KEEP FLORIDA WORKING BUDGET
Governor Rick Scott’s “KEEP FLORIDA WORKING” FY 2015-2016 Recommended Budget Highlights
The Governor’s total recommendation in the “KEEP FLORIDA WORKING” budget for Fiscal Year 2015-2016 is $77 billion. The general revenue portion is $28.3 billion. The general revenue funds available for the FY 2015-2016 budget year increased $1.1 billion from the previous fiscal year, a 4 percent increase. This increase, mostly attributable to increased sales tax collection, is an indication that Florida’s economy continues to improve.
The “KEEP FLORIDA WORKING” Budget is focused on four main components:
1) $673 million in tax cuts for Florida families and businesses
2) The highest per-student K-12 funding in Florida history
3) Making Florida a global destination for jobs
4) Strengthening Florida’s communities by enhancing our workforce training, protecting our environment, and keeping families and communities safe and healthy
Our “KEEP FLORIDA WORKING” budget continues the Governor’s mission of making Florida a global destination for jobs, cutting taxes, investing in education, lowering the cost of higher education, and improving workforce development. The highlights of the budget include:
Tax Cuts Totaling $673 Million for Florida Families
The Governor proposes ongoing tax cuts of an estimated $673 million per year, providing savings to both families and businesses. The impact of these tax cuts will reduce general revenue funds by $640 million. Specifically, the “KEEP FLORIDA WORKING” budget proposes the following tax cuts:
Cut the Cellphone, Cable and Satellite TV Tax by 3.6 Percent - At a statewide average of 14.17 percent, Florida’s tax on communications services is too high. Governor Scott proposes to reduce the tax by 3.6 percent, saving virtually every household and every business a combined $470.9 million annually. An average family spending $100 a month on cell phone, cable and satellite television services will save about $43 annually.
Eliminate Sales Taxes on College Textbooks - The “KEEP FLORIDA WORKING” budget reduces the cost of a college education by eliminating the sales tax on the purchase of college textbooks. The prices of college textbooks have increased significantly over the years, often exceeding $100 per book. Exempting college textbooks from the sales tax is expected to save Florida’s students $41.4 million per year. It is estimated that a student taking five courses per semester will save about $60 per year and over $240 for four years.
Permanently Eliminate the Tax On Manufacturing Machinery And Equipment - Governor Scott eliminated the sales tax that manufacturers pay when they buy machinery and equipment until 2017. The “KEEP FLORIDA WORKING” budget permanently eliminates the tax that businesses pay for their purchase of machinery and equipment used in the manufacturing process. This proposal is estimated to reduce the tax liability of Florida’s manufacturing businesses by $142.5 million annually beginning in 2017. This exemption will increase Florida’s competitive position in providing incentives for the startup and expansion of manufacturing businesses and lead to the creation of additional jobs in Florida.
Further Cut the Business Tax - The “KEEP FLORIDA WORKING” budget proposes to exempt another 2,189 job creators from having to pay the business tax by increasing the corporate income tax exemption from $50,000 to $75,000. This exemption was increased from $5,000 to $25,000 in 2011 and to $50,000 in 2013. The tax cut will save Florida businesses $18.4 million annually. The “KEEP FLORIDA WORKING” budget continues the goal to exempt more small businesses from paying this tax. Eliminating this tax will ensure more small businesses can hire additional workers, providing more Florida families with jobs.
Saving Florida Families Money
The Governor’s recommended budget contains a host of cost saving initiatives that will save Florida families money. Some highlights include:
Administrative and Operational Efficiencies - The “KEEP FLORIDA WORKING” budget recommends $267 million in savings and a decrease of 1,353 positions as a result of state agencies’ continued efforts to live within their means.
Contract and Lease Renegotiations - Savings resulting from contract and lease renegotiations have generated a statewide savings of $44 million since Fiscal Year 2012-2013. This includes savings in the recommended budget of $2.8 million. Savings will continue to grow as additional contracts are identified and renegotiated.
MyFlorida Market Place Fee Savings - The “KEEP FLORIDA WORKING” budget recommends reducing the MyFloridaMarketPlace purchasing transaction fee from 1 percent to 0.75 percent. This reduced fee is estimated to save businesses providing goods and services to the state approximately $6.7 million annually.
Real Estate Optimization Plan - The “KEEP FLORIDA WORKING” budget recommends continued utilization of the Real Estate Optimization Plan, which calls for the centralization of the operations and maintenance responsibilities of facilities that are now maintained by other state agencies located in the northeast region of the state. As a result of this initiative, the state will begin to realize efficiencies beginning in Fiscal Year 2016-2017, which will total $3.8 million annually in Fiscal Year 2017-2018.
Reduction in Debt Service - The “KEEP FLORIDA WORKING” budget recommends a reduction of $28 million due to reduced debt service obligations and State Board of Administration fees associated with the issuance of bonds for public schools, Florida colleges, state universities, and correctional facilities. Florida’s debt has dropped by $7.5 billion since 2010. Florida has less debt per capita than New York, Illinois and California; in fact, California and Illinois have more than double the debt per capita of Florida, and New York has more than triple the debt per capita of Florida. Refinancing activity has generated gross debt service savings of approximately $1.25 billion.
State Employee Health Coverage Savings - As part of the Governor’s philosophy to promote fair treatment of state employees, the “KEEP FLORIDA WORKING” budget includes a saving of $24.8 million so that all employees pay the same amount for health insurance coverage - $50 per month for individual coverage and $180 per month for family coverage. This will reduce the employer contribution for health insurance coverage for employees in the Senior Management Service and Selected Exempt Service systems.
Elimination of Earmarks - As part of the Governor’s efforts to give money back to Floridians, or redirect funding to provide more efficient services, recurring funding was reviewed for earmarks and as a result the budget includes the elimination of $12.2 million in projects.
Pension Unfunded Liability - The unfunded actuarial liability (UAL) of the Florida Retirement System (FRS) Defined Benefit Program amounted to $21.5 billion on July 1, 2014. Based on an actuarial liability of $160.1 billion and an actuarial value of assets of $138.6 billion, the program is 86.6 percent funded as of July 1, 2014. As of November 30, 2014, the market value of the plan’s assets amounted to $148.2 billion.The “KEEP FLORIDA WORKING” budget implements the recommendations of the independent actuary and proposes to fully fund the recommended contributions to the UAL.