identify cuts either. "We'll come out with a budget and it will all be in there," he said.

Reducing taxes

Scott has targeted a $1.4 billion cut in property taxes the state collects to pay for public schools. Scott wants to make that cut in the upcoming budget and follow it up with another $1.4 billion cut over the next six years.

But Scott has also pledged to avoid cuts to public schools. That means he'll have to find money elsewhere in a budget already facing a $3.5 billion shortfall.

Scott's plan calls for phasing out the corporate income tax, including a first-year rate cut from 5.5 percent to 3 percent. That would reduce state tax collections by another $835 million.

"The original concept may need to be modified in the final execution," said House Speaker Dean Cannon, R-Winter Park. "But we agree on the underlying concepts of reducing the tax burden."

Scott said Floridians will understand cuts to the budget and give him time to meet his goals.

"What they expect is someone who is going to come in and control spending and do it in a fair manner. And if you do things in a fair manner, you're okay," Scott said. "Maybe I'm naive, but that's my belief."

Michael C. Bender can be reached at mbender@sptimes.com.

To fulfill his campaign pledge, Gov.-elect Rick Scott might have to add 1.71 million jobs to Florida's work force in seven years. Here's where the jobs are supposed to come from:

1.05 million

Natural population growth

237,699

Reducing regulations

and limiting lawsuits

from injured people

364,214

Tax and budget cuts

60,000

Economic development initiatives

Source: Rick Scott campaign

A closer look at Rick Scott's jobs plan shows his challenges 12/22/10 [Last modified: Thursday, December 23, 2010 9:30am]
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