On May 8, the Florida Legislature passed a $66.5 billion budget, balanced by $3 billion in federal stimulus funds and the trust-fund raids and deep spending cuts to which we've grown accustomed in recent years. "It's reasonable and responsible for the times that we are in," Miami representative and GOP budget chief Marcelo Llorente told the Miami Herald.
The Legislature faced a steep hill when it assembled in March. Lawmakers came into the session with a $6 billion shortfall — nearly 10 percent of the entire budget — despite having already sliced $8 billion over the last two years. Though both the state House and Senate are dominated by Republicans, this year's budget battle was contentious, ultimately requiring legislators to spend an extra week in Tallahassee. Deals were cut and the 407-page budget arrived on Gov. Charlie Crist's desk.
At least it's done. With it, the frivolities that tend to pop up in the Legislature every year — forcing couples into marriage counseling, making it more difficult for the elderly and minorities to vote — had to be dispatched. Ultimately, the $66.5 billion budget was a mess of short-sighted decisions and missed opportunities.
Instead of fixing the inequities in this state's property tax code, legislators made it worse. Instead of closing loopholes and tweaking the sales tax so that it produces a consistent, adequate source of revenue, they kicked that can down the road. Instead of investing in our schools — among the worst-funded in the nation — they applied Band-Aids.
The first thing you'll notice about this budget is that nearly everything that involves the state government will become more expensive. In other parts of the world, this is considered a "tax." Here in Florida, where we don't raise taxes, these are called "user fees." This bit of semantics allows Republican legislators to campaign next year telling you that they cut your taxes.
If you're a smoker, now would be a cost-effective time to quit. Already, the federal government slapped a $1 per pack surcharge on your Marlboros to fund children's health programs. Come July 1, when the state budget takes effect, the state cig tax will increase some 300 percent, from 34 cents per pack to $1.34. The tax will also apply to smokeless tobacco, but not cigars. This new revenue stream will generate about $900 million a year — unless lots of people quit smoking. (Actually, smokers, now might not be a good time to quit; the budget is dependent on you smoking and paying more. Keep sucking.)
The other new fees will raise about $1 billion per year. If you drive a car you'll render unto Caesar heftier sums. Annual tag renewal fees will cost 35 percent more. Need a new license plate? That'll cost $28 instead of $12. Registering a new vehicle? That too will more than double in price, from $100 to $225. Replacing a driver's license? That will now cost you $25, a 150 percent increase.
Court costs are headed skyward. Filing a lawsuit will cost $395, up $100. Filing a probate case will also cost $395, up from $280. Interestingly, it will now be cheaper for landlords to evict tenants.
State prisoners aren't escaping these new user fees either. They'll now have to pay $5 a month for their health care, up from $4. And if you're a shoreline saltwater angler, you'll have to pay for a $7.50 license, though this has more to do with new federal regulations than the state budget.
If you have home insurance, expect to pay more for that. The Legislature passed legislation allowing Citizens Property Insurance, a state-created entity designed to insure homes that other companies won't, to raise rates by as much as 10 percent a year into perpetuity. Legislators also passed a bill to entice big insurers who have left the state, such as State Farm, to come back; under this legislation, State Farm could jack up its rates without seeking the approval of state regulators.
Gov. Crist may veto that bill.
Not that Florida's ever been especially kind to its schoolchildren — we're dead last in the nation in per capita per pupil spending — but recent years have been particularly tough, thanks to the collapse of the housing market and the passage of Amendment 1 in 2008, which doubled the state's property tax homestead exemption and allowed homeowners to transfer property-tax savings to their new homes. This was designed to spur the housing market. In fact, it succeeded only in depriving local government and school districts of revenues they needed to weather the housing bust. So school boards across the state made dramatic budget cuts.
This year's budget actually increases the state's per pupil allotment by $28 to $6,872 — which sounds good until you consider that that's only an "increase" because legislators slashed school funding in January. On the whole, student funding will be down more than $250 per student since the 2007-2008 school year, and will be lower than in any school year since 2002-2003. In Orange County, this means that six elementary schools might be closed and there will be layoffs, cuts in bus service and the elimination of some summer school programs.
Next year, voters will vote on a constitutional amendment carving out more property tax cuts for rental properties and commercial real estate. Also, a second proposed constitutional amendment would give new home buyers a temporary tax break that phases out over a five-year period. If both of these pass, school boards and local governments will take an even stiffer punch.
Together, these amendments will make the bad situation created by Amendment 1 even worse. Barring a rapid turnaround in the housing market, local governments will have to cut back more services (including police and firefighters) or raise taxes to make up the nearly $300 million these amendments would cost in their first year, with the price tag escalating rapidly thereafter. Although the commercial property tax cuts wouldn't apply to schools, the already besieged school districts will nonetheless face a similar, and seemingly perennial, dilemma: raise taxes or fire teachers.
But there's good news: Though the Legislature rejected teachers unions' calls for a 1-cent sales tax to fund education, the Legislature gave school districts permission to raise property taxes — 25 cents for every $1,000 in assessed value. (Statewide, this could generate as much as $380 million.) School boards can vote to enact the tax hike later this year, but they have to ask voters via referendum to keep the increase after 2010. If voters sign off, those in homes appraised at $200,000 will pay an extra $50 a year. If they don't, students linger in decaying schools.
Without the stimulus money to buttress the K-12 education budget, the proverbial goose would be cooked. The state had to apply for a federal waiver for the $2.2 billion in stimulus dollars, because its education funding had dropped since 2006. Happily, the federal government approved our application and we'll be getting the money. In any event, when the stimulus funds go away in two years, it's not clear how school officials will continue patching over the fiscal holes.
The outlook is no brighter for Florida's college students. Next year, the state's 11 universities will raise tuition rates by 15 percent, and community colleges by 8 percent. Though students will be paying more for college, the state's scholarship program won't be there to help. Lawmakers have effectively capped the Bright Futures scholarship amount at current levels, which means that students will have to make up the difference between current and future tuition rates on their own.
Since its inception in 1997, Bright Futures has fully funded higher education for students with a 1270 SAT score and partially funded it for those with a very mediocre 970 or better, regardless of their financial situation. As a result, some 95 percent of University of Florida freshmen could qualify, even though a quarter of UF families make more than $150,000 per year.
In the meantime, the Florida Lottery funds that pay for the Bright Futures program — which cost $400 million last year — are drying up.
Two bad things happened to Florida's environment this session: The state's environmentally sensitive land-buying program, Florida Forever, went the way of the dodo, and in an eleventh-hour move, lawmakers made it easier for developers to bulldoze at will without regulations getting in the way.
The latter will allow developers in Florida's biggest urban areas — Orlando included — to build new stuff and add new traffic to our roads without having to build new or expand current roads, as they must now. Instead they'll have to pay a fee, which the state hasn't decided yet how to calculate. It will enable counties and municipalities all over the state to overlook the impact that new developments will have on congestion and eliminate reviews by state and regional regulators.
It's a development free-for-all, pushed by a Bradenton state senator who happens to be a real estate developer. Supporters argue that it will restrict suburban sprawl, but that doesn't seem likely. The bill allows counties to designate anywhere with 1,000 people per square mile an "urban" zone, a rather liberal classification that would allow even areas with densities of one unit per acre to build up quickly. And given the loosening of road-building rules, it's entirely likely that the roads you travel will become a lot busier — as if they're not congested enough already.
The death of Florida Forever is sad, but the reasons for its demise are sadder still. Originally, House and Senate Republicans had zeroed out the $12 million appropriation, but some senators proposed a stripped-down version that could be funded by closing a loophole that allowed corporations to avoid paying documentary stamp taxes on land transactions. Indeed, in the final budget that loophole was plugged, but the new revenue didn't go to Florida Forever.
Why? The Senate refused to go along with the House's scheme to open up oil drilling along Florida's coasts, so the House killed the state's environmental program, which has purchased more than a half-million acres of sensitive lands since 2006.
And then there's the Legislature's inexplicable inability to forge ahead with SunRail, this region's imperfect baby step toward decent mass transportation. Certainly, the slow-moving train that would connect DeBary to Orlando has many flaws, but it's at least a timid nudge in the right direction, which is useful after the painful demise of light rail a decade ago. Besides, it's already got funding. The $1.2 billion project has a promised $300 million in federal money, and SunRail has already spent $100 million on planning.
Still, legislators couldn't make it work because they couldn't decide on an insurance plan. The debate centers on how much liability the state should bear for any potential mishaps and how much should be placed on CSX, the company that is selling the state the train tracks. The state Senate refused to go ahead with a plan that would have shielded CSX from liability — even if an accident were CSX's fault — up to $200 million.
The state's deal with CSX expires June 30, so if a workaround deal hasn't been struck by then, SunRail is dead. U.S. Rep. John Mica, R-Winter Park, Orlando Mayor Buddy Dyer and other supporters say they're still looking at options.
There's no better scapegoat for politicians than the bureaucracy, so another 800 civil servants can expect a pink slip. Most of the rest will have their pay cut by 2 percent — following two years of stagnant wages.
The Legislature also gut-punched this state's rising ranks of unemployed — now at 9.5 percent — by rejecting $444 million in federal stimulus money because of the alleged regulatory strings attached.
But the true tragedy of this session isn't what they did; it's what they didn't do. They failed to look at the fiscal calamity surrounding this state and re-evaluate how we do business. As this newspaper has documented `see "Ponzi scheme," April 16`, Florida has survived with its low-tax mentality and swiss-cheese tax code so far thanks to the steady rate of people moving into the state. Retirees came here for the sunshine and the low cost of living. They bought and built houses, which propped up the construction industry.
But such pyramid schemes only last as long as new investors are added, and that's not happening any more. Our population growth is declining quickly. In fact, more people now leave Florida each year than arrive from other states.
A first step would be to begin closing the state's endless array of sales tax exemptions and credits — which if eliminated would net billions of dollars a year, according to state analyses. Is there any good reason that the state exempts fish breeding from sales taxes? Or bottled water? Or cattle growth enhancers? How about "alcoholic beverages used by business for tasting"? Or charter fishing boats? Or anything sold or leased to a church? Or any religious item? Or the purchase of a cinematography school? Even in a crisis the Legislature declined to address these loopholes. Nor did lawmakers look to tax currently exempt services, including dry cleaning and sightseeing tours, which could net another $15 billion a year.
Instead of pushing exemptions — such as Amendment 1 and the two constitutional amendments that will be on the 2010 ballot — the Legislature could step up to the plate and overhaul the state's tax code for a 21st-century world.
But that's a sacred cow lawmakers are too scared to slaughter. In Tallahassee, that's what reality looks like.