Let me start by affirming that the numbers nonsense I’m addressing today is not unique to our current governor, nor is it the exclusive province of one party. The particular form of the nonsense I’ll be exploring tends to be a form Republicans favor more than Democrats, but that’s only because Democrats have other numbers, equally nonsensical, they like to play with.
But for today, let’s talk about tax cuts. Specifically, let’s talk about Governor Rick Scott’s “$1 billion tax cut commitment to Florida’s families over the next two years.”
These sorts of promises always raise a question in my mind. It’s simply this:
Are we really wasting all that money right now?
That’s an important question, of course. If, say, state and local governments in Florida are wasting $750 million a year, as opposed to $1 billion, the governor’s proposal would do $250 million in harm to Florida’s families every year after it is adopted. That’s only $12 or $13 per man, woman and child per year in the state on average, but of course the harm would not be distributed evenly. Some would “pay” a stiffer price in lost services than others . . . if, that is, the governor’s number is off.
Is there reason to think the number might be off? Well, yes, actually.
The $1 billion figure appears to be based on what could be saved in taxes by eliminating specific taxes or reducing them. Of the seven tax cuts in Governor Scott’s proposal, three involve immediate elimination or gradual phasing out of specific taxes on businesses and business activities. The reason for targeting these taxes in particular would seem to be part of a campaign to “make Florida the best state to start a business and create job.”
That’s all well and good, but cuts have consequences beyond leaving money in some people’s pockets. I don’t hear the campaign saying anything about what we won’t be spending money on in order to be able to afford $1 billion in tax cuts. I don’t see even a suggestive list of budget cuts to go along with the tax cuts.
So I went looking to see what a $1 billion tax cut might really mean to the future of Florida’s governments.
It’s just possible that it might not do any harm at all. We are looking at a projected increase in revenues for FY2015-16 of almost $1.1 billion, according to the Revenue Estimating Conference report on General Revenue from early in August. $1.1 billion more in revenue means we don’t have to actually cut anything on the service side, right? We just give back the excess.
Except, of course, that the costs of providing those services are likely to change as well.
The most recent projections for inflation in 2015 and 2016 by the Federal Reserve suggest around 2 percent per year.
In percentage terms, the identified $1.1 billion in additional revenue for FY2015-16 represents 3.8 percent growth over the projected revenue for FY2014-15.
So . . . keeping things very simple here, the projected growth in revenue would be expected to outpace inflation by roughly 1.8 percent, maybe a little more . . . or about $500 million.
But the tax cut proposal is for $1 billion. That’s twice as much as the “excess,” and that notion of “excess” is assuming (a) these governments are already providing an adequate level of service in all areas of concern and (b) prices rise at the rate of inflation.
The first point, while we still are recovering from the Great Recession, would be likely to stir some dissent. The second is not a bad guess, but is just a hope.
Meanwhile, even if both prove true, we’re a half billion dollars short.
My real point isn’t about $1 billion, or $500 million, or 2 percent inflation. It’s about the games we play with tax cuts and promises.
Specific, big, round numbers attract attention and enthusiasm. Promises rally the troops and encourage the fence sitters.
But the strategy of campaigning ultimately must give way to the work of governing.
And it’s there, when real budgets are being adopted and implemented, that we learn the real impact of campaign promises for the lives of Florida’s families.