Scott's Budget - March 2011

Hooray for Governor Scott. While I may not agree with some components of his proposed FY 2011-12 state budget, it is great to see him taking his role seriously in proposing a budget which could cut nearly $ 5 billion from the spending levels approved by former Governor Charlie Crist who was more concerned with his Senate race than in responsibly leading our state.

Of course Governor Scott’s budget is just a proposal and the Florida House and Senate will ultimately write the budget. But the Governor has shown his intent to be a hard bargainer in ensuring fiscal sanity is brought back to our state spending levels during these hard economic times in which Floridians from all walks of life are struggling to balance their own household budgets.

These budget negotiations will also serve as the first major testing ground between Governor Scott’s outsider beliefs and those of the entrenched State Representatives and Senators who have worked their way through the legislative system and can sometimes be the protectors of the status quo. Hopefully the legislators will heed the calls from Florida citizens who need the state to justify every penny of its expenses rather than being allowed to simply budget this year based on last year’s expenditures.

I had the opportunity to listen to a talk by Florida Senate President Mike Haridopolos who said he agreed in principle with the Governor’s ideas to change the state worker pension plan so it operates like that of every other state in our country and most businesses. I am hopeful that Speaker of the House Dean Cannon will agree. Currently our state workers make NO contribution to their retirement plans as it is funded 100% by our taxes. And it bases some of the retirement benefit calculations on the last years of salary earned rather than average career earnings credits which has resulted in many infamous cases in which state workers have gotten large raises nearest their retirement age to game the ultimate benefit payments.
The biggest pension challenge will be changing the plan from “defined benefits” which are guaranteed to “defined contributions” in which the state worker needs to guide their own dollars just as private employees do with their 401K and IRA plans. State workers who are closest to retirement should be protected from such changes but those just starting out their career or who have more than 20 years until retirement should be shifted immediately into the more sensible defined contribution plan.

Among the other controversial budget proposals by the Governor are to move Medicaid recipients from fee-for-service plans to managed-care plans , to add accountable performance goals for public education spending in relation to high school graduation levels, and to fold specific “trust” funds into the general operating budget. I am not comfortable with the last idea but I am a big believer in the first two proposals.

The Governor’s public school education budget which cuts about $ 1.7 billion from last year’s spending levels will certainly be the biggest battleground. Most of that amount was funded last year by President Obama’s controversial $800 billion in borrowed stimulus spending and Governor Scott believes that lawmakers should not have accepted or spent that money in the first place and feels no obligation to replace it with fresh state tax dollars.

Governor Scott is also living up to his campaign pledge to take control of economic development in the state by giving his office control of $ 300 million to be used to for incentives to lure new employers to the state rather than allowing several state agencies to continue doing so in their own ways. Similarly, the Governor wants to abolish the state’s growth management agencies to make it easier for major real estate projects which is an idea I cannot support given how developers of The Commons megamall in Davie had little trouble getting approvals from our local politicians but could not overcome sound concerns from those state agencies.
Lastly, Governor Scott is proposing a $ 459 million corporate income tax cut which he believes will provide those corporations with the dollars to grow their businesses and their employment levels. If the Governor can ensure those monies would be spent as such and not simply distributed to shareholders, then I applaud him in doing so.