STATE OF THE BUDGET

The focus of this column is governmental budgets. As most of you now know, the federal budget for 10/1/03-9/30/04 is expected to be $600+ billion in deficit when one includes this year’s so-called social security surplus (plundered from the “lock-box”). Federal deficits have no end in sight and will explode upon your children and grandchildren like a ton of bricks.

But, with this column, I hope to discuss Florida’s state budget. Most states, of course, ban deficit spending. Thus, Florida, as a state government, supposedly suffers no deficits. The more critical question is, nonetheless, whether or not Florida’s annual state budgets are honest, fair and adequately cover the needs of our citizens? The answer, I submit, is a resounding “No”.

First, are the budgets honest? Let me bore you, as usual, with some numbers. For the last 3 years, the state and the media have reported that Florida’s annual budgets were $50.4 billion for 2002-03; $53.5 billion for 2003-04; $57.3 billion for 2004-05.

It’s a bunch of malarkey. Those figures are fairly consistent with reports from the state’s Department of Financial Services at www.flfds.com/pressoffice/cafr2003. In contrast, the state’s Comprehensive Annual Financial Report (CAFR) reports that the net costs of governmental activities were only $26 billion for 2002-03, after deducting some $20 billion in program revenues. Even the latter figures are somewhat deceptive. For example, education is shown as having an annual state budget of some $15 billion or so. If you look, however, at the figures of the 2004-05 Florida Education Finance Program, it is there reported that K-12 financing will be only $9 billion by the state and $6 billion from local property taxes. Even this 60%-40% split doesn’t apply in counties like Monroe where the ratio is more than reversed; in Monroe, the state pays less than 20% of K-12 operating expenses and none of capital expenditures.

Thus, the answer to the first segment of my query is “No”, our state budget is not set forth very honestly.

Next, are state revenues assessed and collected fairly? I think not. See, for example, not the remarks of me, an old progressive or liberal, but the website of the Internal Revenue Service of the US Department of the Treasury at www.irs.gov/app/understandingTaxes. The IRS says that, where everybody pays a sales type tax, i.e. the same fixed amount in taxes (e.g. 6% sales tax, beverage and tobacco taxes, fuel taxes, phone taxes, utilities taxes), these are regressive taxes and cause, per the IRS, “lower income groups to pay a greater portion of their income (in taxes) than higher income groups pay”. That’s what the IRS says, with online lesson plans to back it up. The poorer you are in Florida, the more proportionate taxes you pay; the richer you are, the less taxes you pay.

Florida’s CAFR for 2002-03 reported that our regressive state taxes (sales, beverage, tobacco, fuel, phone, utilities) produced $20.4 billion of a total of some $27.1 billion in net state revenue. Thus, 75% of our state revenue comes mainly from those least able to pay.

Consistent with JEB’s inaugural promise in 1999, he has repeatedly slashed the Intangible Personal Property Tax which catches only the wealthiest of us. That tax doesn’t cover retirement plans, savings or checking accounts, municipal or treasury bonds, etc., all of which are exempt. It covers, mainly, stocks. The first $250,000 per person is now exempt; $500,000 per couple. The tax on the excess is now 1/10th of 1%. So, instead of producing more than $1 billion annually in state revenue, the wealthiest of us now produce $300 million, or about 1% of our annual state revenue, and even that nominal amount is deductible from federal taxes which have been similarly slashed by JEB’s brother (apparently, it runs in the family). Since Florida is one of only 7 states without a personal income tax, that means that our wealthiest citizens proportionally pay very little of our state tax burden.

Florida does have a state corporate income tax, as do all but 5 other states; Florida’s 5.5% rate is among the lowest rates charged by any state. On top of that, as if private school vouchers weren’t themselves disgraceful enough, Florida’s corporations get a dollar-for-dollar tax credit for donations to “nonprofit” school tuition organizations. The corporate income tax produces less than 2% or 3% of state revenues.

FloridaTaxwatch.org reports that more and more of the Florida tax burden is shifting from state to local governments, along with the state abandoning governmental services to counties and cities. Those services still provided by the state are being increasingly privatized to the for-profit cronies of the Bushies.

Are our state tax burdens fair? Not hardly, when the poorest among us pay a far higher proportion of those taxes than our most wealthy.

Finally is our state revenue base sufficient to adequately cover the needs of our citizens? “No”, I submit. Our schools are chaotic. The promises of Florida Forever and everglade restoration are being abandoned. Health care coverage for the young, the aged, the poor continues to deteriorate. Drug addiction treatment is being forsaken and replaced with years of imprisonment. The litany of unmet governmental service needs requires more space than this column allows. The simple truth, however, is that our state budgets are not honest, not fair, and do not cover the needs of our citizens. At 17 million people, Florida ranks 4th in our nation’s population, but 45th or worse in state governmental revenues, expenditures and/or services.