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A Times Editorial
Unless they want coming years' shortfalls to be even worse than this one, lawmakers will use this session as an opportunity to reform Florida's tax base.
© St. Petersburg Times, published September 23, 2001
Having acknowledged that a special session of the Legislature has become unavoidable, Gov. Jeb Bush now faces the much more complicated decision of what it should try to accomplish. That there will have to be painfully deep budget cuts is a given. The Constitution forbids deficit spending, and three years of devil-may-care tax reductions have left no fat in the budget to cushion education and social services from unacceptable harm in the present crisis.
But the harm will be mitigated if Bush and the Legislature can muster the courage to do two things:
Postpone the most recent reduction in the intangibles tax, affecting payments next due in January.
Borrow responsibly from the Budget Stabilization Fund, which was created precisely to cope with emergencies such as the one at hand.
If Bush and the Legislature should have foreseen an economic slump during the regular session, they could not possibly have anticipated how terrorism would make matters worse. Acts of war were specifically among the contingencies that the Tax and Budget Reform Commission had in mind when it proposed, and voters approved, creating the emergency reserve nine years ago.
There is $940-million in the fund, some of which should be used to protect the public schools -- kindergarten through 12th grade -- from hardships greater than Tallahassee already has dealt them by sending down no new state money so that taxes could be cut yet again.
But to tap the Budget Stabilization Fund is to create problems of a different sort. Once spent, it's gone -- and what replaces it in next year's budget, for which the deficit forecasts are even more staggering? Furthermore, the Constitution requires that the Budget Stabilization Fund eventually be repaid. From what? However, the Legislature has the power to say when and could theoretically stretch it beyond the five annual installments currently set by law.
The crisis that awaits the special session has in fact been lurking for decades, needing only a disaster to set it loose. By amending the Constitution in 1924 to forbid an income tax and by repealing the state property tax a decade later in obedience to the will of industrial and timber tycoon Ed Ball, Florida condemned itself to unhealthy dependence on a sales tax that withers whenever nervous consumers stop spending or frightened tourists stay home. A golden opportunity to broaden the sales tax base to include services was bungled in 1987, poisoning the well for tax reform ever since.
With Republican rule has come a prevailing ideology that the only thing to do with taxes is cut them. But what the ideologues cannot repeal is the natural law that recessions increase the need for humane public assistance -- principally welfare and Medicaid -- in inverse proportion to the state government's diminishing ability to pay for it.
In withdrawing from the governor's race Friday, Pete Peterson observed that the fundamental problems he would have addressed not only persist, but are worse than they were before the terrorist attacks on America. Of all the states, he said, Florida has the greatest vulnerability, and that is true.
The greater likelihood is that Florida will be looking at a paper deficit of substantially more than $1-billion for the fiscal year starting next July 1. If Bush and the Republican-led Legislature are ideologically incapable of raising taxes even in good times, they surely would not do so during a recession, which is no time to be raising them anyway.
Painful as the special session may be, legislators are likely to recall it as a happy time when they convene for the regular session in late January.
If the depth of a recession is the worst of times to raise taxes, it could be the best of times to reform the tax base, which is riddled with illogical exemptions that compel the less politically influential taxpayers to pay more than their fair share. Reforming the base to treat everyone alike would put Florida's government in better shape to share in prosperity whenever it returns. Senate President John McKay, though a conservative Republican, is an apostle of that kind of tax reform, and he should insist that the governor and House commit to it now.
Meanwhile, the latest intangibles tax cut, which McKay tried to prevent, clearly deserves to be reconsidered before payments next come due. That would still leave taxpayers paying less, because the tax is based on the year-end value of their holdings, which are unlikely to come out of the cellar by Dec. 31.
If America has learned anything since Sept. 11, it is that government is not a luxury. It is, rather, the most important investment we can make.