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Florida's budget shortfall slams into small businesses

Will Weatherford must be wondering when the fun starts.

In two years as legislative aide to House Speaker (and now his father-in-law) Allan Bense, Weatherford served in the background in Tallahassee during the boom years that ended in 2006.

Things were so rosy then, Florida's Legislature was whacking corporate taxes and still had enough money for education that it financed such things as a new literacy initiative to send reading coaches into schools. A year later, it allocated hundreds of millions of dollars to meet growth management requirements.

Now, Weatherford, as a state representative and presumed future speaker, is preparing for his fourth legislative session. The Wesley Chapel Republican is looking at a broken economy and the reduced tax collections that go with it as the leading issues in Florida.

"Nobody ever said, 'Good luck and oh, by the way, you have to cut $8 billion,' '' Weatherford said. "I had no idea what we were in for.''

But budget-cutting has been the task at hand annually as the persistent recession has corresponded with Weatherford's initial election in 2006.

Making ends meet in Tallahassee has meant raiding trust funds. It's bad public policy that cannot be repeated without inviting long-term insolvency. Likewise, the federal stimulus money used to balance the current budget expires after 2011. It's that stimulus money, incidentally, that preserved the jobs (for the time being) of those literacy teachers hired in 2004.

So, yet again, legislators must match revenue with expenditures that are expected to be $5 billion short over the next two years. Choices are limited. Accepting the federal stimulus dollars came with the caveat that education and Medicaid spending must be held harmless in the 2010 legislative session.

"Any ideas?'' Weatherford asked last week.

• • •

Marcus Price has his own problems. He shares it with every other employer in Florida. Price and his wife, Dr. M.J. Price, founded Goin' Postal in 2002 in downtown Zephyrhills. It is a shipping business that also offers Web site design and other services, and in eight years it has grown to 300 franchise locations.

Price has 17 employees and is staring at higher unemployment compensation taxes for 2010 as the state confronts a depleted trust fund used to pay jobless benefits. Florida has been borrowing $300 million monthly from the federal government since the fall, and state law requires an automatic tax increase to replenish that trust fund. It dropped from $1.3 billion to zero over an eight-month period last year as the state unemployment rate grew to 11.5 percent.

Price's company must pay a 5 percent unemployment tax increase that began Jan. 1. To his employees, it means another hit in the wallet.

"Everybody is going to get a pay cut to make up for the extra money,'' he said this week.

It beats the alternative of laying off workers, which would only add to the number of people receiving unemployment benefits.

• • •

Weatherford and Price share a common goal: limiting increases in unemployment insurance taxes. Price sees it as a way of making his payroll. Weatherford sees it as a way of solving Florida's budget woes.

"We've got to stimulate growth and get people excited about bringing business to this state,'' Weatherford said.

So helping small businesses will be a top consideration for the Legislature. Exactly how —whether it's reviewing the tax code or existing regulations — is unknown.

"Do no harm will be the first priority,'' he said.

• • •

Preferably a wide-reaching priority.

The extended recession shadows nearly all public policy debates. Oil drilling in the Gulf of Mexico? Some lawmakers like the revenue potential for the state. Mass transit? Try winning a local sales tax referendum in 2010. The Class Size Amendment? Florida can't afford to implement it as voters intended, and another referendum asking for modification is anticipated.

The environment. Highway congestion. School crowding.

The philosophy of do no harm shouldn't be limited exclusively to stimulating business growth.

Florida's budget shortfall slams into small businesses 01/12/10 [Last modified: Tuesday, January 12, 2010 5:14pm]
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