Breaking of ‘social contract’ demands scrutiny
Herald Tribune | September 2, 2015
Last Modified: Friday, September 1, 2015 at 6:22 p.m.
Florida’s budgeting devices have become more sophisticated, thanks to technology, but state legislators and the governor rely on a simple tool — the broom — to balance the budget.
A handy “pocket guide” to the state’s budget, recently released by Florida TaxWatch, documents the extent to which the Legislature sweeps trust funds and directs their revenue to the overall budget. The 2015-16 budget approved by the Legislature in special session swept $230 million from 22 trust funds, all of which had been established for specific programs or projects.
The good news is that the sweeping total has trended downward in recent, post-recession years; just three fiscal years ago, the amount was $542 million. Nevertheless, since 2008, nearly $4 billion has been taken out of trust funds to make up for shortfalls in general revenue (mainly the statewide sales tax).
In fairness, these totals are relatively small compared with the overall budget, which is $78 billion this fiscal year.
But as stated by TaxWatch — a privately funded, independent, nonpartisan organization — the sweeps break political compacts with taxpayers. For example, the documentary stamp tax on real estate transactions was slightly increased in 1992 to bring in revenue for the state’s affordable housing trust funds. The Legislature and governor have repeatedly raided those funds and did so again this year to the tune of $80 million.
Another example: This year, the Legislature swept $67 million from environmental trust funds. That harm was compounded by the fact that the Legislature failed to heed the direction from voters who approved constitutional Amendment 1 during the 2014 general election. That amendment, supported by 75 percent of voters, was intended to ensure that one-third of documentary tax revenue would be directed to the Land Acquisition Trust Fund. Some $244 million should have been budgeted for that fund but, according to TaxWatch, only $52 million was dedicated to land acquisition, although “another $15 million went to conservation and rural-lands easement and $20 million for the Kissimmee River restoration.”
Bottom line, TaxWatch concluded: The passage of Amendment 1 “did not lead to an increase in funding for land acquisition, or even environmental programs. In fact, funding for all environmental agencies was reduced in the FY 2015-16 budget.”
Unconscionable.
Most trust funds are financed by revenue from fees or other charges collected by the state. They are supposed to be dedicated to specific programs. Using those dollars for other purposes breaks what TaxWatch calls a “social contract.”
We agree with TaxWatch that, in dire circumstances such as the Great Recession, some trust-fund sweeps were necessary. But when the strategy is used over and over, in good times and bad, it becomes a crutch.
TaxWatch has recommended that the Legislature require a separate bill — analyzed, reviewed and voted on by lawmakers — each time a revenue sweep from a trust fund is proposed. Staff analysis (typically done on other proposed bills) “should compare what would be funded with and without the sweep, the associated costs and benefits, and should address the current tax or fee structure that funds that trust fund to determine if the current levels are appropriate,” TaxWatch advised.
Lawmakers already should be asking those questions themselves. Still, a formal bill requirement for this level of vetting would bring needed scrutiny, and give the public greater opportunity to “follow the money.”
A tougher sweep review would represent a big but needed change in the budget process. We urge lawmakers to get to work on these reforms now, before patience — and public trust in the trust funds — runs out.
Article last accessed on Sept. 11, 2015 here.
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