Florida’s Fiscal Conservatism

One implication of the sluggish economic recovery is that state governments have seen sluggish revenue growth.  Different states have met those challenges different ways.  Texas has been getting some publicity for its fiscal conservatism under the leadership of Governor Rick Perry, at least in part because Perry has hinted he might be a 2012 presidential candidate.  But Florida’s fiscal conservatism also is worth a mention.

Florida’s state government budget peaked in the 2006-07 fiscal year at $73.9 billion, not coincidentally just prior to the bursting of the real estate bubble.  Since then the Florida legislature’s leaders have (mostly) held the line on taxes and cut spending to match the reduction in revenues.

This year, Florida’s Governor Rick Scott, in his first year in office, and in his first year holding an elective office of any kind, responded to Florida’s weak revenue inflows by promising not only to hold the line on taxes, but to cut them.  The legislature didn’t quite come up with the level of tax cuts Governor Scott wanted, but did pass a budget Governor Scott recently signed of $69.7 billion, down from the previous year’s $70.5 billion budget.

It is possible to hold the line on taxes and government spending when revenue declines.  Florida’s budget this year is a bit more than 1% lower than last year’s, and more than 5% lower than its peak in 2006-07.

Not surprisingly, there have been lots of complaints about the Governor’s austerity.  Most of the complaints have been addressed to Governor Scott.  Also unsurprisingly, the people complaining haven’t been taxpayers, but rather (1) government employees, (2) newspaper writers, and to a lesser degree, (3) people who have received costly welfare and health care services from the state.  It’s easier to be more sympathetic to the third group, even if one questions the entitlement mentality that somehow taxpayers should be on the hook to take care of their special needs.

The new budget doesn’t take effect until July 1, so thus far all complaints are about the possible future effects of the austere budget.  Of course, some people already know they will lose their jobs, and most state workers already know that not only will the get no pay raise, the new budget even specifies a pay cut, in the form of requiring employees to pay for benefits the state formerly gave them at no cost.

Governor Scott campaigned on a platform of creating a leaner government, which would lead to job creation in the private sector and a stronger Florida economy.  So far, the complainers are complaining about Scott’s following through on what he promised to do during his campaign (even though we will have to wait to see whether the job creation materializes).

My guess is that Florida isn’t receiving the same attention as Texas because Florida’s Rick Scott isn’t a potential presidential candidate like Texas Governor Rick Perry.  But Scott has pretty much ignored his critics, and poll numbers that show his popularity falling since he took office, to follow through on cutting government just like he promised to do when he was a candidate.

Randall G. Holcombe is Research Fellow at the Independent Institute and DeVoe Moore Professor of Economics at Florida State University. His Independent books include Housing America: Building Out of a Crisis (edited with Benjamin Powell); and Writing Off Ideas: Taxation, Foundations, and Philanthropy in America .
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