July 30, 2014

Florida's Finances

The State's Budget- Two Opposing Views of How Florida Spends Its Money

Are We Tightwads... Or Big Spenders?

Mike Vogel | 3/1/2011

...Or Big Spenders?

Big Spenders

J. McClure III
"The tax system as it is now works. Does Florida raise enough revenue? The answer is yes. The problem was when the times were good, not only did we raise it but also we spent it all. We should have been setting it aside."

— J. Robert McClure III, president/CEO, the James Madison Institute, Tallahassee

The Medicaid Chasm

Medicaid consumes 29% of state revenue — $7.9 billion of state-generated revenue and another $12.1 billion Florida gets from the federal government. It covers 2.9 million Floridians, rising by 2019 to 4.8 million because of the federal healthcare law. The program is on its way from costing $20.2 billion this year to $25.1 billion in 2013-14, including $2 billion to implement the federal healthcare law. "It's a system that everyone recognizes is broke and does not serve the patient well, let alone the taxpayer," says Senate President Mike Haridopolos.

"In some cases, the van drivers are paid more than physicians," according to a presentation new state House members received from Carol Gormley, staff director of the House Health and Human Services Committee. "Without significant changes, Florida Medicaid is unsustainable."

Cash Cows

Waiting in line at the DMV is costing you and giving the state a fat margin. Thanks to fees such as the $77.25 it costs for a new vehicle title, the Department of Highway Safety and Motor Vehicles brings in more than $2.1 billion to the state while having a budget of $368 million. Likewise, the state Division of Corporations brings in $240 million in fees while operating on a budget of $8 million.

In Hock

With more than $20 billion in debt and plans to borrow another $7 billion over 10 years, Florida's annual debt service is increasing. Given its borrowing plans, the state won't have room under its 7% debt cap for more borrowing until 2014, when Preservation 2000 environmental bonds are retired.

Easy Money

Doc Stamp Receipts (in billions)
Doc Stamp Receipts
Source: Florida Tax Handbook

Florida taxes real estate transactions through a documentary stamp tax on deeds, mortgage notes and the like. The doc stamp tax — one of the highest in the country — helps illustrate Florida's budget challenges. One issue: Not all doc stamp revenues go to the general revenue fund. Some goes into trust funds with dedicated uses — environmental land purchases, conservation, affordable housing, transportation — and the Legislature has little discretion in spending it. Another issue, however, involves how the Legislature spends what it has discretion over. Doc stamp tax revenue ballooned during the real estate bubble — but legislators spent it as if it would recur, leaving a big hole to fill when it didn't. In 2005-06, legislators saw $1.2 billion in doc stamp tax revenue come into the general revenue fund. That number fell to $110 million in 2009-10.

Tags: Politics & Law, Government/Politics & Law

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