With Gov. Rick Scott promising to bring 700,000 jobs to the Sunshine State in the next seven years and Florida lagging behind the nation with high unemployment, Florida TaxWatch unveiled an updated report Wednesday to help the state figure out how it can be more economically competitive.
It is time that we, as Florida taxpayers, imagine a more competitive Florida," said Dominic Calabro, who is the president and CEO of Florida TaxWatch. "Let's focus this legislative session on removing barriers to our state's competitiveness. And policymakers at all levels of government should focus their efforts on strengthening our foundation for growth and addressing the areas that constrain it, to help lead Florida to economic recovery and future prosperity."
The report, which compiles rankings of the states economic competitiveness from different sources, is entitled State Competitiveness Indices & Rankings: What National Rankings Tell Us about Florida's Competitiveness.
Calabro presented it to the Senate Commerce and Tourism Committee Wednesday afternoon, updating previous reports at the committee staffs request.
Since this year is about jobs, jobs, jobs and economic development, we wanted to know how we compare to other states, said Sen. Nancy Detert, R-Venice, the chairwoman of the committee.
The purpose of todays meeting is information for us, added Detert, who said the committee was gathering data on luring jobs and crafting the budget.
Policymakers at all levels should focus on strengthening our foundations for growth, said Calabro as he reviewed the report.
The report drew upon rankings from seven organizations -- American Legislative Exchange Council (ALEC); the Beacon Hill Institute; CNBC; Forbes; the Kauffman Foundation; Small Business & Entrepreneurship Council; and the Tax Foundation -- for the 50 states in terms of economic competitiveness, and found mixed results.
Between the seven indices, Florida is ranked among both the top 10 states as well as the bottom half of states for its competitiveness nationally, Florida TaxWatch noted in the report. The variability in these rankings is caused by the different factors of the business climate being considered by each index and the different weights assigned to those measures. For this reason, more detailed analysis is warranted.
While ALEC, Small Business & Entrepreneurship Council and the Tax Foundation all ranked the Sunshine State as one of the six most economically competitive states in the nation, the other rankings gave Florida lower marks. While the Beacon Hill Institute study ranked Florida 12th, the results of the CNBC, Forbes and Kauffman Foundation studies all placed the Sunshine State in the 20s. CNBC gave Florida the lowest marks, ranking it as the 28th most economically competitive state in the nation.
In his comments before the committee, Calabro touched on the methodology of the seven rankings.
Essentially it comes to what they measure and how they weigh it, Calabro told the committee.
The report examined how the state matched up with neighboring states -- which Florida TaxWatch defined as Alabama, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Texas.
The report highlighted a number of Floridas strengths in attracting businesses, including the lack of a state income tax and low labor costs.
But the report also found room for improvement in the Sunshine State. It maintained that, when it came to business taxes, Floridas overall tax burden was found to be higher (more costly to business) than the rest of the nation and its neighboring states.
The TaxWatch study gave Florida mixed reviews on the corporate income tax.
Florida ranks within the top 15 states for its corporate income tax policy, noted the report. A majority of its neighboring states were ranked higher for a more favorable corporate income tax rate, but not significantly. However, Floridas corporate income tax is not likely as harmful to its competitiveness as other parts of the states business tax burden.
The report gave Florida much lower marks on property taxes, sales taxes and other tax burdens.
Florida ranked low the bottom half of the nation for its relatively high property tax burden on businesses, argued the Florida TaxWatch team. Every neighboring state except Texas was ranked higher for its more favorable (lower) property tax burden. High property tax rates may negatively affect Floridas competitiveness.
Florida is ranked poorly nearly last in the nation for its total sales tax burden, continued the Florida TaxWatch team. Floridas sales tax burden on business was also ranked last compared with every neighboring state except Louisiana. However, this low ranking is offset by Floridas high ranking in personal income tax, as most states use a combination of the two taxes to raise revenue while Florida relies only on the sales tax.
On the remaining tax burden, which the report defined as insurance, capital gains, utilities, and gas, as well as worker and unemployment compensation taxes, the report stated that Florida lagged behind the rest of the region and the nation.
The remaining tax burden on business in Florida is one of the worst in the nation, insisted the report. All of Floridas neighboring states were ranked considerably higher. The low ranking in this category reveals that the remaining tax burden is a significant threat to Floridas competitiveness.
Drawing on rankings from CNBC and Forbes, the report found that, in terms of regulations, Florida ranked in the middle of states across the nation but trailed behind neighboring states.
The regulatory and legal climate of Florida is ranked in the middle of all states by the two indexes that measured it, maintained the Florida TaxWatch team. All but two of Floridas neighboring states are ranked significantly higher than Florida. This may be an area for reform in Florida to improve its competitiveness.
Reviewing the rankings, the report found that Florida was trailing on quality-of-life issues, with higher crime than most states and trailing other states in producing a high-tech work force.
The Florida TaxWatch team wrote in the report that the state also was not competitive on education matters.
Florida ranks in the upper bottom half for overall higher education and K-12 education, but ranks at the bottom of the nation for its shortage of investment in innovation, noted the study. Floridas neighboring states did not rank significantly higher in broad measures of educational quality or higher education. However, Florida was consistently ranked lower than neighboring states for technical degrees awarded and investment in research and development.
When a company is settling on a location, they look at a lot of other factors, said Calabro -- who added that, when businesses narrow their focus, cost is a major factor.
The senators expressed some reservations on the report, with questions on how the study gathered data.
Detert and Sen. Paula Dockery, R-Lakeland, the vice chairwoman of the committee, asked clarifying questions to Calabro on the report. But there were some criticisms.
Detert noted different education studies and pointed out that some conflicted with the data in these rankings. She also took great exception to one of the rankings which had Florida ranked 48th in terms of quality of life.
I would hate to see anyone use this presentation and use these statistics, said Detert. Its all over the map.
Sen. Evelyn Lynn, R-Daytona Beach, asked for Florida TaxWatch to redo parts of the report, agreeing with Detert that the rankings seemed off when it came to education.
Calabro agreed, noting that the rankings drew upon different factors and different definitions. Lets find out what we want to measure, where we are and where we want to go, said Calabro.
I think this is veryuseful information, said Sen. Don Gaetz, R-Destin, who then drew upon his own experiences in business to weigh in on the study.
Im not sure if a sales tax is a business tax burden, added Gaetz. It was the regulatory environment and labor costs that made our decision.
Gaetz and Calabro agreed that Florida has to target companies that will be the right fit for the Sunshine State.
We have to figure out who we want to come here and what are their impediments, said Calabro.
Calabro said he and his team are willing to drill down andflesh out the report at the committees request.
We were asked to update something that is not ours, said Calabro, who added that his team is willing to redo parts of the report, including different formatting of information, and expand it.
Reach Kevin Derby at kderby@sunshinestatenews.com or at (850) 727-0859.
