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Chip Bok | Akron Beacon-Journal

Numbers don't lie: Tax system broken

Transplants and tourists have fueled Florida's economy for so long that any dip in either group creates a shock. But the latest population numbers, coupled with the plummeting housing market, ought to awaken politicians who think state government can keep treading water.

The population grew at an annual rate less than half that of the previous decade. It is still growing by a large number – 193,735 last year – but in starkly different ways. The number of transplants from other states dropped to 35,301 last year – one fifth the amount of the previous year.

In public schools, the reversal is more pronounced. State economic forecasters now predict that school enrollment will decline next year for the third year in a row.

These trends could be viewed as entirely welcome in a state with traffic-choked highways and overcrowded schools except that they also undermine a tax system that is so fragile it assures the supply of government services can never keep pace with the demand for them. Floridians want great universities, for example, but the Legislature keeps taking money away from them.

Just read from the latest Cornerstone report produced by the Florida Chamber of Commerce: “The ability of Florida's educational system to produce the workforce of the future remains a greater concern. ... Four out of five new jobs in Florida through the year 2010 (will) require some form of post-secondary education and training. Florida's educational system ... is not producing graduates at that rate."

The imbalance between the state's modern ambitions and its antiquated tax system has only grown worse through years of specially granted exemptions for businesses and wealthy stockholders. This year, the bill is coming due. The Legislature has been forced to meet in special session to cut $1-billion in spending, and the state already is another $1.1-billion in the hole. Budget forecasters project an additional $1.4-billion shortfall for next year.

Lawmakers have ignored this crisis, which is why the constitutionally empowered Taxation and Budget Reform Commission has a responsibility to act. Former state Senate president John McKay has provided at least one good idea. He proposes to ask voters to remove $9-billion worth of sales tax breaks in exchange for lowering school property taxes. The net result would be a broader tax base that would more resilient to swings in the economy.

The diminished population growth may or may not last, but a prestigious commission led by Miami businessman Charles Zwick wrestled two decades ago with the persistent disconnect between growth and aspirations. It too called for a broader tax base, and wrote: “We can no longer compete successfully by relying merely on cheap land, cheap labor, low taxes, and plenty of sunshine."

Though land and its associated costs are no longer cheap, Zwick's larger point remains relevant. When will politicians face the reality"

Transplants and tourists have fueled Florida's economy for so long that any dip in either group creates a shock. But the latest population numbers, coupled with the plummeting housing market, ought to awaken politicians who think state government can keep treading water.

The population grew at an annual rate less than half that of the previous decade. It is still growing by a large number — 193,735 last year — but in starkly different ways. The number of transplants from other states dropped to 35,301 last year — one-fifth the amount of the previous year.

In public schools, the reversal is more pronounced. State economic forecasters now predict that school enrollment will decline next year for the third year in a row.

These trends could be viewed as entirely welcome in a state with traffic-choked highways and overcrowded schools, except that they also undermine a tax system that is so fragile it assures the supply of government services can never keep pace with the demand for them. Floridians want great universities, for example, but the Legislature keeps taking money away from them.

Just read from the latest Cornerstone report produced by the Florida Chamber of Commerce: “The ability of Florida's educational system to produce the workforce of the future remains a greater concern. … Four out of five new jobs in Florida through the year 2010 (will) require some form of postsecondary education and training. Florida's educational system … is not producing graduates at that rate."

The imbalance between the state's modern ambitions and its antiquated tax system has only grown worse through years of specially granted exemptions for businesses and wealthy stockholders. This year, the bill is coming due. The Legislature has been forced to meet in special session to cut $1-billion in spending, and the state already is another $1.1-billion in the hole. Budget forecasters project an additional $1.4-billion shortfall for next year.

Lawmakers have ignored this crisis, which is why the constitutionally empowered Taxation and Budget Reform Commission has a responsibility to act. Former state Senate President John McKay has provided at least one good idea. He proposes to ask voters to remove $9-billion worth of sales tax breaks in exchange for lowering school property taxes. The net result would be a broader tax base that would be more resilient to swings in the economy.

The diminished population growth may or may not last, but a prestigious commission led by Miami businessman Charles Zwick wrestled two decades ago with the persistent disconnect between growth and aspirations. It too called for a broader tax base, and wrote: “We can no longer compete successfully by relying merely on cheap land, cheap labor, low taxes, and plenty of sunshine."

Though land and its associated costs are no longer cheap, Zwick's larger point remains relevant. When will politicians face the reality"

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progress-energy.com/energyplanning or e-mail the company at: energyplanning@pgnmail.com or call (888) 238-0373.

Numbers don't lie: Tax system broken 03/12/08 [Last modified: Tuesday, March 18, 2008 6:44pm]

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