Florida Gov. Rick Scott: Slash taxes by $4 billion By Tami Luhby, senior
writer | February 7, 2011: 7:01 PM ET
NEW YORK (CNNMoney) -- Taking an unusual
tack to dealing with a $3.6 billion budget deficit, Florida
Gov. Rick Scott unveiled a budget Monday that cuts $4 billion
in property and corporate income taxes.
The budget, which the newly installed governor
has said is the nation's most fiscally conservative, also
cuts $4.6 billion in spending from services such as Medicaid
and prisons. Public employees would also have to contribute
5% for their pension benefits, which will save $2.8 billion
over two years.
"It clearly is a lean budget,"
said Scott, a tea party favorite who unveiled his budget
at a rally for tea party supporters, who applauded loudly
for his calls to reduce state spending.
A former health care executive, Scott is
a firm believer in reducing the size of government and increasing
the private sector's ability to create jobs. He has already
ordered a review of all state regulations to determine their
impact on job creation.
His $65.9 billion budget reflects his views
that growing business is the way to get Florida out of its
economic troubles. The state has the third highest unemployment
rate, at 12%, and had the second highest number of foreclosure
filings in 2010.
Calling his spending plan "Florida's
first jobs budget," Scott said he would reduce corporate
income taxes from 5.5% to 3% over two years, before eliminating
the levy in 2018. He would also reduce $1.4 billion in property
taxes.
And he would spend $800 million on economic
development projects and incentives that promote job creation.
"Things cannot improve until we have
more private sector jobs," Scott said.
Cutting taxes may not boost the Florida
economy, at least not immediately, said Gus Faucher, economist
with Moody's Analytics. The tax cuts must be balanced with
the drop in spending, which will hurt the state's economy.
Ultimately, though, it's the Florida residents
who must say what they prefer.
"They will have to decide what they
value more -- the services they will end up losing or the
tax breaks," Faucher said.
Scott said he will not cut state spending
for schools, but the budget proposal posted online shows
a $3.3 billion reduction in the education funding. The drop
comes from one-time federal funds that are no longer coming
in. Schools also will likely be squeezed from the drop in
property taxes.
The governor also wants to reduce Medicaid
costs by shifting to a system where the patients direct
their care. This will reduce their health care usage and
save $4 billion over two years, he said.
Also, he hopes to save $500 million by making
changes to the state prison and juvenile detention systems.
And some 8,700 jobs would be eliminated, with the greatest
numbers coming from children and family services and corrections.
The state legislature will now weigh in
on the budget, which covers fiscal 2011-12, which starts
July 1, and the following fiscal year.