Monday, April 21, 2008

What Happened To Our State of Florida?

Why are we in the worst budget crisis of our lifetime? Why is the criminal justice system on the brink of eliminating vital substance abuse and other rehabilitative programs?

With just two weeks of the legislative session left, it seems almost certain that public schools and public health programs will get whacked by billions of dollars.

In other words, everything is going according to plan.

Not the plan of most Floridians, who will be shocked when the new budget year starts this summer and they find that services that they, their elderly relatives or their neighbors rely upon will be reduced or gone.

No, this is the plan of the anti-government wing of the Republican Party, which has held considerable sway in Tallahassee over the past decade.

These folks fundamentally do not believe that government should be in the business of running schools or paying for medical care for the poor or elderly. Never mind that public education has been a bedrock value of this country for a century and a half, or that society as a whole appeared to agree in the 1960s that the richest country on the planet ought to care for its old and sick.

Such charity, in their view, should be entirely voluntary, and not subsidized by public dollars. True, in times when the economy is rolling along and tax revenues are bountiful, these arguments seem petty and mean-spirited. This is why you didn't really hear them in the Capitol during the late 1990s and through the first half of this decade.

Instead, the proponents of this ideology cleverly took after the other half of the equation through tax cuts — the "starve the beast" approach.

Not starve it immediately, because that draws heaps of bad publicity.

Rather, they tinkered with Florida's already unsteady tax structure and further unbalanced it, so that when the recession came, the hit would be that much more extreme — and require cuts that were that much more severe.

The best example is former Gov. Jeb Bush's dogged elimination of the intangibles tax, which, with few exceptions, hit the wealthiest 4.5 percent of Floridians and was also the only progressive tax the state had. By getting rid of it, the state became that much more reliant on the sales tax, the fluctuations of which are readily evident in every economic downturn.

Consider where the state would be if it had the $1 billion that tax on stocks and bonds would have produced today. It would not have covered the whole shortfall, true, but because much of that bottom-line total is federal matching money that will not be received because the state is cutting back on its share, it would have covered considerably more than $1 billion.

Or imagine if the rich-people's break had been given year-to-year, depending on the state of the budget — like, for instance, the way the little people's "sales tax holidays" are granted or not granted. Then, Florida's richest would have to forgo their several-thousand-dollar tax breaks in tough years — just as ordinary Floridians have had to do without their six-cents-on-the-dollar break on back-to-school clothes some summers.

Of course, that idea was never on the table. The intangibles tax was deemed "insidious" and had to be eliminated, entirely and forever, while the sales tax holidays — which typically cost about $40 million — were considered gifts to the people, but only when the state could afford them.

Between the intangibles tax repeal and the various other permanent tax cuts — most of them targeted for specific groups and totaling less than $50 million a year — Bush and Republican lawmakers cut recurring revenues by some $1.8 billion a year. The predictable consequence is where Florida is today — on the verge of hacking away at what was already a flimsy safety net.

This outcome, while predictable, is not inevitable. Gov. Charlie Crist wants to spend some of the $7.8 billion in reserves Bush said he was leaving behind (the figure was illusory, and included such things as Florida's obligations in the Everglades restoration), while House Democrats want to close a $400 million loophole that allows giant, multistate corporations an enormous tax advantage against Florida-only businesses.

Neither of these ideas, though, is likely to happen, because both are based on the premise that such massive cuts to education and social services are bad things to be avoided. Unfortunately for parents of public school children, for the poor and for the abused, the architects of the tax policy that got us here do not accept that premise. In their view, they are on the brink of a long-sought victory. They are not likely to give it up easily.

by S.V. Date, published at on April 21, 2008

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