One State Poltician Making The Right Moves, Having The Right Priorities - Florida Governor Rick Scott

As a current resident of Florida, I am acutely aware of the economic problems facing the entire country. Florida's economy had long been heavily dependent on the construction industry and when the Florida housing industry cratered several years ago, the construction industry, along with the subsidiary industries that serve that industry, real estate agents, title search companies, etc., also suffered a significant downturn. This resulted in anemic state economic growth and an unemployment rate that has been consistently higher than the rest of the country.

Thus, the economic situation facing members of the Florida political class is probably worse than the economic challenges facing most state and local governments and politicians across the nation. But all is not lost in Florida, which has taken a different path in managing their financial plight than the state of Illinois.

As you recall from our Illinois post last week, the Illinois state government has also been having dire financial problems and billion dollar shortfalls in their state budget. Their primary approach to trying to resolve their government budget problem was to significantly raise personal and business income taxes early in 2011 rather than aggressively reducing state government spending.

As 2011 winds down, it has become apparent that raising taxes on Illinois businesses was probably a big mistake. Large businesses such as Motorola, Sears, and other companies have threatened to leave the state of Illinois, taking thousands and thousands of jobs with them. This has resulted in the state government providing tax reduction deals to these corporations to keep the companies and their jobs within the state of Illinois.

Thus, a year after raising business taxes, the state has just turned around and given back the raised tax revenue to businesses, leaving the state government about in the same state it was in as 2011 began: continued out-of-control state government spending and budget deficits. A year lost and the budget in worse shape. Not a good strategy.

As a result of this muddled approach, the unemployment rate in Illinois has dropped about 11% in the past two years (from a high of 11.2% to 10.0%) but the national unemployment rate has dropped 15% (from a high of 10.1% to 8.6%) in the rest of the country. Thus, Illinois is not recovering as quickly from an economic perspective, as measured by the unemployment rate, than the rest of the country. One possible reason for this less than average economic improvement is that the state political class is trying to solve the budget problem by raising taxes and not reducing government spending.

The state of Florida has tried the opposite approach, keeping taxes and tax rates unchanged, cleaning up government waste and fraud, and reprioritizing state budget priorities to be more focused on serving citizens and not special interests. Consider two indicators of improving economic health, one global and one local:

• Globally, the state unemployment rate is down 17% (from a high of 12.0% to 10.0%), beating out both the Illinois unemployment performance (11% drop) and the national performance (15% drop).
• This improvement has occurred even though one of the state's main economic drivers, the construction industry, is still in a deep economic rut.
• Locally, although the state economy has been lousy for the past three years, my home's property taxes have decreased every year since we moved to Florida in 2005, dropping about 37% over that time frame.
• Thus, using my sample size of one, the state political class in Florida has reduced my property taxes in really tough economic times but has kept most state and local government services functioning. Teachers are still teaching, police and fire are still protecting, libraries are still open, roads are still viable and being fixed, etc.

Credit for this performance, globally and locally, has to go to the state political class, our former governor, Charlie Crist, and our current governor, Rick Scott. How Rick Scott is effectively addressing and improving the state's economic woes was summarized in an article from the Daytona Beach News Journal on December 12, 2011:

• The governor's budget proposal next year intends to cut government spending significantly by reducing the state government staff by about 4,500 unneeded jobs.
• He also has a plan to slash out-of-control Medicaid spending in a measured, fair, and intelligent manner.
• The reason to boldly attack Medicaid spending is that the state of Florida is now spending 180% more on Medicaid today than it spent in 2000 while the state revenue has only gone up 30% in that same time frame, making Medicaid a larger and more unacceptable, and unsustainable, percentage of the overall state budget.
• The article notes how this reduction needs to be done carefully in order to keep overall health care costs and spending down in the state without cutting health care coverage and concludes that Scott is approaching this problem in the right way.
• But the governor is showing some courage, courage that is certainly lacking in Washington relative to runaway Medicare and Medicaid costs, a courageous stance that the article recognizes that is sorely needed: "Lawmakers may have different ideas about the program, but they all must face up to the budget challenge it poses. The education budget will be in constant peril if the state doesn't find ways to get Medicaid costs under control."
• Scott has proposed ways to cut back prison costs in the state as another logical and smart way to save money since the state crime rate has been decreasing and with that decrease, the prison population has shrunk.
• The governor has been praised by starting to demand detailed accountability for state spending by each state government department, requiring departmental "'fully accountable' budgets to show how money is spent, what service is provided and what is accomplished."
• In the face of budget pressures and shortfalls, the governor's budget proposes over $1 billion more to the state budget for use in Florida public schools, an investment that will directly serve the vast majority of Florida families.
• There are also no changes to state support for higher education funding despite an overall state budget crisis.
• In the face of these changes, the governor is calling for no increases in taxes, a wise move given the disaster that happened when Illinois significantly raised taxes. This "no tax increase" position is also supported by the newspaper article's writer: "Now is not the time to raise taxes -- not when the economic recovery is fragile and growth still is relatively slow."

So let's reivew:

1. The Florida state economy seems to be improving quicker than the national economy and the economy of at least one state (Illinois), a state that  incorrectly decided that raising taxes on state businesses and residents was a better way to close budget gaps caused by out-of-control polticial class and government than reducing spending.
2. The Florida governor is not raising taxes, taking the more effective and prudent approach of cleaning up waste and fraud in government spending by reducing prison system costs, shrinking the state payroll of unneeded jobs, and reining in excessive Medicaid costs.
3. The governor is showing tremdendous political courage by addressing a runaway Medicaid expense and cost stream that will eventually bankrupt the state if not boldy addressed now.
4. In the face of a short term Florida state government budget shortfalls, the governor is not sacrificing the long term eocnomic health of the state by increasing investment in Floirda public schools.
5. The governor is requiring state government functions to be fully responsible and accountable for the taxpayer money they spend, an effort sure to reduce unneeded and unwarranted government spending, both long term and short term.

As we have said many times in this blog, fixing the major issues that have faced this country for decades should not be this hard to resolve. All it requires of our political class is a little courage, a little unselfishness, a little hard work, and a little creativity. Govenor Rick Scott is being successful with these attributes. Too bad that the Washington polticial class has none of these same qualities.


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