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Florida faces budget cuts for 6th year in a row

By James Call

Tallahassee, FL – State economists cut almost $1.6 billion from projected tax collections over the next 20 months. James Call reports while the unexpected shortfall opens a hole in next year's budget and most likely means a sixth-consecutive year of spending cuts, Governor Rick Scott says he will continue to push to reduce taxes.

At a meeting of the Revenue Estimating Conference, Beth Lines of the state's Economic and Demographic Research office documents the decline in tax collections.

Economists from state agencies, the Governor's office and the Legislature agree trends indicate Florida will have $600 million less than expected for the remainder of this fiscal year and $968 million lower than projected for the next. The numbers reflect what economists call an anemic economy. It is not the recovery Governor Rick Scott and lawmakers promised in the spring when they were cutting spending, taxes and regulations. Governor Scott says recovery lies in reducing the cost of living and doing business in Florida.

"I think of my job How do we make sure that state does not become a high cost state? You are not going to live. You are not going to get people to move here if it is a high cost place to do business and to live."

The governor told a Tallahassee business group he will continue to pursue small government policies to promote economic growth. He views economics as a competition. And when talking about his 2012 Legislative Agenda he tells audiences he competes to win.

"If we aren't better competitors then these other states, cities, countries, we are not going to win. I talk to economic people across the state and some of them love their communities because they are focused on how we get our impact fees down, concurrency down, things like that. How do we make our permitting process easier because some of them don't? Then they wonder why people say, gosh I will go do business someplace else.'"

House Speaker Dean Cannon endorsed the governor's remarks and Senate President Mike Haridopolos promised to work closely with Scott. However a projected budget shortfall will complicate their work when the Legislature convenes in January.

Lawmakers have cut state spending for five consecutive fiscal years. A quarter of the Legislature has signed a pledge to never support a tax increase.

One potential new revenue source may be found in expanding gambling opportunities. A handful of lawmakers indicate they are working on casino-destination bills, an idea that Haridopolos says he would let get a full hearing in the Senate.

"I want to make sure any gaming that is going on in the state of Florida is highly regulated, so that people at least know the true odds for which they are playing for. And it could be a revenue enhancer for the state of Florida without a tax increase. I mean if a person choses to gamble that is their choice. Not a required tax. And if we are going to have gambling in the state let's do it in a first class manner."

Supporters say casino resorts would generate billions of dollars for the state. However, No-casinos Inc., an Orlando-based group that fought a 1994 gambling ballot initiative has reactivated itself to fight any new gambling proposals.

A member of the House minority has an idea to close the budget shortfall.

Tallahassee Rep. Michelle Rehwinkle-Vasilinda wants to end a tax loophole enjoyed by out of state retails companies doing business via the Internet.

Playing off the governor's remarks, Vasilinda says the state's failure to collect a sales tax on Internet purchases handicaps Florida businesses when they complete in the global marketplace. She has a bill to fix that.

"I think it's quite frankly the most important bill for the state of Florida on a number of levels."

One reason Rehwinke-Vasilinda feels that way is the price advantage internet companies enjoy hurts Florida stores and stifles job creation and economic growth. And she adds, after five years of state spending cuts, any additional cuts may do more harm than good.

"We need the revenue. In my mind I differ from the governor on this. You got to have government be a player. It is a three-legged stool. We've got private enterprise, we've got nonprofits and we got government and this what makes our economy. If you keep chopping the leg off of government without looking at waste and fraud and better collection practices then I think you are really deepening the recession and deepening our economic woes and I think that's what happened."

This will be the fourth Legislative Session where Rehwinkle-Vasilinda will sponsor a bill adopting the streamlined sales and use tax agreement. It has received bi-partisan support in the past. Ormond Beach Republican Senator Evelyn Lynn once again is sponsoring a companion bill.

Supporters say closing the loophole levels the playing field for Florida stores and would raise about $2 billion a year. In the past Florida business groups have supported the measure. The last three sessions the measure failed to gain traction when opponents said, for all intent and purposes it represents a tax increase. Lawmakers will tackle the $1.6 billion budget shortfall when the Legislature convenes in January.