EDITORIAL: State of Florida desperate for new revenue sources

South Florida Sun-Sentinel–Feb. 27, 2008
South Florida Sun-Sentinel Editorial Board

ISSUE: Budget woes cloud the Sunshine State.

Florida’s budgetary problems are fast becoming a crisis that can no longer be blown off as simply the result of a bloated bureaucracy or the product of wasteful spending. The challenge is to find new revenue — fast.

Otherwise residents had better get used to a decline in the quality of services they have come to expect. Already government agencies of all shapes and sizes are sounding the alarm, which raises a critical question: How will a public already jaded to government actually respond? So far, the reaction has been muted. Taxpayers can’t be blamed for being callous, cynical or just plain detached. It clearly doesn’t help when government officials abuse the public’s trust. The South Florida Water Management District board, with its penchant for government planes and luxury hotels, or the Broward School District, and its dubious awards of construction contracts, come to mind.

Still, the devastating figures facing the Sunshine State are adding up and taking a toll. State lawmakers estimate the state will face a budget shortfall that could easily exceed $3.5 billion, which would prompt a cut of roughly $600 million in state spending before the current budget year ends on Sept. 30.

If it’s any consolation, Florida’s not alone. According to the Center on Budget and Policy Priorities, a Washington, D.C.-based think tank, the bursting of the nation’s housing bubble and a weakening national economy have slashed sales tax collections to the point where half of the 50 states are expecting major budget shortfalls this year. Since most states can’t legally run budget deficits, they are left with three painful choices: spending cuts, tax increases or a combination of the two.

This is particularly problematic for Florida, whose leaders valued less government and low taxes even as the state’s burgeoning population demanded better living conditions and improved government services.

In Tallahassee, there’s talk of tweaking sales tax exemptions, imposing “sin” taxes on cigarettes and gambling, even reviving the old intangibles tax to find new revenue. But, the smart money says that’s all it is — talk. Expect the thrust from next month’s Florida legislative session to focus on cutting spending, consolidating programs and state agencies and imposing a hard cap on property taxes.

Imagine child-support disputes, probate matters and other civil court cases grinding to a halt, thanks to a proposal to cut $17 million from the state courts’ budget that will result in the furlough of judicial assistants, court interpreters and case managers.

There’s also a good chance of shutting down Tri-Rail as the Department of Transportation must play Solomon and decide between using its resources to maintain South Florida’s popular commuter rail line or pay for road projects in the area. It sounds farfetched, but it’s a budget driven by a Hobson’s choice that comes with very real consequences.

School officials in Palm Beach County are bracing for an expected $15.5 million in cuts. The picture isn’t any rosier in Broward County, where officials have considered scenarios in which landscaping will go untreated and air conditioning unused as an alternative to cutting classroom employees.

Higher education is in for hits, too. Limits in student enrollment, closing satellite campuses, and staff layoffs are all on the table as state university officials scramble to address a potential $92.4 million in cuts this year. This on top of the estimated $55 million in cuts the university system has already made since the current budget year started last October.

The crunch has Florida Atlantic University officials talking about turning away 2,000 students the next school year, a move that would only create additional revenue losses from the decline in tuition payments and fees. Don’t expect relief for community colleges, either.

They’re in the same boat.

Some local governments have even suggested raising taxes. Officials in Deerfield Beach, Lauderdale Lakes, Southwest Ranches and Tallahassee, as well as the Palm Beach County Commission, haven’t ruled that option out as a way to pay for popular services, ranging from code enforcement to mosquito spraying. Scare tactics? Hardly.

The warnings of dire budgetary troubles, particularly with the prospects of a lousy economy, aren’t anything new. Larry Fuchs, the former head of the state Department of Revenue, had concerns about an inelastic tax system that relies too heavily on fluctuating sales tax collections, and is riddled with too many tax break and lax collection loopholes — and that was in 1999.

There is no one policy that can close the state’s budgetary shortfall any time soon. This crisis was years in the making, and unfortunately, there’s no easy out. There is, however, one glaring reality.

Florida needs new revenue, and state leaders had better find it, and fast.

BOTTOM LINE: The road to relief and recovery begins with revenue.