Scott Likely to Focus On Tax, Spending Cuts By Lloyd Dunkelberger

Posted: September 9, 2011 in News and politics

TALLAHASSEE | Although Gov. Rick Scott is softening his image through a series of public relations moves, the fundamental thrust of his conservative administration — reducing the cost and size of government — remains intact.

All indications are that Scott, working with an equally conservative Legislature, will pursue tax cuts for corporations while limiting, if not cutting, more state spending. The pursuit of that agenda will play out in the coming months as Scott and lawmakers develop a new budget for 2012-13.

Since taking office in January — and watching his popularity numbers plunge — Scott has done an image makeover this summer, ranging from replacing some of his top staff members to not wearing a tie to meeting with newspaper editorial boards, which he previously had shunned. He even put out a new official portrait.

But those changes don’t seem to signal any sort of shift in Scott’s basic philosophy.

This month, state agencies will submit their spending plans, which will include, at the request of Scott and lawmakers, measures that could cut each agency’s funding by 10 percent. If implemented, the reductions would come on top of deep cuts enacted for the current fiscal year.

Scott will also continue to push for the elimination of the state corporate income tax, which was one of his campaign promises.

Lawmakers gave Scott a small victory on the corporate tax in the spring by agreeing to increase the number of businesses exempted from the tax, although it only amounted to a $29 million cut. The tax raises some $1.9 billion per year for the state.

However, the ability for Scott and lawmakers to consider tax cuts or spending changes in the new budget will be directly tied to revenues the state collects.

And the continued uncertainty over the national economy — highlighted by a gloomy jobs report on Friday — casts considerable doubt over that revenue picture.

On Thursday, state economists issued a preliminary long-range financial forecast that boldly proclaimed the state could meet its critical funding needs for schools, health care, prisons and other programs during the next three years because of expected revenue growth in a recovering economy.

But the report also warned that if the economy stalled, budget shortfalls — which approached $4 billion last spring — also could return.

In fact, the report, which will be discussed by the Legislative Budget Commission on Tuesday, projected that the state would face a $308 million shortfall by 2013-14 if lawmakers have to spend down a $1 billion budget reserve fund in the coming year.

Despite that uncertainty, House Democratic leader Ron Saunders of Key West said that, in a recent meeting with Scott, the governor made it clear he would press ahead with his plan to phase out the corporate income tax. Scott has argued that eliminating the tax would make Florida more attractive to companies wanting to relocate in a more business-friendly state.

“I think he expects to come back with the elimination of the corporate income tax,” Saunders said.

Saunders said Democrats would not necessarily oppose a tax cut, but would prefer to see a “broader-based” initiative, such as cutting fees for Floridians who buy auto tags and driver licenses, rather than cutting corporate taxes.

“That obviously depends on whether there are revenues available to have those tax cuts without cutting education and social services and other programs,” Saunders said.

FUNDING FOR SCHOOLS

Lawmakers, as well as Scott, are expected to consider increasing state spending on public schools, which saw their funding cut by nearly $800 per student in the current budget.

“We’re hearing from our districts that a lot of these education cuts are not going over very well,” Saunders said. “There may be support for restoring some funding to education.”

The state Board of Education has proposed increasing per-student funding by about $118 per student in the new budget year.

But while Scott may look more favorably on funding for schools, he burnished his image as a fiscal conservative last month by backing more than $700 million in cuts to the state’s water management districts.

Scott said the cuts — which included a $210 million reduction in property taxes — could be made without jeopardizing the districts’ role in developing and protecting Florida’s water supply.

Environmentalists sharply disagreed.

“It undermines years of progress on protecting Florida’s water resources,” said Eric Draper, a lobbyist for Audubon of Florida. “The cuts allow the politicians to claim ‘we have reduced taxes,’ but they’re not being completely candid in saying how those cuts are going to affect water supply and environmental protection.”

Cuts of that magnitude will hamper the districts’ ability to respond to situations such as droughts and hurt their ability to develop water supplies critical for the state’s future, Draper said.

While noting the uncertainty over state revenues in the coming year, Senate Budget Chairman J.D. Alexander, R-Lake Wales, said he hopes the austerity measures that the state has taken in the past few years will help Florida get through the next year without having to embrace such controversial issues as requiring state employees to contribute to their pensions or eliminating some 4,500 state jobs.

“I hope it is not like it was last year,” he said. “It wasn’t a lot of fun for any of us.”

But Alexander also indicated that, like Scott, he sees room in the $69 billion state budget for more savings. For instance, he said he has been looking at the more than $2 billion the state spends every year on mental health services, with the idea that some savings could be achieved by bringing more uniformity to the contracts.

‘LEARNING ON THE JOB’

After his meeting with Scott, Saunders, the Democratic leader, said he expects Scott’s relationship with lawmakers to be a little less one-sided in the coming year.

“I think he’s learning on the job and hopefully he’ll have a little bit more of an open mind towards what the Legislature wants,” Saunders said.

He said Scott can be more successful by treating the Legislature — which has a solid Republican majority — as “more of an equal partner.”

“Maybe that will be reflected in his legislative programs,” Saunders said.

Copyright © 2011 TheLedger.com — All rights reserved. Restricted use only.

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