florida the economy, taxes and results - a balanced approach is needed

FloridaThe Economy, Taxes and Results -A Balanced Approach is Needed

Presentation to the National Association of Social Workers - Florida

John HallFlorida Center for Fiscal and Economic Policy

April 2010

Our economy is in hot water!

Florida’s Economy• Stagnant population growth – lost over 57,000 people between

2008 and 2009.

• Growth rate in Personal Income declined to 43rd in the Country in Q1 2009.

• GDP ranked 48th in real growth in 2008 – 2nd in 2005.

• Unemployment at 12.2% in February, 2010 – 1.1 million jobless!

• Loss of over 900,000 jobs in three years.

Florida’s Economy

• Nearly 50% of all mortgages are “underwater” – 2 million homes.

• Home foreclosures and “shadow inventory are 23.5% --- 78% above national average.

Florida’s Economy

• High level of income inequality – 7th and 15th largest gaps between the middle income and the poorest families than the affluent.

• Almost 50% of our jobs pay at or below 150% of the federal poverty level.

Florida’s EconomyThe long range financial outlook is worse since forecasted six months ago.

FY 2010-11 Recovery Forecast

• No growth in population• Weak growth in personal income• Weak growth in employment

More families are struggling.

Do we have enough revenue to meet their

needs?

Bottom line in FY 2010-11…

Gap between revenue and “critical and high priority needs”

is up to $3.2 billion (no FAMP extension).

Bottom line in 2 years…

Worse!

• Gap between revenues and “critical and high priority needs” is $5.4 billion in FY 2011-12.

• Gap is $5.2 billion in FY 2012-13.

Gaps do not address Reserve Funds

Down to $274 million.

YIKES

What About Florida’s tax system?

• 2nd worst tax system in the US. – low income families pay 6 times more of their income in taxes than the wealthy – middle income is 4 times more!

• No “progressive taxes” - personal income tax or intangibles tax on wealth.

Florida’s tax system

• 75% of General Revenue is sales tax.– Primarily a consumption tax. Yet, our economy

is based mostly on services.

• Huge loopholes in corporate taxes for large multi-state businesses.

• Many businesses are exempted from corporate taxes (over $20 billion in profits not taxed).

Is Florida a high tax state?

• 40th in state & local tax burden as a % of personal income.

• 40th in state per capita tax burden - $600/person below national average.

Low taxes may or may not be a good thing. What are the results?

• High school graduation rate is 58% - 47th worst.

• “Talent Gap”.

• Health system is 45th worst .

• Children’s dental health gets an “F”.

Low taxes may or may not be a good thing. What are the results?

Thousands on “waitlists”-– 28,000 elderly.– 19,000 disabled.– 17,000 substance abuse.– 190,000 adults and 200,000 children need mental

health services.– 200,000 families need financial assistance with

childcare.

Legislative developments

• Balanced Approach is Needed – not just cuts.

• More Tax Breaks and Loopholes for Business- over $800 million under consideration.

• Revenue – bottled water bill – SB 152 and HB 167.

• TABOR – SJR 2420!

How about a balanced approach?

Florida Legislators should not just cut spending.

A balanced approach that includes revenue should be used!