Gov. Rick Scott, a Tallahassee outsider despised by the media and willing to take unpopular stands on principle, had a surprising amount of success during his first legislative session as governor.
He demonstrated the tough negotiation skills that helped him so much in business and now are in play for the benefit of the people of Florida — if not, perhaps, for many special interests that formerly held sway.
Scott and the Legislature pushed an agenda of smaller government and a better job-creating climate from which all Floridians can benefit.
The session provided a balanced $69.67 billion budget by closing a $3.8 billion gap entirely through reduced spending. That is important because it means that state government shrank, and so the burden of supporting it by individuals and businesses also shrank. In a time of trying to get some momentum going for a sustained economic recovery, that is critically important.
Through persistent persuasion and an unwillingness to cave early, Scott was able to get a decrease in corporate income taxes. Remember, while these taxes are called “corporate,” don’t think big fat-cat corporations. They are on any profitable businesses in the state, including the one that employs you.
Scott and some legislators refer to this year’s work as only “a start.” We are hoping they keep pushing for reduced taxes and regulations and will dump the targeted tax cuts and incentives that would be unnecessary if the overall business climate were friendly enough.
Here is a brief overview of what went right during the legislative session. We will be expanding on several of these issues in coming weeks as the details emerge.
+ The budget. Of course the biggest issue each year, particularly in years with declining revenues, is the budget. By balancing it and lowering taxes, state government is smaller and leaner.
The balancing came through spending cuts, including a $1.3 billion cut to public education, or about $540 per student. However, for local districts, much of that expense is offset by an $859 million savings in teacher pension plans.
Specifically, the pension changes start the process of bringing public-employee benefits nearer to the reality of the private sector, where most of us toil. The state’s 650,000 employees, including teachers, will for the first time contribute 3% of their pay toward their pensions. While in reality that is a take-home pay cut, state employees remain in an enviable situation compared to most private-sector workers, who are responsible for building their own retirement savings through 401(k) plans.
Another big budget cut was to reduce reimbursements to hospitals by 12% — or $510 million — to rein in state Medicaid costs. The media report these as deep cuts hospitals will somehow have to absorb. But if Scott had not made the cuts or increased funding, his first name would have been “former hospital executive” and it would be insinuated that he was giving goodies to cronies. That’s how the media agenda works, and Scott has been right to go around the mainstream, despite the howling. Plus the cuts spared two programs, serving the catastrophically sick, aged and disabled.
The only thing left for Scott to do with the budget now is veto some of the turkey spending. There is still far too much of that in the budget, i.e. $46 million to University of South Florida Polytechnic in Lakeland; $5 million for the regatta sports center at Nathan Benderson Park in Sarasota; $3 million to expand Polk State College; $3.4 million for the Pine Hills Neighborhood redevelopment district in Orange County; and $10,000 for an Institute for Cuban American Studies.
+ Taxes. Scott wanted $459 million in corporate tax cuts, cutting the rate from 5.5% to 3%. The tax cuts are part of his plan for revving up the state economy and creating jobs using the Arthur Laffer/Milton Friedman concept of freeing up businesses from the bottom up, rather than the Keynesian model of top-down government spending and more deficits.
Lawmakers, however, did not have the stomach to make the cuts necessary to cover the tax cuts and were not going to provide any. But Scott held out and eventually got lawmakers to agree to move toward him.
That first move increases the threshold that triggers the tax — from $5,000 in profits to $25,000. That knocks out nearly half of the state’s companies, but only achieved a $30 million reduction in tax revenue. That’s because it only helps the smallest companies — not big business, as will be charged because, you know, Republicans are in bed with big business. Right. Check the facts.
This should fairly be labeled a “small business” tax break, because the big corporations will still be paying plenty of taxes. But this is the kind of unshackling that can help thousands of small businesses feel free enough to expand and hire workers.
The budget also reduced property taxes a small amount through a $210 million reduction in water management district funds. The water management districts have been sitting on millions in reserve funds without choosing to reduce property taxes in the go-go years. So the Legislature did.
+ Growth management. This is a major change, rolling back some of the most expensive, time-eating regulations from the state’s 1985 growth management law.
The bill repeals concurrency, which was the law that required developers to pay for infrastructure upfront on major projects. Concurrency eliminated smaller developers with big dreams and killed a lot of projects — and jobs — because bureaucratic car-counters in Tallahassee could not be satisfied.
Speaking of which, the bill also gets rid of state oversight of major, local land-planning decisions.
Previously, an elected county commission could approve a change to a comprehensive plan to allow a new development the commissioners saw as beneficial to the community, but a bureaucrat in Tallahassee could rule it was not an adequate plan. That was always a bad setup. Let local elected officials decide, and then voters can decide on elected officials.
+ Education. Officially, K-12 spending was cut 7.5% to $1.35 billion, or about $542 per student. Those are the numbers generally used and misused. But there are two huge caveats: First, school districts statewide will save $859 million through the new requirement that teachers must contribute 3% of their pay to their retirement funds.
The second caveat is that the state wisely required school districts to set aside $554 million in federal stimulus money last year, which can be applied this year against the reductions. Combined, these two caveats mean that real school district cuts amount to only 1.25%, or $85 per student — nothing like the hyperbole being reported.
Now as to actual education, and not just spending, the Legislature increased the number of charter schools; expanded the state’s “opportunity scholarship” program, giving children in failing public schools the chance to go to better schools; made it easier to fire crummy teachers; and made teachers more accountable, allowing 50% of teachers’ merit pay to be based on students’ performance.
+ Election law changes. This is another bill where the hyperbole of opponents just does not match the law. It was called a rollback of voting rights, disenfranchisement of minorities and racist. For instance, one rule change that was attacked was requiring third-party voter-registration groups to register with the state and file reports. After the corruption we’ve all witnessed by groups such as ACORN, this sort of change was necessary to ensure the validity of the process.
The law also requires voters who want to change their name or address at the poll to cast a provisional ballot, which is then verified and counted later — if it is legal. This should make voting multiple times more difficult. A perfectly valid safeguard.
+ Unborn baby protections. A woman wanting an abortion now must get an ultrasound first. The goal is to give a full set of facts, not hazy verbiage such as “choice” that obscures the underlying reality. Let a mom see the baby she wants to do away with.
Another new law also makes it harder for pregnant teens to be moved to a different area of the state to get an abortion without parental notification and to get waivers from the notifying parents. A parent must be told if a child is given an aspirin, but not if a child is having an abortion? Wrong.
+ Unemployment benefits. The new law would cut benefits from 26 to 23 weeks when unemployment is higher than 10.5%. The lower the rate, the fewer the weeks a person can be on unemployment.
Unfortunately necessary. Just ask an employer who received dozens of applications until unemployment was extended and job applicants dried up.
+ Amendments. One amendment lowers the cap voters approve on annual increases in commercial property tax assessments from 10% to 5%. Another amendment gives first-time homeowners an added exemption that discounts a home’s assessed value by 50% in the first year, which would then phase out over five years.
And, in an attempt to reinvigorate states rights and repudiate Obamacare, there will be an amendment that would state that no law can “compel, directly or indirectly, any person or employer to purchase, obtain, or otherwise provide for health care coverage.”
The overall session was good for business. And that means good for jobs and workers.
Lawmakers have taken the first necessary steps. “We are positioning Florida as the state in which to do business,” Scott said.
But everyone knows there is more to do.
What should have passed
There were two important laws that should have passed: curtailing public sector unions and verifying someone’s legal citizenship status if he is arrested.
Regarding public unions, the paycheck-protection bill would have banned public-employee unions from using automatic payroll deductions to collect union dues and then using that money for political activity.
That this is a partisan issue is obvious in that unions give almost all of their financial support to Democrats, and the Legislature is run by Republicans. That it failed a Republican legislature shows the continuing strength of public unions.
But there is more to it than partisan politics. Union members can be quite diverse in their political views, from green to libertarian. But dues that are deducted under state law go almost entirely to one party.
Further, it means that public-sector unions use pass-through tax dollars to support candidates that will give their members more tax dollars, and therefore more dues, which are then used to elect friendly candidates and so on. This has always been bad law and changing it is the right thing.
The immigration bill would have required using the federal E-Verify to determine if someone is in the country legally when they area arrested. Perfect common sense.