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No more tax giveaways

Many of Florida's legislators have begun to sound off about the state budget being developed for the fiscal year that will start July 1. House and Senate leaders are telling lawmakers not to raise taxes, using sound-bites like Senate President Jeff Atwater's: "The people of Florida do not have one more dime to send us." That's very quotable and pretty popular too, since no one loves to pay taxes and many feel government is inefficient and doesn't do a good job of helping the economy.

But equally jarring are the inconsistencies: At the same time elected officials rail against taxes they also acknowledge the inevitable outcome of cutting services that struggling families need in a recession because there isn't enough money to meet those growing needs.

Another inconsistency is the story that is rarely told as loudly as the "no taxes" declaration. While pledging not to raise taxes, many legislators are fond of digging Florida's financial hole deeper by continuing to hand out tax breaks for businesses while misleadingly calling them an investment in economic development and job creation. These "tax expenditures," as they are known, cost money just the way appropriations from the state budget do. In fact, they amount to several billions of dollars in lost tax revenue each year. In every legislative session, tax breaks are approved with little attention given to examining whether they really do provide the economic benefits and jobs that their supporters claim.

If the people of Florida do not have "one more dime" to send to Tallahassee, shouldn't that edict extend to tax expenditures too?

The state should take a hard look at existing tax breaks and view with skepticism new giveaways, such as three that recently surfaced: special tax breaks to try to lure the Chicago Cubs to Florida for spring training; filmmakers for working in Florida; and towing, storage and salvage services on Florida waterfronts. These three alone would cost taxpayers several hundred million dollars in the next three years. It's money we don't have, for jobs we might never see.

In these tough economic times, the need for public services grows just as the resources available to the state to meet those needs shrinks. Thousands of families are struggling with the consequences of unemployment. Thousands are on waiting lists for public services. Florida has the highest rate of mortgage foreclosures and delinquencies in the country. Poverty and homelessness are increasing. Are these needs less important than tax breaks for baseball teams and film moguls?

Florida has significant environmental needs as well. Springs across the state have become choked in recent years with weeds and algae as nitrogen levels in groundwater have increased. A state official just warned a Senate committee that waiting to spend the dollars necessary to protect Florida's springs could cost more in the long run.

Revenue to make investments in education and job training are needed, too. Recently, after two years of study and discussion, the governor and prominent business groups concluded Florida faces an emerging "talent gap" that is "our state's most important resource for driving sustainable economic development and a diversified economy." Are these needs less important than tax breaks for individual businesses?

There are severe consequences when the Legislature cuts the state budget: State agencies lay off workers, cut salaries and benefits, scale back payments to private sector providers and nonprofits, and reduce aid to local governments. Those entities, in turn, respond by cutting back further on the number of people employed. With the newly jobless spending less money, the impact ripples through the state's economy. All these actions in response to budget cuts will be a drag on the recovery and could even tip the economy back into recession.

The better way is a balanced approach that instead of relying only on spending cuts also provides needed revenues through closing corporate tax loopholes and unjustified tax expenditures. That approach makes investments in our future, while at the same time reducing government spending by eliminating inefficient, ineffective or unneeded state programs.

John Hall is executive director of the Florida Center for Fiscal and Economic Policy in Tallahassee, a nonprofit conducting research on tax and budget issues with a focus on their impacts on low- and moderate-income Floridians and small businesses.

No more tax giveaways 01/29/10 [Last modified: Friday, January 29, 2010 5:56pm]
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