Gov. Rick Scott and Republican legislative leaders continue to act as if Florida will magically return to prosperity if they can just cut taxes and business regulations enough. But new state revenue forecasts for the next two years expose the fallacy of that argument. Florida in the next two years won't have the means to maintain even the current level of often inadequate spending, particularly in education. Yet Scott's so-called jobs plan remains depressingly familiar: Just cut more taxes for businesses. It is a failed strategy that has diminished Florida's quality of life, and it has failed to keep the state's unemployment rate from rising higher than the nation's.
State economists — just a few months after suggesting Florida would see a small budget surplus next year — recalibrated their estimates earlier this month. The latest data suggest sales tax and other collections will be less than expected, creating a $2.2 billion budget gap as lawmakers meet in January to craft the 2012-13 budget.
In real terms, that means that without additional revenue of some kind, this year's more than $1 billion in funding cuts to public schools — leaving the state spending less on education than it did in 2005-06 — could be followed by more cuts in 2012-13 and 2013-14. That leaves almost no chance of raising the state's already low teacher salaries — even as lawmakers insist they want to move to a merit pay system so good teachers earn more. Nor is there likely to be any money for construction or significant maintenance projects.
The governor proposes additional cuts to the state's modest corporate income tax by doubling the tax exemption to $50,000. Never mind that about half of Florida's businesses already do not pay the tax. He wants to reduce taxes on computers, machinery and other property, which would require a constitutional amendment. And he wants to expand a sales tax exemption for manufacturing equipment. Predictably, the business-backed Florida TaxWatch already has offered its stamp of approval and claimed the proposals will give Florida an edge in competing with other states for new business. Yet even Scott has acknowledged there are not many businesses out there looking to move hundreds of jobs to another state, regardless of the tax breaks.
Scott, Republican legislators and their big business backers cannot have it both ways. The Florida Chamber of Commerce and other business interests agree that public schools and improved higher education are keys to developing a stronger state economy. Scott professes interest in improving public schools, state colleges and universities. Yet the insistence on tax cut after tax cut is starving education, and many states that are more interested in investing in education than cutting taxes have lower unemployment rates.
There is a better way. Scott and Senate President Mike Haridopolos recently acknowledged the state's sales tax system is unfair since it gives Internet-only merchants like Amazon.com, which doesn't collect the taxes, an unfair advantage over Florida businesses that do. Collecting such taxes from carpetbagger merchants would bring in an estimated $800 million or more. The Florida Chamber of Commerce supports collecting the taxes and calls it "e-fairness." Yet neither Scott nor Haridopolos are willing to get behind proposals to reform the tax code, apparently for fear of being accused of raising taxes.
The governor's predictable crusade for more tax cuts on top of tax cuts is not a road map to job creation and economic prosperity. It would require deeper spending cuts in areas such as public education — the very sorts of programs that families and business executives examine when they consider whether Florida is a good place to live and work.