How Florida is Funded, and What Can We Do To Make It Better

For decades Democrats have been pegged as big spenders. The party of “free stuff” and tax hikes.

I’m twenty-eight years old. My perceptions are likely different because of my age. My optimism strong, my sense of responsibility real, and my hope for a future where everyone wins pure.

I have no motives beyond serving the great people of House District 47, and doing so in an ethical and transparent way that holds myself and others accountable. To that point: I will stress that in the Sunshine State, crony capitalism is real, and wasteful spending quite evident. This is true under the 24 year long leadership of the Republican Party– not Democrats.

I don’t blame government for wasteful spending, I don’t even blame party. I blame policy makers who often prioritize personal political agendas over the needs of their community’s health and well-being. Politicians are often more concerned about their re-election bid versus analyzing and evaluating policy that they’ve passed, to actually witness the impact (or lack thereof).

There are important roles for government to play, but it must always be done in conjunction with our business community, nonprofits, and I would even add institutions of faith. These are sectors of our society that understand local needs better than any politician can, and without their insight you are operating in a vacuum that doesn’t exist.

With all that said and done, there are absolutely deep funding needs in Florida. This includes (but it is not limited to):

• • Arts and Culture Funding: Florida has slashed the state’s grant program — for museums, theaters, science centers and more — by nearly 90 percent last session, from $25 million down to $2.6 million. Florida’s ranking in per capita appropriations for arts fell from 10th in the nation to 48th.
  • Mental Health: The most recent data, for fiscal year 2014, showed Florida ranked 51st out of 52 jurisdictions for total state mental health spending — behind 49 states and Washington, D.C. — at $36.05 per capita. The Sunshine State was only ahead of one jurisdiction: Puerto Rico, at $20.22.
  • Affordable Housing: Anyone who purchases real estate in Florida pays a documentary stamp tax on the transaction, a portion of which is earmarked for trust funds to develop affordable housing. Last session, the trust funds collected about $322 million. For the 11th consecutive year, Republican leaders in the Florida House decided to sweep more than half of the money collected out of the trust funds and use it to plug budget holes and fund other priorities — a total of $182 million.
    • We know that when we don’t address Affordable Housing, than we have more folks who are homeless, adding an even greater burden to the public dollar, as this often leads to emergency room visits and the engagement of law enforcement.
  • Environmental Conservation: In 2014, the people of Florida voted overwhelmingly to add Section 28 to Article X of the Florida Constitution, which created the Land Acquisition Trust Fund to acquire, restore, improve, and manage conservation lands.
    • Unfortunately, the Florida Legislature misused these funds by misappropriating them towards four state agencies including the Department of Agriculture and Consumer Services (DACS), the Department of Environmental Protection (FDEP), the Fish and Wildlife Conservation Commission (FWC), and the Department of State. This Trust was created by the voters to enhance our conservation efforts, not cover the cost of state agencies.
  • Early Learning: In Florida, about $600 million in state and federal funds is allocated annually to the 30 nonprofit Early Learning Coalitions serving children in all 67 counties. Those dollars are used to provide early education opportunities for children of low-income working parents, children of parents transitioning from welfare to work, children of homeless parents and children who have been abused, neglected or abandoned. In 2001, lawmakers allocated $681 million in state and federal funding to the program. Last year, the total allocation was $610 million. That $70 million decrease is a 40 percent reduction once adjusted for inflation.

• Public Education:
  • • Per-Student Spending: Education Week rated Florida’s school spending an F alongside 25 other states. Last session, the increase came to 47 cents per student, as lawmakers directed most new funding to security and mental health issues.

• Teacher Pay: Florida ranks 42 out of 50 on public teacher pay, with teachers in Orange County earning an average of $40,000 annually. It’s one reason why we have a teacher shortage in Florida, and less students are going into teaching. (High stakes testing doesn’t help either — but that’s a conversation for another time)

• School Security: The legislature allocated money to arm teachers, but did nothing to actually meet the unique security needs of our schools.

• • Capital Outlay: Capital outlay money for buildings, maintenance and equipment has also taken hits. In 2009 and 2010, lawmakers lowered the amount districts could collect for such costs. Then later, lawmakers required districts to share that smaller pie with charter schools.

Our budget is funded by three sources:

1. General revenue is money derived from taxes, such as the sales tax or corporate income tax. These are not required by law to be spent for specific services.
   1. Nearly fifty-nine percent of Florida’s General Revenue comes from sales taxes. Corporate income tax accounts for five percent of Florida’s General Revenue, and all other sources combined account for less than forty percent.
2. Federal funds are dedicated by law to a specific service or assistance program. For example, when the federal government provides the state with money for its Medicaid program, the state cannot use that money for anything else.
3. State trust funds are created by the Legislature, which dedicates the fund to a specific service and determines the source of revenue for the fund. For example, road repair is typically funded from gas taxes.

For the last legislative session, this brought us to a total budget of $89 billion. Health and human services received 41%, and education received 30% of total spending. Natural resources, environment, growth management and transportation received 17%. The remaining 12% is shared among other priorities.

Florida is known to be a low-tax state. It’s one reason why people like to call Florida home. And though we may be low-tax, we’re also low-benefit: Florida ranks 49th in the nation for state and local tax fairness. Our state has no income tax and our governments rely heavily on sales and property taxes to support their operations. As a result, families in the lowest 20 percent income bracket are paying the highest effective tax rate among all income groups.

So what can we do about it? What steps can we take to support the programs that we need while spending the public’s dollar more wisely? Here is what I suggest:

• • Revaluate Current State Investments: There are instances of public dollars being used unwisely. One example that comes to mind are for-profit charter schools, where tax revenue is restricted to this exploitative system, versus supporting public education (or general revenue funds) as a whole. It’s not always a question of revenue; sometimes it’s a question of how our revenue is being spent.
  • Scrutinize Silent Spending: Silent spending, in the form of numerous kinds of tax breaks, costs Florida billions of dollars in lost revenue a year. Unlike money spent through the state budget process, this “shadow budget” is not routinely examined to see if it is meeting worthwhile goals or promoting a stronger economy. Silent spending takes many forms, the most common of which include: tax credits, tax exemptions, and tax refunds.
    • This is money that is spent through legislation that changes the tax code.
    • While spending through the state budget is subject to yearly review and reauthorization, spending through the tax code – called tax expenditures – takes the form of revenue the state foregoes, rather than money the state collects and then spends.
    • In either case the result is the same – the state doesn’t have money it otherwise would. Once enacted, these expenditures tend to remain in statute without any expiration date.
    • State tax expenditures are not inherently good or bad. The problem with them arises because, unlike actual spending, they are not routinely evaluated to ensure they deliver on objectives.
    • Stronger evaluations and routine monitoring of such silent spending would give us a much stronger handle on whether the money the state is giving up is being put to good public use.
• Stop Rejecting Federal Funds for Political Games: From high speed railway to Medicaid Expansion, our state leaders have rejected federal funds purely for ideological reasons. It’s one reason why we rank 48 out of 50 on health outcomes, and it’s one reason why we need to Expand Medicaid.
• Be Forward Thinking of New Sources of Revenue: Recreational cannabis is a good example of this. I do support access to recreational cannabis with restrictions, and see it as a source of revenue. In fact, Nevada earned revenue of $30 Million in cannabis taxes during first six months of sales, and public dollars are being saved through the reduction of arrests for cannabis possession too.
  • When looking at potential new sources of revenue, we should not only think about the revenue earned, but the costs saved too (and the potential for additional costs to be accrued)

Ultimately there is a conversation to be had around Florida’s corporate income tax, with Andrew Gillum’s centerpiece economic proposal being to raise Florida’s corporate income sales tax rate from 5.5 percent to 7.75 percent, with the goal of generating $1 billion to be funneled into education. The state corporate tax currently generates about $2.5 billion a year. Most businesses, however, are exempt from paying any tax because the state exempts the first $50,000 in taxable income. Gillum’s campaign said he would keep that exemption to protect small businesses, but said he wants to close loopholes that allow other corporations to avoid paying taxes.

I think that’s a conversation worth having, but ultimately my decisions around Florida’s budget are grounded in what’s possible, and what the needs of our district and region are. Keeping our state low-tax is important, but ensuring it’s not low-benefit for hardworking Florida families is important too, alongside holding those who exploit our systems (special interests included) accountable.

I look forward to diving deep into these conversations with you. Please do not hesitate to email me at anna@annaforflorida.com to share your thoughts.

Onward,