March 1, 2010 - 6:00pm
What role -- if any -- does state government have in shepherding Florida through tough economic times?
While Washington has taken the Keynesian approach of pumping public dollars into private sector (notably, banks) and shovel-ready public-works projects, Tallahassee has been more restrained. The focus, thus far, has been on providing job-creation incentives and balancing the budget -- a constitutional mandate not required of Washington.
Depending on one's political perspective, Florida's leaders have been prudent or derelict as counties continue to reel from double-digit unemployment rates, record numbers of foreclosures and failing businesses.
Unlike California, which is sinking in a sea of debt, Florida's balance sheet remains relatively healthy, or at least manageable. Political observers say that's because politicians in Tallahassee tend to be less polarized than their counterparts in Sacramento or Washington.
Where Democrats in those capital cities see bigger government as the answer, Democrats in the Sunshine State are less interventionist and take a more business-minded approach.
"There's pragmatic leadership that's more forward-looking," says David Denslow, a University of Florida professor and research economist for the Bureau of Economic and Business Research.
On cue, Alex Sink, the state's chief financial officer and Democratic candidate for governor, is urging state agencies to eliminate jobs of middle managers as they retire or quit.
Carrying an agenda that sounds prototypically Republican, Sink set a goal of saving $8 million to $10 million by having one manager for every seven employees over the next 12 to 18 months. She called this a "best business practice" that was in effect when she worked in banking.
Sink's gambit echoes the pleas from Florida TaxWatch, which has called for similar riffing at the management level. TaxWatch President Dominic Calabro believes state government could function better if mid-level managers worked longer hours and led by example.
Robert Sanchez, policy director of the James Madison Institute in Tallahassee, goes a step further:
"To improve Florida's business climate -- and avoid the kinds of horrors that are causing businesses and productive citizens to flee deficit-ridden states such as California -- the Legislature not only needs to hold the line on taxes and spending, but to rein in the excesses of local governments that are increasingly in the grip of public-employee unions.
"The best thing Florida's state government can do to help the economy is to promote a healthy business climate so that, when the nation's economy finally does recover, Florida will have a welcoming environment for the kinds of private-sector entrepreneurs who actually create most of the jobs.
"That means low taxes in support of a limited government that sticks to its core functions.
Florida is neither at the bottom nor the top of states when ranked by tax load or business climate, and opinions differ on how to elevate the state's standing.
But Bob Graham, a former governor and senator, says one indicator -- per-capita income -- shows Florida is going backward.
"In the early and mid-'70s, Florida's per-capita income was 95 percent of the national average. In the mid-'80s, we rose to 101 percent. Today, we're back down to 98 percent," Graham told Sunshine State News.
"That tells me we're not creating enough jobs that are above, or even at, the national average."
To stimulate the economy and to create jobs, Graham says the state should accelerate all public-works projects over which it has purview, and that it should use the stimulus funds as efficiently as possible.
"I haven't seen any research on how we're doing on the former, but we are one of the laggard states on the latter," Graham says.
Most observers agree the state could do more to curb costs and lower the overhead on business.
Recently, state agencies acknowledged that they have kept 5,500 positions vacant through a seemingly cost-effective hiring freeze. In turns out, however, that the state continued to fund these slots and used the money to pay higher salaries to existing employees.
Such shell games don't impress fiscal conservatives who say these kinds of maneuvers simply illustrate the built-in inefficiencies -- and non-responsiveness -- of bureaucracies.
Politicians' populist attempts to engineer savings have backfired, too.
Calabro cites Gov. Charlie Crist's Amendment 1, which was supposed to make property taxes "drop like a rock."
"It actually made things worse for businesses by exacerbating the inequities," he says.
Calabro and other fiscal conservatives say lawmakers could make things right by imposing a property tax cap for all. Whether politicians have the will to tinker with the sacrosanct Save Our Homes program is another matter, however.
Speaking in Tallahassee last month, State University System Chancellor Frank Brogan said the state must do more to improve higher education, which would, in turn, help to recruit additional high-tech and biomedical firms, such as Scripps.
Brogan said deeper investment in research-oriented institutions will broaden and stabilize Florida's financial base that has historically consisted of agriculture, tourism and residential development.
Graham says the state must get smart about university funding.
"When I left office in 1987, Florida universities were in the top quartile in funding nationally. Now we're spending $4,500 less per student than we were in 1990 in inflation-adjusted dollars." Strong state support, Graham says, reinforces the link between higher education and higher-paying jobs.
While agreeing that Tallahassee could do more at the post-secondary level, UF's Denslow said greater business involvement is crucial at the K-12 level.
"Smaller districts and less state power could improve the governance of the K-12 system," he notes.
Though he gives state leaders generally high marks, Denslow sees an occasional disconnect between lawmakers and the public. He cites, for example, two voter initiatives that would raise the state's minimum wage and require public referendums on all comprehensive land-use changes.
"This injects a note of uncertainty," he says.
If the Florida Legislature seems, at times, to be out of sync with voters, Denslow suggests that Florida also appears to be slipping further behind neighboring Southeastern states in terms of competitiveness.
"We don't come off too well. Save Our Homes has shifted the burden to business at a time when more states are going to a tax rate that's based 100 percent on sales (as opposed to property and employees)."
Still, Denslow says things could be a whole lot worse.
"Our pension fund is not as badly underfunded as other states. We're not spending as much out of non-recurring funds. There's prudent financial management."
Denslow credits much of this prudence to the leadership ladder in the Florida House and Senate.
"It's predictable and there's continuity for the future," he notes, citing the orderly ascension of "pragmatist" state Sens. Jeff Atwater, Mike Haridopolos, Don Gaetz and Mike Bennett.
That said, Sanchez says the GOP leadership could, and should, be more aggressive and creative -- without going on a spending binge or imposing new regulations on business.
"To avoid the further risk of ruinous tax hikes, the Legislature needs to act this year to tame the growth of Medicaid, to expand money-saving school choice programs such as the Florida Tax Credit Scholarships, and to encourage the recovery of the private property-insurance marketplace currently suffering as a result of misguided regulation."
Graham cautions that cutbacks can reach a point of diminishing returns.
"The last 10 years have shrunk the state's revenue base by $3 billion to $4 billion. It's time we tested the (trickle-down) theory," he says.
Looking ahead, political and business leaders interviewed for this article are generally optimistic about the upcoming elections. Whether the new governor is a Republican or Democrat, most are hopeful that the state's new chief executive will spend more time setting an agenda for the state, and less time on fund-raising phone calls.
Graham, who left the governor's office in 1987, said, "We have a good set of candidates, and we've been fortunate to avoid the kind of political gridlock found in other states."
