Last week, Florida Governor Rick Scott proposed his 2012/2013 budget. Scott was forced to design his plan knowing he needed to address a $2 billion shortfall. The proposal addresses this shortfall by cutting the budget by 4.6 percent and has the benefit not raising taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es.
Scott proposes what the budget’s website refers to as “small business tax reform.” This reform includes:
1. Exempting business income under $50,000.
2. Exempting tangible property valued at less than $25,000.
3. Cutting the state’s productivity increase requirement in half, making it easier for businesses to qualify for its machinery and equipment sales tax exemptionA tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the IRS, preventing them from having to pay income tax. .
The $2 billion budget shortfall is addressed by cutting spending in several areas. State spending is reduced by:
1. Cutting 2,800 currently-filled state jobs.
2. Trimming prison costs.
3. Slashing state Medicaid expenditures by 10 percent ($2 billion).
Meanwhile, education is the recipient of $1 billion in increased spending over the 2011/2012 budget. Though this increase will not bring education spending back to 2010/2011 levels, many Floridians consider it a victory.
Although it is doubtful that everyone in the Sunshine State is happy with the budget proposal, what it accomplishes is no small task. Addressing a $2 billion state shortfall without increasing taxes sets a realistic model for other states that seek to remedy budgetary woes while simultaneously trying to remain economically competitive.
Follow David S. Logan on Twitter @LoganomixShare