BRADENTON, Fla. - Florida's Taxation and Budget Reform Commission on Friday will consider one of the most radical tax reform measures in the state's history, one based on the Colorado Taxpayer Bill of Rights that caps the annual revenues supporting state and local governments and requires voter approval of new taxes and fees.
It is yet another in a long list of attempts to rein in government spending in the Sunshine state, where property taxes and values soared during the real estate boom years.
The latest measure has been proposed by commission member Mike Hogan, who is the tax collector for Duval County. His proposal is modeled after Colorado's constitutional amendment called the Taxpayer Bill of Rights enacted in 1992. After huge declines in education and transportation funding, the measure in 2005 was suspended for five years.
Former Republican Colorado Rep. Brad Young, and other business leaders, have warned Florida officials about unintended consequences of the tax reform proposal, which is designed to continually reduce the size, scope, and role of government as part of the state's economy.
"The economy of a state and that of the nation generally increases from 1% to 3% above the rate of inflation and population growth due to underlying increases in productivity," Young said in a letter to the commission. "As a result, the limit would prevent Florida's various levels of government from keeping pace with the economy. After some changes in budgeting methods and some belt tightening, you would have no choice but to start the process of reducing or eliminating government functions."
Hogan's proposal does have supporters such as Florida House Speaker Marco Rubio, who said it is essential to make the state more affordable.
The proposals will be voted on by the commission on Friday. If approved, it would be the first step toward placing it on the November election ballot.
The commission on March 17 approved another constitutional amendment for the November ballot that would swap school property taxes for an increased sales tax and cap increases in some property assessments. All proposals by the commission will be reviewed on April 24 and 25.
Rating agency analysts have warned that potential budgetary problems for all levels of government in Florida could mount as tax reform measures are implemented.
Moody's Investors Service on March 19 revised its outlook on Florida's general obligation credit and certificates of participation to negative from stable, citing the state's significant revenue weakness due to the ongoing economic slowdown. Florida's general obligation debt is rated Aa1 by Moody's, AAA by Standard & Poor's,and AA-plus by Fitch Ratings.