On Nov. 6, Florida voters will be asked to make many critical decisions in the voting booth which will impact all of our residents for generations.
While the choices for president of the United States, U.S. Senate, and all of the other races continue to dominate media headlines and the bulk of the public discourse on these elections, there are many important decisions to be made regarding our state Constitution that have garnered far less attention.
Perhaps none of these decisions carries greater weight and importance than how we vote on Amendment 3. If adopted, Amendment 3 would change Floridas Constitution to ban state government from collecting revenues above a set limit prescribed by an arbitrary formula.
At first blush, this may sound like a good thing. A constitutional limit on revenue collections and spending could lower taxes and could make state government more efficient right? Wrong! As with most of the complex and voluminous proposed amendments on the ballot this November, the devil truly is in the details.
In fact, a careful look at Amendment 3, beyond the three-second sound bytes and bumper sticker sloganeering, leads to the incontrovertible conclusion that Amendment 3 will actually raise taxes and fees on most residents, does nothing to make state government more efficient, and will lock Florida into a pattern of failure for generations.
Amendment 3 is a somewhat creative re-imagining of the Taxpayer Bill of Rights (TABOR) proposal that Floridas policymakers have rejected numerous times over the past several years. The TABOR movement started in Colorado in 1992 when voters there approved an amendment to that states Constitution capping state revenue in a manner very similar to the caps in Amendment 3. The Colorado experiment was an absolute, unqualified failure.
Colorado had been ranked 35th in the nation for per-capita K-12 education funding by 2001, it fell to 49th. In higher education funding, Colorado had been ranked 35th in the nation for per-capita funding before the cap by 2001 it fell to 48th. Funding for public health programs also plummeted. Before TABOR, Colorado ranked 23rd in the nation for the percentage of pregnant women receiving adequate pre-natal care after TABORit fell to 48th. Immunizations for children also suffered greatly after TABOR. In 1992, Colorado ranked 24th in the nation for children receiving their full vaccinations after the caps, it fell to 50th, creating a massive public health crisis. Transportation infrastructure stalled and in some locations across the state was canceled; in turn, the jobless rate skyrocketed and Colorados economic growth slowed to a crawl, especially when compared to other states in the region without a TABOR cap.
Things got so bad in Colorado that the same business groups that funded the campaign to put tax caps in the Constitution abandoned the idea and successfully pushed for the caps suspension in 2006. Since 1992, 30 states have considered and rejected TABOR-like caps and voters in 16 states have turned down the tax caps at the ballot box. Colorado remains the only state to ever experiment with the TABOR-like caps.
Here in Florida, the Legislature has considered constitutional revenue caps routinely over the past decade, rejecting the caps each year until 2011. In 2008, the Taxation and Budget Reform Commission, the body that is constitutionally empowered to place items on the ballot dealing with state revenue and tax structures, rejected a proposal very similar to Amendment 3. It is also important to note that Florida already has an expenditure cap in our state Constitution which has worked just fine for decades.
Why is Amendment 3 such a colossal bad idea? As stated above, the problems lie in the details. The formula to determine the revenue cap in Amendment 3 dictates that revenue collections cant exceed the prior years amount, save an adjustment tied to the rate of inflation and population growth. The problem is that services, like education and health care which make up the overwhelming bulk of state funding, do not track inflation in terms of their overall costs. The cost for services tends to rise faster than the rate of inflation and do not fall as quickly when the inflation rate goes down.
This creates a gap that gets bigger each year. In fact, calculations made by the Center on Budget and Policy Priorities (CBPP) in a comprehensive report on Amendment 3, show that if the measure were to take full effect this year, there would be a whopping loss of $11 billion in just 10 years with over half of those losses coming directly from education! These losses will have a dramatic impact on the quality of life for all Floridians.
The problems with Amendment 3 are compounded when we consider the fact that Florida already ranks at or near the bottom in virtually every indicator for providing critical service to our residents. Numerous studies from groups like the Florida Center for Fiscal and Economic Policy, the Center on Budget and Policy Priorities and data from the U.S. Census Bureau paint a pretty dismal picture on Floridas current situation.
Florida currently ranks dead last in total education spending per-capita and is 44th in the nation for the high-school graduation rate. We are the third highest in the nation when it comes to the number of residents without access to regular health care and fourth highest in the nation when it comes to the number of children without health care. We have the second highest number of foreclosure filings and over one-third of the nations homeless families live right here in the Sunshine State. Infrastructure spending is abysmal, as is the number of jobs we create through public infrastructure projects. This is the picture before the revenue cap. If Amendment 3 is approved by the voters, we will not only be stuck here at the bottom forever things will continue to get much worse.
The aforementioned study by the CBPP points out some of the critical areas that will greatly suffer if Amendment 3 is adopted:
-- Forty-nine percent of the funds subject to the new cap are for our public schools. If the Colorado failure is any indicator, which it most assuredly is, parents will be shouldered with new school costs including new fees for textbooks and extra-curricular programs.
--Medical care for over 250,000 seniors in our state will be put at risk and as the number of people with access to health care declines, emergency room visits will explode, driving up health care costs for the rest of us.
--The loss of transportation and other infrastructure funds will delay or cancel vital projects across the state, further slowing Floridas economic recovery and taking a vital engine for job creation off the table.
But will Amendment 3 lower taxes? No, it just shifts the burden around. There has been a dramatic shift in Florida over the past decade from state funding of programs and services to the local level. Each year since 2001, local governments have been forced to pick up the tab for things like education, as the state has reduced its share in the name of tax cuts. As corporate tax rates are reduced and new loopholes for special interests have been created, the funding burden has been placed on local governments.
For example, in the past, the spilt between state and local funding for public schools has been about 60 percentfrom the state, 40 percentfrom local governments. Now that split has been largely reversed. As local governments have been forced to pick up the tab, property taxes and other local taxes have exploded, forcing all of us to pay more while those interest groups with lobbyists in Tallahassee are asked to pay less. If Amendment 3 passes, this trend will not only continue, it will get worse.
Similarly, the cost for public infrastructure projects will also increase if this revenue cap is placed in the Constitution. During the 2011 legislative session, there were numerous reports generated by various entities, indicating that if Amendment 3 is adopted, Floridas bond rating will be downgraded. This means that the cost of borrowing for roads, schools, bridges and water treatment plants will increase. The taxpayers will get the same project, but it will cost them more to build.
The evidence is overwhelming. Amendment 3 will freeze Florida at the bottom for generations and do almost nothing to reduce taxes. But will Amendment 3 lead to a more efficient state government? Once again the answer is a resounding no. Floridas current tax and revenue policy is a mish-mash of special interest exemptions, loopholes and sweetheart deals for the well-connected.
Florida generates approximately 70 percent of all revenue from the sales tax, a rate higher than just about any other state, meaning that we have one of the most regressive tax structures in America. Yet, thanks to over 240 different special-interest exemptions to the sales tax, we lose about $10.3 billion each year, according to the Florida Center on Fiscal and Economic Policy. Some of those exemptions, like those for food and medicines, make sense to many; however, sky box seats, yacht purchases and ostrich feed do not.
In 2009, the conservative Florida House of Representatives identified 51 different exemptions that served no public purpose but took no action to close them. Simply eliminated, those exemptions and a few others would generate almost half-a-billion dollars each year!
Our corporate income tax policy is similarly flawed and riddled with loopholes that do absolutely nothing for most taxpayers. For example, national corporations are currently allowed to send all of their profits out of state to avoid any tax liability. Florida-based firms and small businesses cant do that, so they have to pay their full tax liability and by doing so are at a competitive disadvantage. Closing that loophole will not only help Florida-based companies but will also save taxpayers $314 million every year.
These are just a couple of examples of Floridas Swiss cheese tax policy and it is here that we can find the source for many of our problems. Amendment 3 does nothing to address these problems, it is merely a smokescreen designed to shield the big special interests from a public that is growing more and more frustrated with the status quo. As a matter of fact, Amendment 3 and its revenue cap will make it impossible to address any of these problems because any attempt to make our tax system more fair and efficient will run afoul with the new cap.
This is why some in the Legislature have put Amendment 3 on the ballot and why these same politicians are trying to fool us into supporting it. Amendment 3 is not about the middle class, it is not about our retirees or small businesses; it is all about protecting the special interests that control Tallahassee.
Amendment 3 sounds like a good thing. Supporters want us to believe that it is all about lowering taxes and making government more efficient. A careful look at this incredibly flawed proposal indicates that it is really about protecting the politically connected at the expense of our students, seniors and the future of our state.
The revenue cap in Amendment 3 has proven to be a failure in the only state it was ever tried. Amendment 3 will tie the hands of future legislators and freeze our state in failure for generations. Amendment 3 will raise taxes and fees on most of us. Amendment 3 will do nothing to make government more efficient or save us money; in fact, it guarantees that the flawed status quo remains in effect by enshrining it in our Constitution.
Every other state that has considered constitutional revenue caps like that in Amendment 3 since the Colorado disaster has rejected them Florida should follow their example.
Rich Templin, Ph.D., is the political and legislative director ofFlorida AFL-CIO.
